Know-How Protection

Introduction

Know-how refers to practical knowledge, expertise, and skills that are not generally known or easily accessible. It often includes trade secrets, confidential information, methods, techniques, processes, or expertise that allows individuals or organizations to achieve specific results or perform certain tasks effectively. Know-how is typically acquired through experience, research, and development efforts. It can be protected through confidential information agreements or trade secret laws.

Legal protection in Hong Kong

The term “know-how” is not specifically defined in Hong Kong law (although it has been defined in the EU technology transfer block exemption, but the term is generally used to describe a type of commercial confidential information which is primarily characterised by its technical nature. “Trade secret” is an alternative name for commercial confidential information.

In Hong Kong, confidential information is not the subject of statutory definition. However, its scope is fairly well established in the case law – property, contract, bailment, trust, fiduciary relationship, good faith, unjust enrichment have all been claimed, at one time or another, as the basis of judicial intervention. In the UK, in Shenzhen Senior Technology Material Co Ltd v Celgard LLC [2020] EWCA Civ 1293, the Court held that confidential information was not property, endorsing. However, the court in Force India Formula One Team Ltd v Malaysia Racing Team [2012] EWHC 616 (Ch) acknowledged that intellectual property lawyers treated breach of confidence as a branch of intellectual property law and considered that whether confidential information truly counted as intellectual property depended on the context.

Details
Registration	Rights arise automatically; no registration requirement.
Duration	Indefinite duration – but in practice likely to diminish quickly over time, and may be destroyed prematurely by unauthorised disclosures or careless practices.
Use	Does not confer a monopoly right, so cannot be used to prevent the use or disclosure of a similar body of information independently developed.
Is it a property	Not recognised as a property right under Hong Kong law
Assignment	Not capable of assignment as a property right, but a formal information transfer coupled with a non-use and confidentiality agreement can have the same effect.

To be protected by the law of confidential information, information must be:

Confidential in nature – having “the necessary quality of confidence about it, namely … not … something which is public property or public knowledge”; and
Disclosed “in circumstances importing an obligation of confidence”.

The rights that this confers can be enforced against the recipient of such information. To bring an action for breach of confidence, the predominant view has been that there must be use or disclosure of the information, either threatened or actual. However, it appears that a breach of confidence may also arise where a defendant even merely looks at information that they know (or ought to know) is confidential.

Why Protecting Know-How Matters:

Competitive advantage: Your know-how gives your business a distinct advantage over competitors. By safeguarding it, you can maintain your unique edge in the market, ensuring your innovations stay exclusive to your organization.
Business continuity: By protecting your know-how, you can mitigate the risk of unauthorized disclosure or misappropriation, ensuring the continuity of your business operations and preserving your core capabilities.
Value and monetization: Properly protected know-how can have long-term financial benefits. With effective strategies in place, you can leverage your intellectual assets to secure licensing and partnership opportunities, generating additional revenue streams for your business.

How YTL LLP Can Help:

Risk Assessment and Strategy Development: Our experienced legal team will conduct a comprehensive assessment of your business operations to identify potential vulnerabilities and develop a tailored strategy to protect your know-how.
Trade Secret Policies and Agreements: We will assist in drafting robust trade secret policies and agreements, tailored to your unique business needs. These legal instruments will establish clear guidelines for handling confidential information, ensuring its protection throughout your organization.
Litigation and Enforcement: In the unfortunate event of misappropriation or unauthorized disclosure of your know-how, our litigation experts will work tirelessly to enforce your rights and seek appropriate legal remedies to safeguard your intellectual assets.
Employee Training: We offer customized training programs to educate your employees on the importance of trade secret protection, ensuring a strong culture of confidentiality within your organization.

Take the Next Step:

Protecting your know-how is not just good practice; it is critical for maintaining your competitive edge and preserving the long-term success of your business. Contact our team at YTL LLP to schedule a confidential consultation and discover how we can protect and maximize the value of your intellectual assets.

Unlock the power of know-how and safeguard your business’s future with YTL LLP.

Alfred Leung, Partner (alfredleung@hkytl.com; 852 3468 7202)