Uganda passes Trade Secrets Protection Bill

On October 28 2008 the Parliament of Uganda passed the Trade Secrets Bill 2007.

The bill aims to provide legal protection to undisclosed information in commercial transactions. The bill protects such information against unlawful disclosure, acquisition or use by third parties in a manner contrary to honest commercial practice.

The bill provides for injunctive and monetary relief, including the payment of a royalty, for the misappropriation of trade secrets. It also provides for civil remedies for the misappropriation of trade secrets, and will repeal an act providing for criminal penalties for the theft or embezzlement of information in order to withhold the control of trade secrets.

Under Section 2 of the bill, a ‘trade secret’ is defined as information, including a formula, pattern, compilation, programme, device, method, technique or process, that derives independent economic value - actual or potential - from not being generally known to, and not being readily ascertainable by proper means by, other persons who could obtain economic value from its disclosure or use, and was the subject of efforts that were reasonable to maintain its secrecy under the circumstances.

Section 4 provides that disclosure, acquisition or use of a trade secret by improper means constitutes an infringement, unless such result is arrived at by independent development or reverse engineering. Reverse engineering is the process of discovering the technological principles of a device, object or system through the analysis of its structure, function and operation.

Under Section 5, ‘misappropriation’ represents theacquisition of a trade secret by a person who knew or had reason to know that the trade secret was being acquired by "improper means" (eg, theft, bribery, misrepresentation, breach, inducement of a breach of duty to maintain secrecy, and espionage through electronic or any other means).Under Section 6,‘misappropriation’ is also defined as the disclosure or use of a trade secret without express or implied consent by a person who:

used improper means to acquire knowledge of the trade secret;
at the time of disclosure or use, knew or had reason to know that his or her knowledge of the trade secret:
- derived from a person who had used improper means to acquire it;
- had been acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; or
- derived from a person who owed a duty to maintain its secrecy or limit its use; or
before a material change to his or her position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake.

Acts that are not contrary to honest commercial practice include obtaining the information:

from a publicly available source, such as a library;
through invention or discovery;
by gift, purchase or inheritance;
through government records in the public domain; and
through a person in lawful possession of the information under Section 7.

Section 9 gives the right to assign, transfer or license - wholly or partially - any trade secret subject to territorial limitation.

Under Section 12, remedies for infringement include:

an injunction;
damages;
an account of profits;
adjustment; and
delivery up/destruction.

However, a court cannot award both compensatory damages and an account for profits, as the plaintiff would be compensated twice for the same loss.

Section 20 of the bill provides for the preservation of secrecy. In a misappropriation action, the court must preserve the secrecy of an alleged trade secret by reasonable means, which include:

granting a protective order in connection with discovery proceedings;
holding a private hearing;
sealing the records of the action; and
ordering any person involved in the litigation not to disclose the alleged trade secret without prior court approval.

A misappropriation action must be brought within three years of the date on which the misappropriation was discovered (or should have been discovered by the exercise of reasonable diligence). Under Section 21,a continuing misrepresentation constitutes a single claim.

Lastly, the bill provides for civil remedies for the misappropriation of trade secrets. However, the bill will not affect:

contractual remedies (whether or not based on the misappropriation of a trade secret);
other civil remedies not based on the misappropriation of a trade secret; and
criminal remedies (whether or not based on the misappropriation of a trade secret).

Paul Asiimwe, Sipi Law Associates, Kampala

Uganda passes Trade Secrets Protection Bill

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