TRIPS Article 39: Undisclosed Information

In one line

Undisclosed information must be protectable against dishonest acquisition, use or disclosure, and test data submitted for marketing approval must be protected against unfair commercial use.

Article 39.1, the anchor

"In the course of ensuring effective protection against unfair competition as provided in Article 10bis of the Paris Convention (1967), Members shall protect undisclosed information in accordance with paragraph 2 and data submitted to governments or governmental agencies in accordance with paragraph 3."

Read the anchor carefully. The obligation is expressed as part of the duty to protect against unfair competition, not as the creation of a property right.

That framing was deliberate, and it is the reason developing countries could accept the Section. A trade secret is not owned; it is protected against dishonest conduct.

Article 10bis of Paris, incorporated by TRIPS Article 2.1, requires countries to assure effective protection against unfair competition and defines it as any act of competition contrary to honest practices in industrial or commercial matters.

Article 39.2, the three conditions

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 in a manner contrary to honest commercial practices, so long as such information:

(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, to keep it secret.

All three are required. The compilation clause in (a) is important: a combination of publicly known elements can be secret if the particular configuration is not.

Footnote 10 defines the standard of conduct. A manner contrary to honest commercial practices means at least practices such as breach of contract, breach of confidence and inducement to breach, and includes the acquisition of undisclosed information by third parties who knew, or were grossly negligent in failing to know, that such practices were involved in the acquisition.

What is not caught. Independent discovery and reverse engineering are not contrary to honest commercial practices, so neither is prohibited.

Article 39.3, test data

"Members, when requiring, as a condition of approving the marketing of pharmaceutical or of agricultural chemical products which utilize new chemical entities, the submission of undisclosed test or other data, the origination of which involves a considerable effort, shall protect such data against unfair commercial use. In addition, Members shall protect such data against disclosure, except where necessary to protect the public, or unless steps are taken to ensure that the data are protected against unfair commercial use."