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A trade secret is information of commercial value that companies and commercial enterprises keep confidential in order to gain a competitive edge and protect their market position. Such information is among the information that can directly affect a company's economic success and efficiency and that must therefore be carefully protected. The effective protection of trade secrets is a critical factor enabling companies to maintain their competitive advantage and safeguard their innovative activities. The Turkish legal system provides legal mechanisms for the protection of trade secrets under the rules on unfair competition. In our article, we have addressed these matters in detail.
Definition of a Trade Secret
A trade secret is information of commercial value that companies and commercial enterprises keep confidential in order to gain a competitive edge and protect their market position. Such information is among the information that can directly affect a company's economic success and efficiency and that must therefore be carefully protected. According to the definitions found in Turkish law and international conventions and to case law, a trade secret is, in general, information that is not readily known to the public or in the relevant business circles, that is confidential in nature and that provides its owner with economic value.
A trade secret may be defined differently in a narrow and in a broad sense. In the broad sense, a trade secret covers information and documents relating to the field of activity of a commercial enterprise or company that are known only to a limited number of its members, employees and other officers, that could harm the company if learned in particular by competitors, that have not been disclosed to the public or to third parties, and that are of critical importance for the enterprise's economic success and efficiency. This broad definition includes information in a variety of areas such as internal structure, organisation, financial position, research and development activities, business strategies, sources of raw materials, technical specifications of products, pricing policies, marketing tactics, market shares, customer potential and networks, and contractual connections.
In the narrow sense, a trade secret is defined as information that is used in the course of a commercial activity, that gives an advantage over competitors, that remains confidential and that provides economic benefit to the merchant, whether a natural or legal person. This narrow definition covers information such as technical production secrets, production methods, chemical formulas, quality control procedures, research and development plans, business and financial projects, customer lists, cost and pricing strategies, machine drawings, and strategic and financial reports.
According to the Agreement on Trade-Related Aspects of Intellectual Property Rights and the definitions of the Court of Cassation (Yargıtay), a trade secret covers information that meets three basic characteristics:
Confidentiality: The information must not generally be known to, or readily obtainable by, persons in the relevant business circles. This means that the information is known only to a limited group of persons and is closed to general access.
Commercial Value: The information must have commercial value because it is kept confidential. That is, the fact that the information is not known to competitors gives the company a certain competitive advantage, and this advantage creates economic value.
Reasonable Measures to Preserve Confidentiality: Reasonable measures must have been taken by the owner of the information to preserve its confidentiality. This means that the company takes physical, technical or legal measures to protect the information and continuously reviews those measures.
One of the best-known examples of the concept of a trade secret is the Coca-Cola formula. Coca-Cola has taken extensive measures to preserve the confidentiality of its formula; for example, the formula is known to only a very limited number of people and is kept in a physically secure vault. These measures ensure that the information is accessible only under certain conditions, thereby effectively making it a trade secret.
Protection of Trade Secrets
The protection of trade secrets is vital for businesses today, because trade secrets play a critical role in enabling a business to preserve its competitive advantage and strengthen its position in the market.
The provisions under the heading of unfair competition, found in Article 54 et seq. of the Turkish Commercial Code No. 6102, regulate the protection of trade secrets. According to Article 54 of the TCC, “Deceptive conduct or other conduct contrary to the principle of good faith, as well as commercial practices, that affect the relations between competitors or between suppliers and customers are unfair and unlawful.” By regulating tortious liability in this way, it forms the fundamental basis of trade secret protection. Unfair competition is the abuse of economic competition by deceptive conduct or by other means contrary to the rules of good faith.
Article 55, paragraph 1(b)(3) of the TCC diversifies the acts that constitute unfair competition. In this context, “inducing employees, agents or other auxiliary persons to disclose or obtain the production and business secrets of their employers or principals” is regarded as unfair competition. For example, where an employee of a company leaks outside, in return for financial consideration, secrets learned by virtue of his or her duties, the person who receives that information is deemed to have engaged in unfair competition under Article 55/1(b)(3) of the TCC.
At the same time, Article 239 of the Turkish Penal Code (TPC) defines the disclosure of trade secrets to unauthorised persons as a criminal offence and provides penalties such as imprisonment and judicial fines for those who commit it.
Turkish law also contains specific regulations on the protection of trade secrets. For example, the Electronic Communications Law and the Law on the Protection of Competition contain provisions that protect the confidentiality of trade secrets. These laws emphasise the prohibition on the relevant institutions and their employees disclosing or misusing trade secrets.
Measures That Can Be Taken Against Breaches of Trade Secrets
Confidentiality Agreements: Businesses can ensure the protection of trade secrets by signing confidentiality agreements with their employees and business partners. These agreements place the parties' obligation not to disclose trade secrets on a legal footing.
Access Controls: Businesses can ensure the protection of their trade secrets by restricting access to them and carefully managing access rights. This can be achieved through physical and digital access controls.
Training and Awareness: It is important to train employees on the importance and protection of trade secrets and to raise their level of awareness. This can help prevent potential breaches.
Legal Sanctions: Determining the legal sanctions to be applied in the event of unauthorised use of trade secrets provides deterrence. This can be achieved through legal proceedings and actions for damages.
Technological Security Measures: Protecting trade secrets through information technology is of great importance today. The protection of trade secrets can be ensured through technological measures such as data encryption, firewalls and penetration testing.
These measures help businesses protect their trade secrets and make it possible to have recourse to legal remedies in the event of a breach.
Legal Remedies Available in the Event of a Breach
A declaratory action may be brought to determine whether trade secret protection has been breached. This type of action is brought to establish whether an act constitutes unfair competition. In particular, the fact that unlawful access to information is also regarded as unfair competition increases the importance of this type of action. Businesses may request a declaration that acts constituting unfair competition have occurred even before they suffer harm. This is of great importance especially for the protection of trade secrets.
If trade secrets have been unlawfully disclosed, an action for the prevention of unfair competition may be brought in order to stop this. This action, brought to prevent acts of unfair competition, makes it possible to stop existing or potential unlawful acts. An action for prevention is important for protecting threatened rights or preventing repeated unlawful acts. The court may order that a particular act be done or not be done.
If pecuniary loss has arisen as a result of the unlawful disclosure of trade secrets, an action for the rectification of the material situation may be brought, seeking the destruction of the instruments and goods affected by the unfair competition, in order to remedy that loss and prevent possible further infringement. The subject matter of this action is not merely the likelihood of a threat but the concrete consequences of the act of unfair competition. In particular, losses arising from the disclosure or use of trade secrets may be remedied by this type of action.
Persons who have suffered harm as a result of the breach of trade secrets may bring an action for pecuniary damages to compensate for that harm. Within the framework of the principles of tortious liability, the injured party must prove the existence of the damage and of fault. The amount of the damage may be determined by taking into account the benefit the defendant obtained from the unfair competition. In addition, under the conditions set out in Article 58 of the Turkish Code of Obligations, persons who have suffered non-pecuniary harm from the unlawful disclosure of trade secrets have the right to bring an action for non-pecuniary damages.
In unfair competition actions, publication of the court decision to the public may be requested. This is important both for restoring the reputation of the party in whose favour the case is decided and for increasing the deterrent effect against unfair competition.
Article 60 of the Turkish Commercial Code regulates the limitation periods for actions that may be brought against acts of unfair competition. In this regard, actions must be brought within one year from the date on which the breach of trade secrets was discovered or, at the latest, within three years from the date on which the breach was committed. The TCC and the relevant decisions of the Court of Cassation (Yargıtay) clearly determine who may bring unfair competition actions and against whom they may be brought. While businesses, customers, and professional and economic associations have the right to bring an action, those who commit the act of unfair competition, their auxiliaries or the relevant members of the press appear as defendants.
Article 63 of the TCC makes it possible to take the necessary measures for rectifying the material situation arising from unfair competition, preventing unfair competition and correcting false statements. Under Articles 101-113 of the Code of Civil Procedure (HUMK), a request for an interim injunction may be made before or after the action is brought. An interim injunction may be granted in urgent cases and where there is a risk of significant harm arising.
Article 64 of the TCC provides that imprisonment or a fine, or both together, may be imposed on persons who commit acts of unfair competition intentionally. These criminal sanctions also cover acts of disclosing or obtaining manufacturing or trade secrets. The prosecution of such an offence takes place upon the complaint of those who have the right to bring a civil action.
Conclusion
A trade secret comprises three basic elements, namely confidentiality, economic value and protective measures, and is vital for companies. The effective protection of trade secrets is a critical factor enabling companies to maintain their competitive advantage and safeguard their innovative activities. The Turkish legal system provides legal mechanisms for the protection of trade secrets under the rules on unfair competition. While these mechanisms form the legal framework necessary for the protection of trade secrets, they offer a fair means of resolution for preventing breaches and for cases where breaches occur. It is important for businesses to be aware of these provisions and to take the necessary measures in order to protect trade secrets and achieve sustainable success. In the event of a breach of trade secrets, legal and criminal sanctions may be applied under the Turkish Commercial Code and the Turkish Penal Code. For this reason, it is of great importance for businesses to adopt a proactive approach to protecting their trade secrets and to take the necessary measures within the framework of the legal provisions. Accordingly, it is essential for businesses to be aware of these protection mechanisms and to take the measures necessary to protect their trade secrets effectively.
