Introduction

Trade Secrets have always been one of the crown jewels of any business. There are three major criteria (Trade Secrets, n.d.) for an information to be identified as a trade secret, namely –

1. it must be a secret, i.e., it is known only to a few people,
2. it must have a commercial value, and

• it must be subject to reasonable steps

The legendary recipe of Coca-Cola, locked away in a vault, Google’s search algorithm, a secret mixing information across various measurable standards to personalize search results, KFC’s original recipe, kept in a safe in Kentucky, and known only to a select few employees, or the WD-40’s multi-use formula. The businesses have gone to extreme lengths to keep their trade secrets safe, which in turn ensures that their product remains unique, further adding to its appeal.

Being such an asset, these Trade Secrets are under constant threats of cyberattacks, corporate espionage, and internal leaks. According to a 2014 PwC Report (CREATe.org & PwC, 2014) on Economic Impact of Trade Secret Theft, trade secret thefts lead to a loss of around 1-3% of the global GDP annually. This report also highlighted that trade secret thefts cost the US nearly $300 billion USD annually. Further studies suggest that such acts may cause a business to lose around 30-40% (EUREKA, n.d.) of the market share, in addition to the loss of its reputation and other costs. The dramatic growth of technology in today’s digital age has further facilitated cyberattacks on such assets, leading to great economic losses to businesses and economies alike.

While attacks have become more sophisticated, so has the defense. One such defense is blockchain technology, an almost impenetrable digital vault, promising to keep all such secrets (and possibly more) safe and secure. It guarantees decentralization, immutability, and transparency. Blockchain, while being mostly associated with cryptocurrencies and such, has recently changed the game by finding its seemingly untapped potential in securing sensitive business data. But how exactly does this digital marvel work, and why should businesses jump into this bandwagon to secure their secrets?

Current Trade Secret Protection Mechanism

Article 39 (TRIPS, n.d.) of the TRIPS (Trade Related aspects of Intellectual Property Rights) Agreement and the Paris Convention, mandates all the parties to ensure a minimum level of protection for “undisclosed information”, which may be interpreted to include trade secrets as well, provided they qualify the above-mentioned three criteria. The countries are thus required to ensure such information is protected. This protection may depend upon the laws or practices applicable in the country, and may differ in the degree of protection. In the USA, trade secret protection is treated as a complement (United States Patent and Trademarks Office, n.d.) to patent protection. The states have their own laws governing such protection and to prevent unfair competition, as well as federal laws, such as the Economic Espionage Act (Economic Espionage Act, 1996) and the Defend Trade Secrets Act (DTSA) (Defend Trade Secrets Act, 2016). Other nations ensure this protection by law of confidence (Part III: Basics of trade secret protection, n.d.),  or even under Contract as well as Employment Laws.

The traditional methods often used to protect and shield trade secrets include practices such as non-disclosure agreements (NDAs), aggressive litigation, restrictive physical access, etc. WIPO (How to protect trade secrets, n.d.) also suggests various measures to protect trade secrets such as confidentiality, limiting physical and technological access to such information, NDAs, ensuring a “need to know” basis for such information and reviewing it periodically, etc.

Despite being fundamental, these approaches are obviously inadequate to handle contemporary challenges. Companies require a strong, proactive solution, a fortress suitable for the twenty-first century, and blockchain may be the answer.

Enter Blockchain

Imagine a treasure chest, where every piece of the key is scattered across thousands of locations, and no single person has access to the complete key, or, a diary, where every page or entry is locked, and the key changes with every entry. That is blockchain (What is blockchain?, n.d.). It is essentially a distributed database or ledger spread across a computer’s nodes. It decentralizes data storage across a network of computers, eliminating a single point of failure, and ensuring that even if one part is compromised, the overall system remains secure.

Globally, adopting blockchain technology for securing Intellectual Property (IP) has already started to gain momentum, with countries like Japan (Mao & Fujii, 2023) introducing guidelines for its integration within its patent systems, and South Korea (Bin, Yasin, & Rahman, 2023) exploring blockchain for IP management.

Here’s how it functions:

Encryption: The information, in this case, the trade secrets, are encrypted before being stored in the blockchain, meaning this information would be useless without first being decrypted, which would be almost impossible for unauthorized eyes.

Permissioned Access: Only verified parties, who have the access to decrypt this information, can access the data, ensuring its safety.

Immutable records: Each access and/or modification is digitally logged, timestamped and permanently stored, thus creating a robust mechanism.

Smart Contracts (What Are Smart Contracts? Automated Blockchain Agreements Explained, 2025): Digital agreements automatically enforce NDAs based on blockchain technology, reducing reliance on human oversight.

Picture this – an automobile manufacturing company uses the blockchain technology to protect its proprietary designs for a revolutionary new technology related to electric vehicles (EVs) that enables the EV to travel over long distances without having to recharge its batteries, and without compromising its speed related performances, essentially meaning long range and high speeds. By storing the schematics for its designs on the blockchain, access is managed through encrypted keys and permissions, aligning with the global TRIPS agreement standards.

Additionally, the blockchain’s immutable record-keeping can serve as a robust tool to prove ownership and misappropriation of trade secrets during litigation under the DTSA.

Practical Implementation of this technology

• Coca-Cola

In 2020, Coca-Cola (Jr, 2024) turned to blockchain for supply chain management, ensuring the confidentiality of proprietary formulas and vendor contracts (Coca-cola will verify suppliers with blockchain, 2018). Using encrypted blockchain networks, the company automated compliance checks and secured its sensitive data.

• Boeing

Boeing (Innovation Quarterly, 2019) has been leveraging blockchain technology to safeguard its aerospace designs and IP. The company’s blockchain system records ensure tamper-proof documentation and restricted access to authorized personnel only.

• Infosys

Infosys (Shrivastava, 2020) has also incorporated blockchain for managing client data and proprietary algorithms. Infosys could further leverage this technology to comply with IP protection laws and conventions such as the TRIPS, etc.

• Telangana Government initiatives

Telangana government’s (Telangana State Blockchain Framework, 2019) blockchain based land record initiative offers a model for how this technology could be utilized in India to secure IP. This further aligns with India’s National Blockchain Framework (NBF) (Vishvasya: National Blockchain Technology Stack, n.d.), which envisions adoption of Blockchain technology across different industries and sectors, including IP.

India’s untapped potential

India’s technology ecosystem, combined with government initiatives for digital transformation provide the appropriate conditions for blockchain adoption. Initiatives like the NBF and the Digital Personal Data Protection Act (DPDPA), combined with the IPR laws already present, have the potential (with the appropriate amendments provision for blockchain adoption) to create a robust regulatory foundation for blockchain integration.

Consider Indian IT industries, heavily reliant on innovation and secrecy. By incorporating blockchain technology, they can efficiently protect their sensitive data, including their trade secrets. Further, blockchain can help small businesses, often unable to access high-end security mechanisms, level the playing field. It can also help companies build trust and reputation at a global level, which would be beneficial for both the companies as well as the Indian economy.

What do the experts say about this?

Industry heavyweights such as Vitalik Buterin (Hackett, 2016), the creator of Ethereum (Ethereum, n.d.), believe that blockchain’s utility extends far beyond cryptocurrencies. He claims that decentralization is not being pursued for its own sake. It is about developing systems that are resilient, secure, and equitable.

On the other hand, skeptics like Nicholas Weaver (Why This Computer Scientist Says All Cryptocurrency Should “Die in a Fire”, n.d.), a UC Berkeley researcher, has cautioned that blockchain’s hype, may outpace its practical utility. According to him, all cryptocurrencies are essentially “harmful viruses,” that should “die in a fire.” And since cryptocurrencies are fundamentally based on blockchain technology, this doesn’t sound too well for blockchain either, at least from Weaver’s perspective.

Adding to this drama, a recent study (Blockchain Market, 2024) has shown that the global blockchain market may potentially grow from USD 20.1bn in 2024 to USD 248.9bn in 2029. That is a staggering 1138% increase – a number that should make even the most skeptical critics pay attention.

Conclusion

Blockchain can be a paradigm shift in the field of IPR protection, especially trade secrets. By securing trade secrets in an immutable, transparent and decentralized environment, blockchain offers a possible solution, that is innovative and inevitable. However, a lack of comprehensive regulatory frameworks raises concerns. Without standards on data ownership, jurisdiction, and liability, conflicts may occur, which, in the absence of norms governing disputes, could lead to additional complexity.

International cooperation through amendments to existing conventions and agreements, or the signing of blockchain-IP specific agreements could ensure a positive global impact.

India should take the initiative and lead, rather than simply following. It should seize this opportunity by riding the technological growth wave and transforming its industry and legislative structures to create a resilient and technologically sophisticated environment.

But here’s the actual question: What happens if we fail to appropriately govern blockchain technology, given its untapped potential to change industries and global trade? Will we witness a new era of secure invention and global collaboration, or will the lack of monitoring result in anarchy, exploitation, and unanticipated global consequences? Blockchain’s future depends not just on its promises, but also on how we choose to shape its global consequences.

Author: Shivam Jaiswal, in case of any queries please contact/write back to us via email to [email protected] or at IIPRD. 

References

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Economic Espionage Act. (1996). United States of America.

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