Under Articles 39 and 61 of the Agreement on Trade-Related
Aspects of Intellectual Property Rights (TRIPs Agreement), Thailand
has a commitment to ensure effective protection of trade secrets from
unfair competition as described in Article 10 bis of the Paris Convention
(1967). Working towards this goal, the Ministry of Commerce of the Thai
Government set up a special committee to draft Thailand’s first
trade secret law. The committee recently completed the second draft
of the Proposed Trade Secret Act (the "PTSA") for discussion
among lawyers, law academics and government officials in the relevant
governmental agencies.
Some
highlights of the draft are discussed below.
Definition
According
to Section 4 of the PTSA, a trade secret must meet the following conditions
in order to be protected under this Act:
- it
must possess commercial value due to its confidentiality;
- it
must not be generally known by or made available to the public domain
which deals with such matters regularly;
- its
lawful controller or owner must have taken appropriate measures to
maintain its secrecy.
Information
that is protected under Section 4 includes formulae or patterns, collected
or assembled works, programs, means, techniques or processes. Moreover,
to conform with paragraph 3 of Article 39 of TRIPs, the protection of
trade secrets under the draft Act is extended to undisclosed test results
or data that are required by law to be submitted to governmental agencies
for market approval.
Rights of Trade Secret Owner
The
trade secret owner is entitled to apply to the Intellectual Property
and International Trade Court ("IP&IT Court"), which has
jurisdiction over civil and criminal cases involving disputes over trade
secrets [Section 7 (9) of the IP&IT Court Act], for the following
preventive injunctions:
- to
order a person to stop or refrain from trade secret infringement (an
interlocutory injunction); or
- to
prohibit a person from committing trade secret infringement (an absolute
injunction). In applying for this injunction, the applicant may request
the Court to order the destruction or confiscation of instruments,
tools and relevant accessories used in such trade secret infringement.
The Court may order that the product of such infringement still under
the ownership of the infringer be vested in the State or the trade
secret owner, or be destroyed if possession of such product constitutes
an offense under other laws.
Similar
to the preventive injunction under Section 116 of the Trademark Act,
Section 77 bis of the Patent Act 1992 (second amendment), and Section
65 of the Copyright Act 1994, the trade secret owner can request for
a preventive injunction prior to the filing of a statement of claim
or the prosecution. In case of an interlocutory injunction, if the requesting
party does not file a complaint with the Court within the period specified
by the Court in such order, the person who is subject to the order is
entitled to file a request with the Court to revoke such order. In case
of an absolute injunction, there is no time limit for the requesting
party to file a complaint with the Court. However, there are two circumstances
where the person who is subject to such injunction is entitled to file
an application with the Court to revoke the order:
- the
trade secret has been disclosed to the public; or
- the
trade secret’s confidentiality has been destroyed.
In
considering the issuance of an interlocutory injunction, the Court may
require a guarantee from the requesting party to prevent any damage
that may affect the person who is subject to the injunction.
In
considering the issuance of an absolute injunction, if the Court believes
that the issuance of such an order will be unjustified, the Court may
instruct the trade secret infringer to pay fair compensation for the
disclosure or usage of such trade secret information thereafter within
the period as the Court deems proper.
Moreover,
Section 7 of the PTSA clearly allows the owner to take action against
the infringer for compensation. The reason for prescribing this provision
is that at present, in civil cases, trade secrets are protected under
the Law of Contract and it is a close question as to whether trade secrets
are also protected under the Tort Law. Some law academics reason that
since a trade secret is not a proprietary right, it would not be protected
under the Tort Law.
In
civil cases, the PTSA provides the principle of reversal of burden
of proof, which is similar to Section 77 of the Patent Act (second
amendment of 1992). This principle is clearly in favor of the trade
secret owner (the plaintiff) in assuming that the defendant has used
the processes belonging to the trade secret owner if the owner of trade
secrets concerning the processes in manufacturing a product has proven
that the infringer’s product is of the same nature, or is similar
to the product manufactured by the processes of the trade secret owner,
unless the defendant can prove otherwise.
Trade Secret Infringement
The
PTSA defines infringement of a trade secret as "the disclosure
and taking of trade secrets without the lawful consent of the trade
secret owner, resulting in breach of fair commercial practices or a
display of good faith one to another". Actions which are contrary
to such fair commercial practices or display of good faith one to another
include breach of contract, breach of confidence, bribery, intimidation,
fraud, theft, receiving of stolen property or espionage by electronic
surveillance or any other means. However, the infringer must know, or
have appropriate reasons to know, that such action is an infringement
of trade secrets.
Exceptions to Infringement
The
following actions shall not be deemed as infringement of trade secrets.
- Use
or disclosure of trade secrets by a person who obtained such secrets
through a juristic act without being aware, and without having any
appropriate reason to be aware, that such trade secrets acquired from
the other party could constitute an infringement against another person.
- Retro-engineering.
- Independent
discovery.
- Use
or disclosure of trade secrets by the governmental agency in charge
of such trade secrets in the event of a need to protect the public
or any public interest not having commercial objectives, wherein preventive
measures have already been taken to ensure that such usage or disclosure
will be protected from unfair trade practice allegations.
Closed Door Trials
Another
point worth mentioning is that, for the purpose of protecting the confidentiality
of trade secrets during trials of civil and criminal cases, the Court
may issue orders as it deems appropriate. The Court may order the case
to be heard in private and every person at a hearing obliged to preserve
the secrecy of the information disclosed in the course of the trial.
The Court may also order the records, documents or files of the proceedings
to be stored secretly.
Trade Secrets Committee
The
administrative system that is provided in the structure of the PTSA
is the Trade Secrets Committee. The Committee has the authority to give
advice or recommendations to the Minister in issuing ministerial regulations
or practice rules in compliance with this Act, and to give advice or
recommendations to the governmental agency in issuing regulations or
any other practice rules relating to trade secrets under this Act. Of
significance is the Trade Secrets Committee’s power to compromise
or settle disputes pertaining to trade secrets as requested by the parties
concerned prior to the filing of action in the Court. The idea of settlement
of disputes out of court is well supported by both government sectors,
such as the Justice Department, and private sectors, such as the Federation
of Thai Industries and the Board of Trade of Thailand.
Special Enforcement by Authorized
Officials
To
assist the infringed parties, the police, and the Trade Secrets Committee
in investigating and gathering of evidence, the PTSA contains a provision
similar to Section 67 of the Copyright Act 1994, which empowers the
Minister to appoint competent officials with the following authority
and duties:
- to
enter buildings, offices, production establishments or storage facilities
of any individual, from sunrise to sunset or during working hours,
or to enter vehicles, to examine merchandise or to investigate when
there is reasonable cause to suspect that there are violations of
the PTSA;
- to
seize or attach documents or items relating to violations for use
in the prosecution of a case in situations where there is reasonable
cause to suspect that there are violations of this Act;
- to
order individuals to appear and provide affidavits, or to submit accounts,
documents, or other evidence in cases where there is reason to believe
that the affidavits, account books, documents or evidence will be
useful in discovering violations or useful as witness or evidence
in determining whether there was a violation of this Act.
Enforcement
The
penalties called for in the PTSA are mainly criminal penalties, consisting
of fines, imprisonment, or both. The following are penalties that the
Court may impose upon the convicted trade secret infringer:
- For
failing to give statements or submit any documents or objects as required
by the Committee or the Sub-committee: imprisonment not exceeding
three months or a fine not exceeding 50,000 baht or both (Section
32).
- For
obstructing or failing to accord facilitation to the competent authority
in performing duties… or violating or failing to comply with
the order of the competent authority: imprisonment not exceeding
three months or a fine not exceeding 50,000 baht or both (Section
33).
- For
disclosing another person’s trade secrets intentionally in such
manner as to destroy the confidentiality of trade secrets and thereby
cause malicious damages to the owner in operating his/her business,
whether by propagation of documents by broadcasting or telecasting,
or by any other means: imprisonment not exceeding one year or a
fine not exceeding 20,000 baht or both.
In
a case wherein the said offense has been committed jointly by an
offender and the owner of an advertising medium, or a person engaged
in such advertising medium, the offender shall be subject to one-half
of the penalty provided for the offense (Section 34).
- For
disclosing or exploiting trade secrets, with malfeasance, by person
holding a position of protecting or being in charge of trade secrets
in compliance with regulations concerning the protection of such trade
secrets from disclosure or unfair commercial usage, for his/her own
benefit or for the benefit of any other person: imprisonment not
exceeding one year or a fine not exceeding 20,000 baht or both (Section
35).
- For
disclosing facts relating to the business activity of other business
persons, wherein such facts are not usually disclosed according to
normal trade practices, and such facts have been acquired or made
known through execution under this Act: imprisonment not exceeding
one year or a fine not exceeding 20,000 baht or both, except in
cases wherein such disclosure has been performed during the execution
of official duties or for the benefit of investigation or proceedings.
Any
person acquiring or knowing such facts from other persons in accordance
with paragraph one through the execution of official duties, investigation
or proceedings and then revealing such facts in a manner that causes
damages to any person, shall be subject to a penalty in the same
manner (Section 36).
- For
employing deviousness or seeking favoritism, or instigating or proceeding
with an action against any person in a civil or criminal case under
this Act in bad faith for the purpose of causing malicious damage
to such person in operating his/her business, performing his/her occupation
or profession or executing his/her official service: imprisonment
not exceeding one year or a fine not exceeding 20,000 baht or both
(Section 37).
- For
recommitting the same offense under this Act for which he/she has
been punished within a five-year period from the date of receiving
punishment: being subject to a penalty equal to double the amount
prescribed for such offense (Section 40).
In
a case wherein the offender subject to a penalty under this Act is a
juristic person, the director or manager or person responsible for operations
on behalf of such juristic person also shall be subject to a penalty
prescribed by the relevant governing laws unless proven not to be involved
in the offense committed by such juristic person (Section 38).
In
cases arising from offenses under Sections 34, 35 and 36, such fines
as are paid in compliance with judgments shall be paid to the owner
of trade secrets in half-amount portions. However, this does not affect
the rights of the trade secret owner to sue for damages in a civil case
for an amount exceeding that of the fine received by the owner (Section
39).
The
PTSA also empowers the Committee to settle or dispense with cases regarding
any offense under this Act. In this regard, the Committee is entitled
to assign the Sub-committee, the Director-General, an inquiry official
or a competent authority to conduct the settlement of cases, or to establish
settlement criteria or conditions for settling the case to the assignee,
as the Committee deems fit (Section 41).
For
more information, please contact Mr.
Edward Kelly,
Partner, Intellectual Property Department & Client Relationship
Officer, Tilleke & Gibbins (e-mail edward.k@tillekeandgibbins.com).
©1998
Tilleke & Gibbins, Bangkok, Thailand
