KUALA LUMPUR, June 23 — The formula for Coca-Cola could perhaps be the world’s most famous trade secret. Until recent times, it was kept locked in a bank vault that can be opened only by a resolution of the Coca-Cola Company’s Board of Directors.

Only two Coca-Cola employees ever know the formula at the same time and their identities are never disclosed to the public. They are also not allowed to fly on the same airplane!

It was Dr John Pemberton who invented Coca-Cola in 1886, and the formula was kept a close secret, only shared with a small group and was not written down.

In 1891, Asa Candler became the sole proprietor of Coca-Cola after purchasing the rights to the business. In 1919, Ernest Woodruff and a group of investors purchased the company from Candler and his family.

To finance the purchase, Woodruff arranged a loan and as collateral he provided documentation of the formula by asking Candler’s son to commit the formula to paper. This was placed in a vault in the Guaranty Bank in New York until the loan was repaid in 1925.

Woodruff reclaimed the secret formula and returned it to Atlanta and placed it in the Trust Company Bank, now SunTrust, where it remained until its recent move to a new home.

In December 2011, the Coca-Cola company did something rather extraordinary. For the first time in history, the vault containing the trade secret formula that makes up the Coca-Cola empire was made visible to the public in a permanent exhibit titled “The Vault of the Secret Formula.”

The exhibit opened on December 8, 2011 at the World of Coca-Cola, which is a 60,000-square foot interactive Coca-Cola museum featuring more than 1,200 artefacts from around the world.

The secret Coca-Cola formula had not been moved for 86 years since 1925, but the Coca-Cola company moved the 125-year-old secret formula for Coca-Cola to the said new home in Atlanta.

As the capstone to the 125th anniversary year of Coca-Cola (in 2011), the Company decided to share the history of its secret formula in this new exhibit where visitors can experience one of the world’s most recognised brands like never before.

So what are trade secrets?

In most cases, a trade secret may consist of any formula, patent, physical device, idea, process or compilation of information that provides the owner of the information with a competitive advantage in the marketplace, and is treated in a way that can reasonably be expected to prevent the public or competitors from learning about it, improper acquisition or theft.

Some examples of potential trade secrets are a formula for a sports drink, survey methods used by professional pollsters, recipes, a new invention for which a patent application has not yet been filed, marketing strategies, manufacturing techniques, and computer algorithms.

Unlike other forms of intellectual property such as patents, copyrights and trademarks, trade secrecy is basically a do-it-yourself form of protection. You don’t register with the government to secure your trade secret; you simply keep the information confidential.

Trade secret protection lasts for as long as the secret is kept confidential. Once a trade secret is made available to the public, trade secret protection ends.

How can businesses protect their trade secrets?

Simply calling information a trade secret will not make it so. A business must affirmatively behave in a way that proves its desire to keep the information secret. Some companies go to extreme lengths.

Fortunately, extraordinary trade secrecy protection measures are seldom necessary. Although you should take reasonable precautions to protect any information you regard as a trade secret, you don’t have to turn your office into an armed camp to do so.

Sensible precautions include marking documents containing trade secrets “Confidential,” locking trade secret materials away after business hours, maintaining computer security and only providing access to secret information to people with a reasonable need to know.

But the very best way to protect trade secrets is through use of nondisclosure agreements. Courts have repeatedly reiterated that the use of nondisclosure agreements is the most important way to maintain the secrecy of confidential information.

A trade secret owner can enforce rights against someone who steals confidential information by asking a court to issue an order preventing further disclosure or use of the secrets. A trade secret owner can also collect damages for any economic injury suffered as a result of the trade secret’s improper acquisition and use.

However, the court may consider a few important factors relevant to determining whether the trade secret information satisfies the secrecy requirement. These factors include the extent to which the information is known outside the business, the extent to which the information is known by employees and others involved in the business, the extent of the measures undertaken by an employer to protect the secrecy of the information, the value of the information to the employer, the amount of effort or money expended by the employer in developing the information and the ease or difficulty with which the information could be properly acquired or duplicated by others.

How can a trade secret owner commercialise their trade secret invention via a third party?

A trade secret can be commercialised by licensing the trade secret via a licence agreement. In this instance the licence agreement is called Know-how Transfer Agreement. Such agreements should have strong confidentiality clauses and identify mechanisms that will be employed by the licensee to protect the disclosed trade secret under the Know-how Transfer Agreement.

How can we help?

PlaTCOM Ventures specialises in technology transfer and commercialisation of Intellectual Property Rights (IPRs) via end-to-end facilitation. As such, we help SMEs, universities and research institutes to transfer their trade secrets via Know-how Transfer Agreements to interested parties for further development and commercialisation of these inventions. For further information, please contact us at info@platcomventures.com

* Dr Viraj Perera is the CEO of PlaTCOM Ventures Sdn Bhd – the national technology commercialisation platform of Malaysia — a wholly owned subsidiary company of Agensi Inovasi Malaysia (AIM) formed in collaboration with SME Corp Malaysia.