In 2024, the average cost of a single trade secret breach for an international company exceeded $4.45 million, with 62% of incidents linked to insider risks and industrial espionage (according to IBM, European Union Intellectual Property Office, JETRO). These numbers are not just impressive; they underscore that trade secrets are no longer an abstract concept but a tangible strategic asset crucial for competitive advantage, business valuation, and resilience in international markets.
Amidst tightening trade secret legislation, rising cyber threats, and globalization of business processes, protecting confidential information becomes essential for companies operating in the EU, Asia, and CIS. How to establish an effective trade secret regime in an international structure? Which measures effectively counter leaks and industrial espionage? How to integrate AML and compliance requirements into a unified corporate policy? I will address these and other questions in this article, drawing on COREDO’s practical experience in company registration, obtaining financial licenses, and business support across various jurisdictions.
If you want to not only understand the nuances of legislation but also receive step-by-step recommendations for building a trade secret protection system, I recommend reading the material to the end.
Trade Secrets – What They Are and Their Types
At COREDO, we often encounter clients who confuse trade secrets with other types of confidential information, leading to errors in organizing internal access control and forming corporate security policies.
For more effective information protection, it is important to understand which laws and standards regulate trade secrets and confidentiality matters.
Trade Secrets: Laws and Standards
In different jurisdictions, trade secret legislation is based on similar principles but differs in details. The EU has Directive 2016/943, which outlines minimal standards for trade secret protection, as well as GDPR and ISO 27001, which set frameworks for data and information security management. Singapore, the UK, Czech Republic, and Estonia have their own laws and regulatory acts governing features of trade secrets, protection measures, and liability for disclosure.
Types of Trade Secrets and Protection Features
Key features of trade secrets:
- The information has actual or potential commercial value.
- It is not publicly accessible.
- A trade secret regime is applied (organizational, technical, and legal measures).
- Information can be expressed in any form: from technological processes to client databases and business strategies.
Trade Secrets vs. Confidential Information: What’s the Difference?
Trade secrets are different from other types of confidential information (such as personal data or trade secrets) not only in characteristics but also in the protection regime. NDA (non-disclosure agreement) and internal regulations are basic tools, but a stricter organization is required for trade secrets: access restriction, digital document marking, implementation of data storage and destruction policy, as well as regular audits.
Therefore, effective protection requires a systematic approach combining organizational, technical, and legal measures, which we will discuss further.
Trade Secret Protection – Main Measures
Effective trade secret protection is impossible without a comprehensive approach combining organizational, technical, and compliance measures. COREDO’s practice confirms: only the integration of these elements allows the creation of a sustainable trade secret regime compliant with international standards.
| Category of Measure | Description | Examples of Tools/Documents |
|---|---|---|
| Organizational | Internal regulations, training, NDA | Trade Secret Policy, instructions, training, NDA |
| Technical | DLP, MDM, access control, digital marking | DLP systems, MDM, digital marking |
| Compliance and Audit | Internal audit, ISO, GDPR compliance | Audit, ISO 27001, GDPR compliance procedures |
Organizational Trade Secret Protection Measures
At COREDO, we recommend:
- Creating a list of information constituting a trade secret.
- Implementing internal access control and access management system.
- Training employees to work with trade secrets, including regular information security and insider risk training.
- Concluding NDAs with staff, contractors, and external consultants.
Example: For a client in the fintech sector, the COREDO team developed a comprehensive corporate security policy, including whistleblowing procedures, Due Diligence in M&A and internal regulations for data storage and destruction.
DLP Systems, MDM, and Digital Marking
These tools not only limit access to information but also monitor unauthorized copying or transfer attempts.
In one of COREDO’s cases for a large holding structure in the EU, we integrated a DLP system with data storage and destruction policy, which reduced information leak risks during remote work and IT function outsourcing.
AML and Trade Secret Protection
The solution developed at COREDO for an international payment company included an information security audit, implementation of ISO 27001, regular GDPR checks, and training of compliance officers on trade secret management.
Trade Secret Protection Abroad
Cross-border operations and outsourcing increase data leak risks and require special attention to legal aspects of trade secret transfer, protection in holding structures, and interactions with contractors.
COREDO’s practice showed that risk minimization is achieved through:
- Implementing a multi-level access control system.
- Using international standards (ISO 27001, GDPR).
- Concluding detailed non-disclosure agreements and contractor liability agreements.
Information Leaks: Risks and Liability
Even the most advanced system does not guarantee absolute protection from information leaks. Thus, incident management and clearly defining liability for trade secret disclosure become key elements of trade secret management.
Sources of Data Breaches and Scenarios
In international practice, cases of leaks through outsourcing, cloud services, and remote work are also common.
What to Do in Case of a Trade Secret Leak
The COREDO team recommends the following step-by-step plan:
- Immediately localize the incident (limit access, isolate systems).
- Conduct an information security audit and forensic investigation into the trade secret leak.
- Notify interested parties (internal whistleblowing, partners, regulators).
- Assess damage and initiate legal proceedings (including filing lawsuits).
- Review and enhance trade secret protection measures.
Liability for Trade Secret Disclosure
Liability for trade secret disclosure in the EU, Asia, and CIS includes civil, administrative, and criminal measures. In cross-border operations, proving the leak and forensic investigation, as well as interjurisdictions cooperation, become particularly important.
Trade Secret Protection System Audit
Regular audits of the trade secret protection system are a necessary condition for maintaining its effectiveness and international standard compliance. Such audits reveal vulnerabilities, assess ROI from implemented measures, and prepare the company for regulator inspections.
Business Process Audit Checklist
- Classify confidential information.
- Check the presence and relevance of internal regulations.
- Evaluate the effectiveness of the access management system.
- Verify employee training and their awareness of the trade secret policy.
- Analyze technical protection means (DLP, MDM, digital marking).
- Evaluate the company’s readiness to respond to incidents.
ROI Evaluation of Trade Secret Regime
COREDO’s experience shows companies that regularly invest in audits and training achieve better market capitalization and stability.
Cases and Legal Practice on Trade Secrets
Let’s look at common mistakes and gaps in protection systems and a review of court cases in the EU and Asia.
Common Mistakes in Protection Systems
- Lack of clear information classification and internal regulations.
- Insufficient employee training.
- Ignoring technical protection measures in remote work and outsourcing.
- A formal approach to concluding NDAs without subsequent execution control.
Court Cases in the EU and Asia
In 2023, a court in Germany recognized industrial espionage only due to digital document marking and DLP system logs. In Singapore, successful damage recovery became possible after integrating compliance and AML procedures into a corporate security policy.
Practical Recommendations for Businesses
Effective trade secret protection: is an ongoing process, requiring a strategic approach and regular improvement.
Trade Secret Protection Checklist
- Classify confidential information.
- Implement internal regulations and trade secret policy.
- Ensure employee training and regular workshops.
- Conclude NDAs and agreements with contractors.
- Use DLP, MDM, and other technical means.
- Conduct regular audits and efficiency evaluations.
- Integrate AML and compliance requirements.
- Develop an incident response algorithm.
If you are interested in establishing a sustainable trade secret protection system, the COREDO team is ready to share their experience, conduct an audit, and offer solutions proven in practice in the EU, Asia, and CIS.
[^1]: IBM Security, Cost of a Data Breach Report 2024
[^2]: European Union Intellectual Property Office, “Trade Secrets and Confidential Business Information: The Evidence from the EU,” 2023
[^3]: JETRO, “Intellectual Property Protection in Asia,” 2024
[^4]: Directive (EU) 2016/943 of the European Parliament and of the Council
[^5]: GDPR (General Data Protection Regulation)
[^6]: ISO/IEC 27001:2022
[^7]: Singapore Trade Secrets Law (Case Law Overview)
[^8]: Estonian Information Security Standard (E-ITS)