Article 39 of the TRIPS Agreement

Besides protecting conventional rights to intellectual property, the United States also submitted a negotiating proposal concerning the protection of confidential information within an enterprise as a trade secret. This proposal met with steadfast opposition because the subject was alien to most of the negotiating parties and many negotiators were anyway of the opinion that the issue had nothing to do with intellectual property rights.

At this point the Swiss delegation compiled a compromise proposal. Since the WTO requires its Member States to ratify both the Paris and Bern Conventions, it was proposed that the 1883 Paris Convention, and specifically its Article 10bis concerning unfair competition, should be extended to cover trade secrets, too. In a way this cut the ground from under the feet of those countries which had opposed the new issues. Even though there might be differences of opinion concerning whether a trade secret is a form of intellectual property, it is hard to argue with the idea that the unauthorised use or disclosure of confidential information belonging to others is unfair. Article 39 of the TRIPS agreement thus took the following final form:

SECTION 7: Protection of undisclosed information

Article 39

1. 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 government agencies in accordance with paragraph 3.

2. Natural and legal persons shall have the possibility of preventing information lawfully within their control from being disclosed to, or acquired by, or used by others without their consent in a manner contrary to honest commercial practices (See footnote 10) 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

c) has been subject to reasonable steps under the circumstances, by the person lawfully in control of the information, to keep it secret.

3. Members, when requiring, as a condition of approving the marketing of pharmaceutical or of agricultural chemical products which utilise 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.

Footnote 10: For the purpose of this provision, "a manner contrary to honest commercial practices" shall mean 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 acquisition.

This article is considerably shorter than the original proposal submitted by the United States. It also employs expressions which are not generally used in this form in those countries which have enacted legislation proper to protect trade secrets.