For many business, confidential information is one of the most valuable assets that they can possess. Crucial information such as proprietary formulas, innovative processes, customer databases and marketing strategies, can be the main ingredient to maximize a competitive advantage. The very idea of the value of certain information, and that such information is the basis of trade secret protection.
How are trade secrets protected under Indonesian law? And what should businesses do to safeguard this vital information? Below we compile some key information any business owner should know:
Definition
Trade secrets refer to confidential business information that provides a commercial benefit because it is not publicly known. As stipulated by Article 1 of Law No. 30 of 2000 on Trade Secrets, a trade secret is defined information in the field of technology and/or business that is not known by the public and has economic values as it is useful in business activities, and the confidentiality of which is maintained by its owner
This broad definition covers everything from manufacturing methods and business plans to software algorithms and client lists. Article 2 of the law explicitly stipulates that trade secrets include methods of production, methods of processing (preparation), methods of selling, or other information in the field of technology and/or business that has economic values and is not known by the public in general
Legal Protection and Enforcement
Trade secret protection under Indonesian law lasts indefinitely, so long as the information remains confidential. It’s important to note that there is no requirement to register or record the trade secret with the Directorate General of Intellectual Property (DJKI), which means the protection is automatic as long as the information meets the criteria of being confidential, having economic value, and is kept secret by the owner. Protection ceases if the Trade Secret becomes public knowledge or if the owner fails to take reasonable measures to keep it confidential.
Unlawful acts involving trade secrets include theft, unauthorized use, or disclosure. Infringement on Trade Secret, under Indonesian law, is defined as when a person deliberately discloses the Trade Secret or breaks the agreement, or the obligation, either written or not, to maintain the confidentiality of the relevant Trade Secret.
However, it’s important to note that the law also stipulates certain conditions where the disclosure of a Trade secret is not considered infringement according to Article 15 of Trade Secret Law. Firstly, if the disclosure or use of the trade secret is done in the interest of public security and defence, or to protect public health or safety, it is not deemed a violation. Secondly, if reverse engineering is carried out on a product that was developed using another person’s trade secret, and this reverse engineering is done solely for the purpose of further developing the relevant product, it is also not considered an infringement.
Typical Challenges
Despite the existence of clear legal provisions, enforcing trade secrets in Indonesia can be a complex and challenging endeavour. One of the primary obstacles lies in the general lack of awareness among businesses on general knowledge regarding trade secrets. A comprehensive protocol regarding trade secrets or importance of protecting confidential business information can sometimes be lacking.
Related to this issue is the inherent difficulty in gathering evidence when a trade secret has been misappropriated. Since trade secrets are, by definition, confidential, proving that such information has been wrongfully accessed, used, or disclosed requires a level of documentation and monitoring that many businesses are not equipped to maintain–especially in today’s age where practically everything work related is online in some level. Without clear records or monitoring system, it can be a difficult task to demonstrate misappropriation in a legal setting.
Furthermore, the modern working culture that is more mobile is also a challenge. As individuals move between companies, either within the same industry or across different sectors, they may inadvertently—or in some cases, deliberately—disclose sensitive information acquired from their previous employers. In the absence of strict contractual safeguards or proper employee training, these disclosures can severely undermine the competitive advantage that trade secrets are meant to protect.
How Can Businesses Safeguard Trade Secrets?
To ensure the best protection for your trade secret we recommend that companies take proactive steps to protect their confidential information:
- Implement confidentiality and non-disclosure agreements (NDAs) with employees, contractors, and business partners.
- Limit access to sensitive information through security protocols and restricted data access.
- Maintain clear documentation of efforts to keep information secret.
- Educate employees on the importance of confidentiality and the consequences of breaches.
Lastly, consulting an expert on how to fully comprehend and employ the best trade secret protection is a must. At Am Badar & Am Badar, our experienced team is more than ready to assist you in all matters regarding IP. Contact us at ambadar@ambadar.co.id
