What is know-how?
Most companies develop new technical solutions in the course of their activities and want to keep this information confidential. These include production methods and business practices, images, diagrams, financial management, calculations, technology, how to do certain things, and the list goes on.
By keeping the information secret, the company manages to successfully compete on the market and not to give up its position, and perhaps even become a leader in a certain area due to the secret knowledge.
For example, know-how can be the secret of preparing a dish. Let's say you own a chain of French restaurants and your chef has come up with a new recipe for a dish. Naturally, you would want to keep it a secret from your competitors in case your customers appreciate the new French creation.
The law defines "know-how" as any kind of information, unknown to third parties, which has a certain commercial value. It is worth noting that in civil law the concepts of "know-how" and "trade secret" are considered to be certain synonyms and replace each other.
Production secrets have the following features that distinguish them from other objects of intellectual property:
- Commercial value - the information must necessarily be valuable, for example, the application of the scheme in the production of goods. The information can also be valuable in a potential sense. Competitors should be interested to know confidential data, because if it is of no value, there is no point in protecting it and hiding it;
- Free access to classified data is closed to unauthorized persons. A list of persons to whom it is known must be compiled by the holder and appropriate measures must be taken to protect the information;
- Confidentiality (trade secret) is information that is know-how and is not subject to disclosure. This is one of the main attributes of a production secret. It must not become known to third parties;
- The exclusive right to a trade secret belongs to the owner of the knowledge. It is important to remember that the owner of know-how in the company is the company itself, not the author. If an employee of the company created a technical or design solution by the employer's assignment, such results of intellectual activity belong to the employer and it is he who has the exclusive right to them;
- There is no state registration of know-how in Russia. The protection of the exclusive right ceases after the information has become known to unauthorized persons and they have gained access to the closed materials.
Advantages and disadvantages
The benefits include the following features:
- The introduction of a trade secret regime, which protects the confidentiality of information, does not require a long time (it can take only three or four days, although in some cases it will take much longer) and significant financial costs, unlike obtaining a patent;
- The term of protection of a production secret is not limited, as it can be protected exactly as long as the company itself wants it. At the same time, the duration of a patent is strictly limited by law, for example, a patent for an invention is valid for only 20 years and for a certain category of objects can be extended for another 5 years;
- The data have a private nature, i.e., they are known only to a certain circle of people, while for patenting the invention it is necessary to fully disclose the materials about the object. Rospatent publishes information about the application for registration and therefore all important information will immediately become known to competitors.
Despite considerable advantages, the know-how mode also has some disadvantages:
- Commercial confidentiality is necessary to protect sensitive data, and although it does not take much time and money, the process of its implementation is quite complicated and not all companies fully comply with it;
- If a person legally learned information that is a trade secret, and was not notified that these particular documents are classified as secret, he cannot be held liable. In other words, the obligation to keep information secret rests only on those who have signed the relevant contract and have been fully informed about the establishment of the commercial secret regime;
- The disclosure of information automatically terminates the exclusive right to know-how. Most often this is due to the fault of former employees of the company, who were not bound by the contract and disclosed the information to competitors, or a third party independently invented such a solution and has an exclusive right to it. In addition, competitors may obtain a patent on a trade secret object, in which case the previous owner can only use it without extending the boundaries of such use.
Thus, there is always a risk that unscrupulous company employees may disclose non-public information to competitors. Therefore, it is imperative to inform them that they have access to sensitive information and will be held liable if it is disclosed.
How is it regulated by law?
In the legislation of the Russian Federation, the protection of know-how is regulated by several normative legal acts. The most important of these are:
- Chapter 75 of the Russian Civil Code
- Federal Law No. 98-FZ of 29.07.2004 "On Commercial Secrets".
The legal regime for the protection of information constituting a trade secret has both advantages and disadvantages, and before choosing such a regime, it is necessary to clearly determine the need for its introduction.
How to protect know-how?
The registration of know-how in Russia is not stipulated by law. If you want to obtain a patent, the information will immediately cease to be classified, since FIPS publishes all applications submitted. The owner of secret data can only formalize the know-how in his company and thus establish a trade secret regime. This is the only way to protect such information. In order to do so, a number of specific steps must be taken:
- create a list of documents that will be classified;
- prepare a local act of the company, which will regulate the procedure for handling unclassified data;
- issue an order to comply with the commercial secret regime and inform the company's employees about it;
- Prepare a list of employees who will have access to sensitive data, and once access is granted, it is necessary to obtain signatures from them (this can be done by keeping an appropriate logbook);
- prepare a Commercial Secrecy Regulation;
- prepare and sign annexes to employment contracts with employees;
- create conditions at the enterprise to keep trade secrets (restrict access to information only to those who work directly with it and are notified of the established regime);
- information can be marked as "secret," which only confirms the importance of its non-disclosure.
Is it possible to combine protection of know-how and patenting?
Yes, it is possible. For a patent, the maximum legal protection by the state applies, but the information is disclosed. In the case of know-how, the degree of protection is always unclear and there is a great risk that such a solution will be found out by competitors or that they will get a patent on it. You can, however, combine these regimes.
It is necessary to establish a trade secret regime at the production site and apply for a patent. According to the law, if you revoke the previous application, you can file the next one and so on an unlimited number of times. The filing of the application establishes the priority date. The main thing is to withdraw the application before the expiration of 12 months (otherwise Rospatent will publish information about it) and then file a new application with the filing date of the first. Thus, you have time to finalize the invention, the information remains secret and inaccessible to third parties.
If your competitors somehow find out your trade secret and want to get a patent on a solution similar to yours, they will not be able to do it. You can go ahead with the patent application that has already been filed and be the first to get the patent, because you are the one who has the priority to get it.
License agreement on transfer of know-how rights
The person to whom the exclusive right belongs may conclude an agreement on transferring the know-how (production secret) to another person within the framework defined by this agreement. The agreement may stipulate the period of time for which the classified information is transferred. At the same time, if this time is not specified in the agreement, any party may refuse to use the exclusive right, but is obliged to warn the other party not later than 6 months.
Only the owner of the know-how can transfer the rights to it. However, the conclusion of the contract does not lead to the disclosure of the data. The person who granted the right to use is obliged to keep the data confidential until the termination of the concluded contract. At the same time, the other party who received the data must keep it confidential for as long as the owner of the information retains exclusive rights to it.