Question

For years, Coca-Cola Corporation did not enter India since the government wanted some kind of disclosure of their trade secrets. Why are trade secrets so important and what happens if a licensee or a government gains access to the licensor's trade secret?For years, Coca-Cola Corporation did not enter India since the government wanted some kind of disclosure of their trade secrets. Why are trade secrets so important and what happens if a licensee or a government gains access to the licensor's trade secret?

Answer 1

Trade secrets of an organization are treated as classified information. The information has commercial importance and is not made public. The secrets may be related to product information, client list, suppliers, etc. Basically, any secret information that differentiates one company from another can be classified as a trade secret. The formula for Coco-Cola, for example, is protected as a trade secret by the company.

Companies spend a large amount of money on making their products innovative. The business market is extremely competitive and a unique selling point is vital for any business to succeed and maintain its dominance in the market. A lot of effort is carried out in perfecting and implementing the manufacturing, distribution, and advertising activities of a business. A company like Coco-cola understands the importance of its formula in making it the dominant global brand that it has been for decades. If a competitor acquires any of this information, then it will lose its uniqueness which in turn will impact its market share and competitiveness in the market.

Trade secrets need to be handled with extreme caution. If a trade secret is publicly revealed due to the company’s actions or negligence then it loses its protection. It is imperative that companies make their employees sign a non-disclosure agreement and also limit the access of information to minor employees to offset any possibility of their secrets being leaked.