Resolving Trade Secret Disputes in Indonesia

A trade secret is a form of intellectual property that protects economically valuable information that is not generally known and is kept confidential by its owner. Unlike trademarks or patents, which obtain protection through registration or the grant of rights, trade secrets generally do not require registration to receive legal protection.

Protection exists for as long as the information genuinely satisfies the elements of a trade secret. Accordingly, in any dispute, the first issue is not simply whether information has been copied or used by another party, but whether the information genuinely constitutes confidential information protected by law.

When Can Information Be Protected as a Trade Secret?

Law No. 30 of 2000 on Trade Secrets defines a trade secret as information in the field of technology and/or business that is not known to the public, has economic value because it is useful in business activities, and is kept confidential by its owner.

There are therefore three principal requirements:

• The information must be secret, meaning that it is known only by particular parties or is not generally available to the public.

• The information must have economic value, meaning that it can be used commercially or provide an economic advantage to its owner.

• Confidentiality must be maintained, meaning that the owner or person controlling the information has taken reasonable and appropriate measures to prevent unauthorized parties from obtaining it.

The scope of trade-secret protection may include production methods, processing methods, sales methods, recipes, formulas, customer lists, business strategies, and other technological or business information having economic value and not known to the general public.

Trade Secrets Do Not Require Registration

Trade-secret protection does not depend on a registration certificate.

As long as the requirements of confidentiality, economic value, and protective measures are satisfied, the information may obtain protection under the law.

Recordation nevertheless remains relevant in the context of transfers of rights and licence agreements.

Where trade-secret rights are transferred or their use is authorized under a licence, recordation with the Directorate General of Intellectual Property is required under the applicable rules so that the administrative aspects and legal effects toward third parties can be properly managed.

Determining Whether an Infringement Has Occurred

In a dispute involving a recipe between two businesses, the first step is to determine whether the recipe is more than common knowledge or a formula that can readily be discovered and genuinely satisfies the requirements for trade-secret protection.

It is then necessary to determine how the other party obtained, used, or controlled the information.

Product similarity does not automatically constitute trade-secret infringement.

Where another party independently develops its own recipe, obtains the information lawfully, or uses it under a valid licence, the elements of infringement may not necessarily be satisfied.

Conversely, an infringement may arise where a person intentionally discloses a trade secret, breaches an agreement or obligation to maintain confidentiality, or acquires and controls a trade secret through means contrary to laws and regulations.

Licensing and Lawful Use

A trade-secret rights holder may grant a licence to another party.

A licence constitutes permission under an agreement to enjoy the economic benefits of a trade secret for a specified period and subject to specified conditions without transferring ownership of the right itself.

Where a party has a valid licence and its use remains within the scope of the agreement, such use will generally not constitute infringement.

A licence agreement should therefore clearly regulate the scope of use, term, restrictions on disclosure, parties permitted to obtain access, and obligations following termination of the commercial relationship.

Civil Proceedings before the Court

A trade-secret rights holder or licensee may bring civil proceedings against a party that intentionally and without authorization uses a trade secret, grants a licence without authority, or discloses it to a third party for commercial purposes.

Under Article 11 of the Trade Secrets Law, the remedies may consist of damages and/or an order to cease all infringing acts.

The claim is brought before the District Court.

In such proceedings, evidence establishing the status of the information as a trade secret and demonstrating how the infringement occurred becomes particularly important.

Arbitration and Alternative Dispute Resolution

The law also permits disputes to be resolved through arbitration or alternative dispute resolution.

These routes may be chosen where the parties have an arbitration agreement or agree to resolve the dispute through negotiation, mediation, or another alternative mechanism.

For disputes that are particularly sensitive to confidentiality, non-litigation mechanisms may be considered because the parties may have greater ability to structure a more private procedure.

Their effectiveness nevertheless depends on agreement between the parties and the drafting of the dispute-resolution clause in the relevant contract.

Criminal Proceedings as a Complaint-Based Offence

In addition to civil remedies, the Trade Secrets Law contains criminal provisions.

Under the wording contained in the original manuscript, a person who intentionally and without authorization uses another party's trade secret or commits an act categorized as an infringement may face imprisonment for up to two years and/or a fine of up to IDR 300 million.

A trade-secret offence is a complaint-based offence. Criminal proceedings therefore generally require a complaint from the injured party.

A trade-secret owner seeking criminal enforcement should consequently file a complaint with the competent law-enforcement authorities and prepare evidence demonstrating both the existence of the right and the alleged infringement.

Evidence That Should Be Prepared

Internal documentation plays an important role in trade-secret disputes.

The owner should ideally be able to demonstrate when the information came under its control, who had access to it, the confidentiality policies that were applied, agreements with employees or business partners, data-access records, and evidence that the information has economic value.

Confidentiality clauses, non-disclosure agreements, system-access restrictions, confidential document markings, access-right controls, and procedures for returning information after an employment or commercial relationship ends may help demonstrate that the owner took reasonable and appropriate measures to maintain confidentiality.

Closing

Trade secrets do not require registration to obtain protection, but an owner must still be able to establish that the information is confidential, has economic value, and has genuinely been subject to confidentiality measures.

Without adequate protection measures, the owner's position may become significantly weaker when a dispute occurs.

Where an infringement occurs, resolution may be pursued through civil claims, cessation of infringing conduct, arbitration or alternative dispute resolution, and, in certain circumstances, criminal proceedings as a complaint-based offence.

The appropriate route should be assessed according to the rights holder's objectives, the strength of the available evidence, the need to preserve confidentiality, and the commercial consequences of the dispute.