Sri Lankan businesses must protect their competitive advantages, particularly because of the advent of globalization, digitalization, and cross-border trade that offer opportunities and drawbacks. 

Patents, copyrights, and trademarks are common forms of value-generating intellectual property (IP). But so, too, are trade secrets. The thing is, however, that trade secrets are often underappreciated and underprotected.

A trade secret is any confidential business information that gives a competitive edge—anything from customer lists to exclusive ways of producing things. Unlike patents, trade secrets aren’t subject to public disclosure. In fact, trade secrets lose their enforceability if they’re disclosed, whether intentionally or mistakenly.

Businesses that have specific questions about trade secrets should talk to a trade secrets expert. It’ll help to navigate the process of identifying and protecting IP. 

What follows are five things that Sri Lankan companies should know about trade secrets.

1. What is a Trade Secret?

Some Sri Lankan companies, and especially SMEs, remain uncertain about what kind of information constitutes a trade secret. In general terms, trade secrets can involve things like the following:

• Manufacturing methods

• Recipes

• Business plans

• Lists of customers and suppliers

Remember that the trade secret must be out of the public domain, afford a competitive advantage, and be kept confidential.

Courts and regulators will only protect the information as a “trade secret” if there are attempts to keep it confidential.

2. The Legal Position in Sri Lanka

Although Sri Lanka doesn’t have a distinct act on trade secrets, they’re dealt with under current law and international treaties. Confidential information is protected under the Intellectual Property Act No. 36 of 2003, for instance, if:

• It’s not public.

• It has commercial value because it’s a secret.

• Reasonable measures are taken to maintain secrecy.

Further, Sri Lanka is part of the World Trade Organization and falls within the Trade-Related Aspects of Intellectual Property Rights Agreement. Members commit to safeguarding undisclosed information.

So, Sri Lankan companies do have a legal remedy to fall back on in case their trade secrets are exploited unscrupulously. But enforcement requires demonstrable efforts to protect trade secrets.

3. Practical Measures to Protect Trade Secrets

Sri Lankan businesses must set up contractual and working controls to safeguard secrecy. Appropriate means of accomplishing this include worker training, non-disclosure pacts, worker exit procedures, and access controls.

Without these procedures in place, businesses won’t be able to claim legal protection if rivals use their confidential information.

4. Risks Sri Lankan Businesses Typically Face

Sri Lankan companies face several threats on the trade secrets front. Threats include, among other things, employee turnover, cybersecurity vulnerabilities, joint ventures, and outsourcing.

As an example, before venturing into a joint venture with a foreign company, a Sri Lankan business should ensure proper confidentiality agreements.

5. The Value of Trade Secrets in Business

Protecting trade secrets will help Sri Lankan businesses obtain a competitive advantage, attract investors, and facilitate growth. Specifically, trade secrets can become the basis of Sri Lanka’s long-term competitiveness in the tea, garment, IT, tourism, and other sectors.

Trade secrets are powerful intellectual property vehicles for Sri Lankan businesses. Ranging from recipes and customer lists to algorithms and business tactics, trade secrets can be key differentiators in the competitive marketplace.

By understanding the ins and outs of trade secrets, Sri Lankan organizations can strengthen their position in international and regional markets. Whether big, small, or somewhere in between, Sri Lankan businesses must view the protection of their trade secrets as key to ensuring their long-term success.

Businesses that want more guidance should consider sitting down with a trade secrets expert. It’s a strategic investment that can provide clarity and help inform sound decision-making.