Steve McDaniel and Jon Hurt, Contributing Editors11.30.-1
Maybe that’s a little harsh. But, that indeed WAS the punishment exacted by Chinese emperors for several thousand years upon anyone caught attempting to export Bombyx mori (silkworms) or mulberry seeds (Morus alba) in order to start international silkworm competition (sericulture). But, sericulture reached Korea around 200 BC, when waves of Chinese immigrants arrived there.
Silk reached the West through a number of different channels. Shortly after AD 300, sericulture traveled westward and the cultivation of the silkworm was established in India. Stories are also told how, in AD 440, a Khotan prince (today’s Hetian, a kingdom on the rim of Taklamakan desert) courted and won a Chinese princess. The princess smuggled out silkworm eggs by hiding them in her voluminous hairpiece - then Khotan kept the secret too (why share it with the Westerners and kill a good market.
Then around AD 550, two Nestorian monks appeared at the Byzantine Emperor Justinian’s court with silkworm eggs hidden in the hollow bamboo staves they carried (sneaky, but hardly original). The Byzantine church created imperial workshops, monopolizing production-again keeping the secret to themselves. This allowed a silk industry to be established in the Middle East, undercutting the market for ordinary-grade Chinese silk. By the sixth century the Persians, too, had mastered the art of silk weaving, developing their own rich textile artistry. It was only around the time of the Second Crusades 13th Century) that Italy began silk production with the introduction of 2000 skilled silk weavers from Constantinople. Eventually silk production became widespread in Europe.
So it goes with trade secrets – they are only as good as your ability to keep them a secret! But, several thousand years? Dadgummit! That beats Coca Cola’s allegedly-deeply-vaulted and highly-vaunted secret formula by at least a couple of millennia. It goes to show you though that protection of trade secrets on an international scale has been with us for a VERY long time.
Ratchet quickly forward to the present times. Just as is the case between states in the U.S., trade secret laws range all over the place internationally. The likely reason for this disharmony is, of course, money. Filing a patent gives a government an opportunity to charge patent fees for virtually every contact with a patent office. Naturally, this was a model that had a built in incentive that inspired nations across the world to adopt and harmonize laws and procedures globally. In contrast, a trade secret is, at its core, simply maintaining information as confidential. And governments can’t easily charge a fee on what they don’t know exists. Hence, laws protecting trade secrets have been slower to standardize between jurisdictions, though the trend to smooth out differences is clearly visible.
In the United States, trade secrets have historically been protected by individual state common laws. This made seeking legal regress for misappropriation a more costly proposition given the use of multiple lawyers familiar with different local statutes. However, after a couple centuries the U.S. started to get its act together with the publication of the Uniform Trade Secrets Act in 1979. After a few decades, some form of this act has now been made the statute in 47 states. Adoption is pending in Massachusetts, with New York and North Carolina being the remaining holdouts. Is the same trend happening elsewhere in the World? It would appear to be so.
EUROPE: The different nations of Western Europe also had a hodge-podge of contract, confidence and unfair completion national laws protecting trade secrets. This makes protecting trade secrets systemically across this region a difficult task (i.e., paying local council for each country adds up fast). But to the potential detriment of all those lawyers collecting fees, in 2013 the European Commission proposed creating a standardized set of trade secret laws for enforcement throughout the European Union. A draft directive to have a minimum legal standard across EU states has been created in recent months. Notably, member states agreed that individual national law may enhance trade secret protection beyond this standard, that the trade secret definition used by this standard would be consistent with the World Trade Organization’s Agreement on Trade-related Aspects of Intellectual Property Rights (the TRIPs Agreement), and that the time to pursue action for misappropriation would be six rather than two years. Overall, this is a mixed bag – with some acceptance of standardization while retaining the legal flavor of individual states. Finalization and adoption by the European Parliament still needs to occur.
CHINA: Though the world is a big place, the up-coming giant for trade and manufacture is China. They are fully aware of the concepts and value of trade secrets, ever since the days when they kept the methods of producing silk secret for over two thousand years by beheading. But, no offense meant to our friends on the mainland, China has a less than stellar reputation for protecting other’s intellectual property. Phrases such as “possible systemic stealing of intellectual property of American companies” have been used by the Treasury Secretary Geithner in 2011. And those words were backed by the steely power a Federal Circuit’s decision supporting the United States International Trade Commission’s ability to block import of items manufactured in China using misappropriated trade secrets.
Taking the hint, in 2012 China’s Civil Procedure Law was amended so you could obtain preliminary injunctive relief which has been used at least once to protect a western corporation, Eli Lilly, from trade secret misappropriation. So hope is in the air.
GLOBAL: The Golden Land of Global Standardization. After thousands of years of international commerce, the World Trade Organization (“WTO”) adopted TRIPS agreement in 1995. Information that we would understand as a trade secret is defined in the TRIPs agreement Article 39(2) as: “(a) is secret in the sense that it is not, as a body or in the precise configuration and assembly of its components, generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question; (b) has commercial value because it is secret; and (c) has been subject to reasonable steps under the circumstances, by the person lawfully in control of the information, to keep it secret.” To protect your trade secrets under Article 39(2) “natural and legal persons shall have the possibility of preventing information lawfully within their control from being disclosed to, acquired by, or used by others without their consent.” Over 100+ member nations of the WTO that have adopted the TRIPS agreement.
So your problem with international trade secret misappropriation is solved for all time? Nah, don’t be silly! To enforce your rights, Article 42 state “Members shall make available to right holders civil judicial procedures.” And the agreement goes on with generic minimal requirements for civil procedures such as written notice of basis of claims provided to defendants, the right for both parties to legal counsel and to present evidence, etc. that are not exactly a detailed standardization of rights and procedures, but more of an agreement to have rights and procedures.
And as we have seen from the US, the European Union and China which have adopted this agreement, the laws and penalties for each nation / region still remain far from consistent. But it is a step forward. And, it probably beats beheading. Stick around for another thousand years, and everyone will probably operate using the same rulebook.
Silk reached the West through a number of different channels. Shortly after AD 300, sericulture traveled westward and the cultivation of the silkworm was established in India. Stories are also told how, in AD 440, a Khotan prince (today’s Hetian, a kingdom on the rim of Taklamakan desert) courted and won a Chinese princess. The princess smuggled out silkworm eggs by hiding them in her voluminous hairpiece - then Khotan kept the secret too (why share it with the Westerners and kill a good market.
Then around AD 550, two Nestorian monks appeared at the Byzantine Emperor Justinian’s court with silkworm eggs hidden in the hollow bamboo staves they carried (sneaky, but hardly original). The Byzantine church created imperial workshops, monopolizing production-again keeping the secret to themselves. This allowed a silk industry to be established in the Middle East, undercutting the market for ordinary-grade Chinese silk. By the sixth century the Persians, too, had mastered the art of silk weaving, developing their own rich textile artistry. It was only around the time of the Second Crusades 13th Century) that Italy began silk production with the introduction of 2000 skilled silk weavers from Constantinople. Eventually silk production became widespread in Europe.
So it goes with trade secrets – they are only as good as your ability to keep them a secret! But, several thousand years? Dadgummit! That beats Coca Cola’s allegedly-deeply-vaulted and highly-vaunted secret formula by at least a couple of millennia. It goes to show you though that protection of trade secrets on an international scale has been with us for a VERY long time.
Ratchet quickly forward to the present times. Just as is the case between states in the U.S., trade secret laws range all over the place internationally. The likely reason for this disharmony is, of course, money. Filing a patent gives a government an opportunity to charge patent fees for virtually every contact with a patent office. Naturally, this was a model that had a built in incentive that inspired nations across the world to adopt and harmonize laws and procedures globally. In contrast, a trade secret is, at its core, simply maintaining information as confidential. And governments can’t easily charge a fee on what they don’t know exists. Hence, laws protecting trade secrets have been slower to standardize between jurisdictions, though the trend to smooth out differences is clearly visible.
In the United States, trade secrets have historically been protected by individual state common laws. This made seeking legal regress for misappropriation a more costly proposition given the use of multiple lawyers familiar with different local statutes. However, after a couple centuries the U.S. started to get its act together with the publication of the Uniform Trade Secrets Act in 1979. After a few decades, some form of this act has now been made the statute in 47 states. Adoption is pending in Massachusetts, with New York and North Carolina being the remaining holdouts. Is the same trend happening elsewhere in the World? It would appear to be so.
EUROPE: The different nations of Western Europe also had a hodge-podge of contract, confidence and unfair completion national laws protecting trade secrets. This makes protecting trade secrets systemically across this region a difficult task (i.e., paying local council for each country adds up fast). But to the potential detriment of all those lawyers collecting fees, in 2013 the European Commission proposed creating a standardized set of trade secret laws for enforcement throughout the European Union. A draft directive to have a minimum legal standard across EU states has been created in recent months. Notably, member states agreed that individual national law may enhance trade secret protection beyond this standard, that the trade secret definition used by this standard would be consistent with the World Trade Organization’s Agreement on Trade-related Aspects of Intellectual Property Rights (the TRIPs Agreement), and that the time to pursue action for misappropriation would be six rather than two years. Overall, this is a mixed bag – with some acceptance of standardization while retaining the legal flavor of individual states. Finalization and adoption by the European Parliament still needs to occur.
CHINA: Though the world is a big place, the up-coming giant for trade and manufacture is China. They are fully aware of the concepts and value of trade secrets, ever since the days when they kept the methods of producing silk secret for over two thousand years by beheading. But, no offense meant to our friends on the mainland, China has a less than stellar reputation for protecting other’s intellectual property. Phrases such as “possible systemic stealing of intellectual property of American companies” have been used by the Treasury Secretary Geithner in 2011. And those words were backed by the steely power a Federal Circuit’s decision supporting the United States International Trade Commission’s ability to block import of items manufactured in China using misappropriated trade secrets.
Taking the hint, in 2012 China’s Civil Procedure Law was amended so you could obtain preliminary injunctive relief which has been used at least once to protect a western corporation, Eli Lilly, from trade secret misappropriation. So hope is in the air.
GLOBAL: The Golden Land of Global Standardization. After thousands of years of international commerce, the World Trade Organization (“WTO”) adopted TRIPS agreement in 1995. Information that we would understand as a trade secret is defined in the TRIPs agreement Article 39(2) as: “(a) is secret in the sense that it is not, as a body or in the precise configuration and assembly of its components, generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question; (b) has commercial value because it is secret; and (c) has been subject to reasonable steps under the circumstances, by the person lawfully in control of the information, to keep it secret.” To protect your trade secrets under Article 39(2) “natural and legal persons shall have the possibility of preventing information lawfully within their control from being disclosed to, acquired by, or used by others without their consent.” Over 100+ member nations of the WTO that have adopted the TRIPS agreement.
So your problem with international trade secret misappropriation is solved for all time? Nah, don’t be silly! To enforce your rights, Article 42 state “Members shall make available to right holders civil judicial procedures.” And the agreement goes on with generic minimal requirements for civil procedures such as written notice of basis of claims provided to defendants, the right for both parties to legal counsel and to present evidence, etc. that are not exactly a detailed standardization of rights and procedures, but more of an agreement to have rights and procedures.
And as we have seen from the US, the European Union and China which have adopted this agreement, the laws and penalties for each nation / region still remain far from consistent. But it is a step forward. And, it probably beats beheading. Stick around for another thousand years, and everyone will probably operate using the same rulebook.
