In the digital economy and increasingly fierce competitive environment, the most important assets of many enterprises are not limited to factories, machinery, or investment capital, but also include commercially valuable information. Production formulas, customer data, business strategies, operational processes, technological algorithms, and product development plans can all become decisive competitive advantages that determine an enterprise’s success in the market.
However, not all intellectual assets are registered for protection in the form of patents, trademarks, or industrial designs. In practice, many enterprises choose to keep important information confidential in order to maintain a long-term competitive advantage. This is why trade secret protection has become one of the most important tools for safeguarding enterprises’ intellectual assets today.
This article by Law Plus analyzes the protection mechanism and appropriate confidentiality measures that can help enterprises minimize the risks of information theft, data leakage, and loss of competitive advantage in the market.
1. Trade Secrets under the Law on Intellectual Property
A trade secret is information obtained from financial investment, intellectual investment, or business activities, which has not been publicly disclosed and is capable of being used in business.
Unlike patents or trademarks, pursuant to Article 6 of the Law on Intellectual Property 2005 (consolidated in Consolidated Document No. 67/VBHN-VPQH), rights to trade secrets are automatically established through lawful possession and compliance with confidentiality obligations, without the need for registration with a state authority. Specifically, under Article 84 of the Law on Intellectual Property 2005 (consolidated in Consolidated Document No. 67/VBHN-VPQH), information is protected by law only when all three of the following conditions are satisfied:
– It is not common knowledge and is not easily obtainable;
– When used in business, it gives the holder of the trade secret an advantage over persons who do not possess or use such trade secret;
– It is protected by its owner through necessary measures to prevent disclosure and prevent it from being easily accessible.
Accordingly, the key factor for protection is not registration with a state authority, but rather the enterprise’s actual implementation of reasonable confidentiality measures to maintain the secrecy of the information.
However, enterprises should also pay attention to excluded subject matters. Pursuant to Article 85, the following information is not protected as a trade secret: secrets relating to individuals; state management secrets; national defense and security secrets; and information unrelated to business purposes.
2. Trade secret protection as a vital competitive weapon
In many industries, trade secrets form the foundation of an enterprise’s competitive advantage. Examples include:
– Beverage recipes and formulas;
– Proprietary production technologies;
– Strategic customer lists;
– Product research and development data;
– Software algorithms;
– Marketing and pricing strategies.
Unlike patents, which are protected for a limited period, trade secrets can potentially be protected indefinitely, provided that the enterprise is able to maintain the confidentiality of the information.
Many enterprises around the world have chosen to protect core technologies as trade secrets instead of filing for patent protection in order to avoid having to publicly disclose their technical details. This enables enterprises to maintain their competitive advantage over the long term and reduce the risk of competitors exploiting such information.
In the context of digital transformation, customer data and business data are increasingly recognized as strategic assets. The disclosure or theft of such information may not only cause revenue losses but also seriously affect an enterprise’s reputation and market position.
3. Rights of trade secret owners
Trade secret owners are protected by the State with respect to important property rights provided under Articles 123, 124, and 125 of the Law on Intellectual Property 2005 (consolidated in Consolidated Document No. 67/VBHN-VPQH), including:
– The right to use and authorize other organizations or individuals to use the trade secret: The owner may apply the trade secret to its own production and service provision activities; authorize other organizations or individuals to use it through a licensing agreement; or completely assign ownership rights to another party.
– The right to transfer the right to use and prohibit unauthorized exploitation: The owner has the right to prohibit unauthorized exploitation. However, under Article 125, enterprises should note that they may not prohibit a third party from using information if such third party independently discovers or develops the information, or conducts analysis and evaluation of a product that has been lawfully marketed.
With respect to trade secrets, “use” includes applying the trade secret in production, business, or service provision activities, or commercially exploiting products or services created based on such trade secret, pursuant to Article 124.
In addition, pursuant to Articles 198 and 199, where their rights are infringed, owners may request the removal of infringing content from telecommunications networks/the Internet, request a public apology or correction, or initiate legal proceedings to claim damages.
4. Acts of infringement of trade secrets
Identifying acts of trade secret infringement is a prerequisite for an enterprise to initiate legal proceedings.
Under Article 127 of the Law on Intellectual Property 2005 (consolidated in Consolidated Document No. 67/VBHN-VPQH), acts of infringement may include:
– Accessing or obtaining information constituting a trade secret by circumventing the security measures of the lawful controller of such information;
– Disclosing or using information constituting a trade secret without the owner’s permission;
– Breaching a confidentiality agreement or obtaining access to, collecting, or disclosing trade secrets through deception, inducement, bribery, coercion, enticement, or abuse of trust;
– Accessing or obtaining information constituting the trade secret of an applicant in licensing procedures for business operations or circulation of products by circumventing the confidentiality measures of the competent authority;
– Using or disclosing a trade secret despite knowing, or being under an obligation to know, that such information had been unlawfully obtained by another person;
– Failing to perform confidentiality obligations prescribed in Article 128.
In practice, disputes often arise when employees leave their jobs and take customer data, production know-how, or strategic information to competing enterprises. This is a common risk faced by many enterprises today. To optimize protection, enterprises should establish appropriate rules for protecting consumer information in compliance with the Personal Data Protection Law 2025 and ensure that confidentiality agreements in employment contracts comply with cybersecurity regulations.
5. What enterprises should do to effectively safeguard their intellectual assets
Pursuant to Articles 6 and 84 of the Law on Intellectual Property 2005 (consolidated in Consolidated Document No. 67/VBHN-VPQH), rights to trade secrets are protected only when enterprises implement adequate confidentiality measures.
To protect this “competitive weapon,” enterprises should implement the following measures:
– Establish internal confidentiality regulations: Issue regulations governing confidential information, clearly identify the categories of data requiring protection, and clearly stipulate the liability of employees for compensation in the event of violations.
– Enter into Non-Disclosure Agreements (NDAs): Require employees, partners, and service providers to enter into confidentiality agreements before being granted access to confidential information. These provisions should be aligned with regulations on the protection of personal privacy under the Personal Data Protection Law 2025.
– Control access rights and cybersecurity: Restrict access to information based on the “need-to-know” principle. Apply technical measures such as data encryption and multi-factor authentication, and, in particular, maintain system access logs to facilitate evidence tracing in the event of an incident.
– Conduct periodic risk management reviews: Review the technical and legal security systems at least once a year to identify vulnerabilities and promptly adjust policies for managing intellectual assets.
6. Sanctions for trade secret infringement
When rights to a trade secret are infringed, the owner may apply various measures for protection in accordance with Articles 198 and 199 of the Law on Intellectual Property 2005 (consolidated in Consolidated Document No. 67/VBHN-VPQH). Depending on the circumstances, an enterprise may request:
– Termination of the infringing act;
– Compensation for damages;
– Administrative action by the competent authorities;
– Initiation of legal proceedings before a court to protect its lawful rights and interests.
The collection of evidence concerning the misappropriation or disclosure of trade secrets is particularly important for an enterprise to effectively protect its rights and interests.
7. Conclusion
Against the backdrop of increasingly intense competition and the growing importance of data as a strategic resource for enterprises, trade secret protection is not merely a legal requirement but also an essential risk management solution. Commercially valuable information, when properly protected, can become a sustainable competitive advantage and contribute to increasing the long-term value of an enterprise.
Establishing a robust confidentiality mechanism, controlling access to information, and fully complying with the provisions of the Law on Intellectual Property are essential foundations for safeguarding an enterprise’s intellectual assets. Proactive prevention is always far more effective and less costly than dealing with the consequences after information has already been stolen or disclosed to external parties.