A BRIEF COMMENTARY ON TRADE SECRET LAW

	Preamble Information occupies a significant place in the conditions of free-market competition between the subjects of Enterprise. It is not a secret that information so far related to commercial undertakings acquires an absolute value if the information in question addresses trade secrets of a potential competitor. As you well know, traditional techniques and practices have been formed in the business world to get information about clients. On the one hand, pursuant to effective laws they may be legal. On the other hand, business life develops vigorously and the state of legislation under modern accomplishments of science and technologies, in particular, with the adoption of computer-based technologies, does not always answer the question whether information was obtained lawfully?! It becomes more and more confusing now to answer the question to what extent a legalized collection of business information for negotiations, ascertainment of noncompetitive and unreliable business partners comply with the rights of businessmen to a trade secret. The Constitution of Russia clause 4 article 29 guarantees each citizen to the right to information: "Everyone shall have the right freely to seek, receive, transmit, produce and disseminate information by any legal means". But the Constitution does not address the issue of a correlation of the right to information and the right to a trade secret, referring to various laws on information and the Civil Code of Russia. What kind of criteria should be applied to commercial business information to enjoy lawful protection of the trade secret? One could admit that effective laws are enforced to protect fixed information on certain media material. Pursuant to clause 5 of the Law "On Information, Computerization and Protection of Information" documented information is subject to protection which is fixed on a material medium. However, with a gradual development of science and technology, and particularly, when the Internet appeared, new legal issues arise. For instance, can be a computer running a display in online mode be treated as illegal access to information? It is known that during searches using the hypertext system WWW-Browser of an individual user or special IP-scanner they store HTTP-addresses and information on the most frequently visited pages. While a vast computer network with multi-references makes it possible to retrieve information on the Internet, sometimes it is even easier to 'visit' this or that closed commercial Web-server of the businessman without the application of illegal means. Are there any grounds for imposing liability for violation of the trade secret arrangement in this case? One cannot speak about the liability for illegal access to computer information pursuant to Article 272 of the Criminal Code of the RF in such a case. The issue in question is whether legal steps may be taken against the party for a civil legal breach - a breach of a trade secret arrangement and measures pertaining to whether recovery of material damage may be applied? What should one do if the businessman due to his lack of knowledge or dynamics of Enterprise failed to ensure proper protection of a trade secret in the local computer network? Does it mean that a legal interest of the businessman to keep a trade secret confidential does not enjoy the protection of the law? However, not only modern computer technologies put up the issues associated with a correlation between the right to a trade secret and the right to information. The practice of business relations also requires a new approach to a legal governing of the situation formed. For instance, what should one do if the businessman received a proposal for a business partnership, where a disclosure of a trade secret is expected. He then sends back a written rejection by post but fails to notice that confidential information of use to his competitor was imprinted on the folder by his pen. It is enough to look through such a folder in the light to obtain an idea of the businessman's affairs. In other words, whether the interest of the businessman to keep this or that information confidential under the trade secret arrangement may be remedied when the same has become known to the competitor not in the course of industrial intelligence? The situation becomes more confusing as the concept of a unified mechanism for legal protection applicable to a trade secret has not yet been developed in Russia. Furthermore, there is no real legislative program of economic security for the businessman. Under such circumstances, the burden pertaining to the maintenance of economic security of the company, including protection of confidential information lies on the businessman himself. In this case it becomes significant how he will be able to maintain security of commercial information efficiently, while applying effective legislation on a trade secret. This Commentary addresses the Trade Secret Law enacted by the State Duma of the Russian Federation (hereinafter referred to as the TSL) adjusted to the European legal practices associated with the maintenance of security in respect of commercial information. The Commentary involves theoretical aspects of the Institute of Trade Secrets in Russia, including practical guidelines to Russian and foreign businessmen for maintaining the security of commercial information for successful management of their business.
	Introduction Article 1. Purpose and Purview of this Federal Law 1. This Federal law governs relations associated with legal protection of a trade secret for the purposes of preventing mala fide competition and provision of the conditions for the establishment and efficient working of a commodity and service market in the Russian Federation. 2. Legal protection of a trade secret shall be granted to citizens and legal entities of the Russian Federation and foreigners and foreign legal entities on the territory of the Russian Federation. 3. Legal protection of a trade secret shall be granted to citizens and legal entities of the Russian Federation, foreigners and foreign legal entities registered on the territory of a foreign state in compliance with international treaties of the Russian Federation and domestic legislation of that state. Until recently the notion of a trade secret did not exist in the administrative and command economy of the U.S.S.R. The place of a trade secret was occupied by a state secret. Upon transition to market conditions and the adoption of various forms of property, an objective to protect information has become necessary, whilst the subject of commodity-money relations has arisen. The first attempt to govern the relations forming in the Reference of trade secret protection on a legislative level is associated with the enactment of the U.S.S.R. Laws of July and December 1990 "On Enterprises in the U.S.S.R." and the Law of the R.S.F.S.R. "On Enterprises and Enterprise" (The Laws lost effect pursuant to the Federal Law dated 30.11.94 No52-FZ). Pursuant to Article 31 of the Law "On Enterprises in the U.S.S.R." a trade secret meant information which did not constitute a state secret associated with production, technological data, management, finance and other company operations. The Law of the R.S.F.S.R. "On Enterprises and Enterprise" did not give a definition of a trade secret. Pursuant to clause 2 Article 28 of the Law, a trade secret meant information to be determined by the company's principal, who enjoyed the right not to produce to public bodies. It was provided for that a list of information, which cannot constitute a trade secret, should be determined by the Council of Ministers of the R.S.F.S.R. In connection with the above said, on December 5, 1991 was the adoption of the Regulation of the Government of the R.S.F.S.R. No 35 "On the List of Information Which Cannot Make a Trade Secret" (The Regulation is effective so far). This Regulation details the list of information which companies are obliged to submit to supervising public authorities for audit of financial and business operations for purposes of maintaining correct taxation and deduction of payments to the state off-budgetary funds. Clause 1 Article 44 of the Constitution of the Russian Federation dated February 12, 1993 also deserves special mention, where it is stated that intellectual property is protected by law in Russia. These and other norms make a good start for legal governance of the Institute of a Trade Secret as the set of civil and legal standards in the Reference covering the use and protection of confidential information. Recently the issue whether it is necessary to make a separate law on a trade secret has been discussed quite frequently in theory and practice. One should note that as a result of transition to a free-market economy and adoption of a free Enterprise institute, there emerged a necessity of a detailed study of remedies relating to commercial information. The current situation with regard to the Russian legislation is that there is no strict governance of the issues involving a trade secret in the majority of cases. Moreover, the notion of a trade secret is touched upon quite cursorily in various statutory acts. Given this situation the solution of the major issues associated with protection of a trade secret gave way to the necessity of the enactment of a separate Law on Trade Secrets. Therefore, the three Committees of the State Duma elaborated and brought up for discussion the draft federal law "On Trade Secrets in the Russian Federation" on January 22, 1999, which was subsequently approved by the State Duma. It is impossible to overstress the impact of the law. Up until recently, the proposals covering protection of a trade secret were only of a recommendatory nature aimed for arrangements with staff, business papers and technical security rules in respect of information. In the state of insufficient legal governance, confidential information could flow from one company to the other through 'channels of communication', and quite often was used as one of the forms of mala fide competition. The effect of such adoption was violation of intellectual property rights by way of unauthorized reproduction of somebody else's products, acquirement of financial and trade secrets and industrial espionage for purposes of ousting a potential rival from the competitive market. After the adoption of TSL concurrently with such customary issues in the Reference of legal governance granting remedies at law for a trade secret to Russian nationals and foreigners and legal entities, new ideas have been introduced into the concept of the law: granting the same remedies at law to industrial secrets as for a trade secret; option to refer a trade secret to a state secret in the established manner; granting the status of official secrecy to a trade secret received by a public authority or local self-government body; establishment of the liability for illegal obtainment and use of another party's trade secret, and also establishment of third party liability for its use. The Law is of a great practical significance. The option to refer not to general principles and standards of the civil legislation in litigation but to specific provisions of the law has been advocated. Therefore, there is no need to address multiple statutory acts and bylaws which are controversial in governing of trade secret issues. The importance of the law has also manifested itself in abatement of uncertainty in the issues of protection and use of a trade secret, which is frequently used as a means of deterrent in respect of creditors, competitors or consumers. Up until recently the courts did not handle disputes arising in connection of a trade secret, therefore in many cases, failing the law containing the provisions of legal governance, treatment and protection of trade secrets. Now, with a specific law, businessmen may refer to the law in each particular case. Finally, the law does not proceed from copy-book criteria for attributing information to a trade secret, but is based on legislative principles for protection of confidential information. If one tried to cover all aspects of Enterprise under the single law or potential pieces of information making a trade secret, the volume of such law would outdo the volume of the Civil Code. Therefore, necessary and satisfactory measures to maintain the secrecy of information are not governed by the law, but are determined in each specific instance according to the circumstances. he Law does not define what is the subject of the said circumstances. One could assume that when the provision is introduced, a legal interest of the right holder to keep commercial information a secret should be protected under the arrangements applicable to a trade secret. This is an essential innovation, which may significantly affect the issue of maintaining information security. In other words, the law on TS serves as a starting point in classification of standards and principles under a single document and will allow many of today's controversies to be resolved under the protection of a trade secret in the Russian legislation.
	Chapter I Nature of a Trade Secret Article 2. Major terms used in the Federal Law 1. The following major terms as are used in this Federal Law: A trade secret means scientific and technical, commercial, organizational or any other information used in Enterprise [:], , Russia's Constitution in Article 8 guarantees support to competition and a free economic Enterprise, acknowledging and protecting private, public, municipal and other forms of property. Pursuant to the constitutional principal of property right protection, the Civil Law specifies the objects of material and intellectual property. In law enforcement practice, as a rule, the same is divided into industrial (scientific and technical) and commercial (financial and credit) information. If one speaks about intellectual property, the right to use an invention is issued as a patent. The patent is a remedy at law for protection of industrial information (the results of creative activity in the Reference of science and production). However, if original Enterprise ideas or patentable solutions represent valuable information, where the right holder does not wish to make them public, they may make a trade secret (the results of creative activity in the Reference of commerce and business). Thus, information associated with Enterprise, which may be of an industrial and commercial nature, can be attributed to a trade secret. In such case, the company management process should provide for a combination of the functions featuring human resources management and promotion of outside resources. In this regard, not only industrial or business information may be acknowledged as a trade secret, but also information of an administrative nature. And namely, information associated with the human resources management (official secrecy). There is an opinion that official secrecy is information associated with the execution of functions by public authorities and local self-governing bodies. Pursuant to the Decree of Russia's President "On Urgent Measures to Protect the Population Against Gangsterism and Other Manifestations of Organized Crime" dated 14.06.94 all banks must submit, to the Prosecutor's Office or Tax Police on request, the documents on financial and economic operations, deposits and transactions by the accounts of the parties involved in criminal activity in the established term. It is provided not only for a check of the said individual and his relatives but also corporations whose assets may be used by the suspect. This list covers quite a wide circle of persons whose financial and economic business may be deprived of legal protection. However, the foresaid does not mean that information may be disclosed. Said authorities and specific executives are bound not to disclose information, which has become known to them in connection with execution of their official duties (official secrecy). This does not settle the issues immediately associated with protection of a trade secret in respect of information of public authorities, local self-governing bodies as a legal regime of the Institute of Official Secrecy has not yet been determined under the Russian legislation. As it is known pursuant to the Regulation on the Registration Chamber of the Mayor's Office of Saint-Petersburg that all legal entities (save and except non-profit organizations) shall be registered with the State Registration Chamber of the City Mayor's Office and district registration services of the city administration. Information related to maintenance of the Registers of state registration of legal entities does not make official secrecy so far as there is no special legal control. Thus, copies of foundation documents of one commercial company may be used by any unauthorized persons under the pretence of drafting their own documents. Obviously, no duty regulations may prevent the obtainment of information by the parties concerned as long as a legal regulation covering protection with rigid legal effect is not maintained. In addition, no strict legal Commentary is available describing the public and private nature of the contents of official secrecy. In view of this there are no reasons to say that a commercial company does not own its company's secrets. Although the law specifies in clause 3 article 6 that the right holder has no right to assign classification 'official secrecy' to the documents containing a trade secret. This is a direct contradiction to the Civil Code where a unified arrangement is stipulated under Article 139 in respect of legal protection pertaining to a trade and official secret. In German Trade Law the notion of a trade secret is covered by one definition, which consists of two terms: Geschafts - und Betriebsgeheimnisse that means in a literal translation, a business and production secret. Whereas a business secret is information associated directly with the commercial side of business, a production secret is information and facts related to the internal (organizational) structure of a commercial company. Technical information related to a special Reference of application: knowledge in the Reference of technology, physics or chemistry directly associated with the company relates to this category as well. One should note that such division of a secret into trade and official has no legal sense in the Russian practice. The Civil Code of the RF provides for general procedures for protection. Concurrently with a gradual development of legislation the aforesaid division into an official and trade secret in connection with a legal specialization undertaken under the Law on TS may have a real legal sense.
	Chapter II Definition of a trade secret Article 2. Major terms used in this Law [:] Classification mark of a trade secret - requisites showing that the regime of a trade secret for information (data) was established and which is put on the information carrier and/or on the accompanying document; a disclosure of a trade secret means actions as a result of which a trade secret has become known to the third parties in breach of the law or agreement (including an employment agreement); an unlawful practice of obtaining a trade secret means theft, a commercial subornation, bribing, misleading, default or solicitation to make a default related to the observance of confidentiality, and also gathering of information making a trade secret by way of theft of documents, subornation or threats, and equally by any other unlawful practice for the purposes of disclosure or unauthorized use of such information; use of a production secret (know-how) means use of a production secret (know-how) in own production, promotion under license or any other agreements or any other actions related to the adoption of know-how into business turnover or removal of business turnover[:] . The definitions of TS introduced by the Law describe an objective nature of the Institute of a Trade Secret in the Russian legislation. The indisputable advantage is that the law introduces concrete notions, which predetermine the nature of a legal remedy for information under the regime of a trade secret. Concurrently, putting the classification mark TS on specific business information definitely answers the question of their legal protection. However, the Law on TS provides no answer to the question whether information, which has not been secured by local protection arrangements is subject to protection, and namely, if the classification mark TS was not put on? Obviously, adoption of objective protective measures uphold the right holder's desire to protect commercial information. However, a failure to arrange protective measures does not always mean that a businessman waives the interest to keep certain commercial information a secret as not all protective arrangements may ensure 100% security for confidential information. However, in no way does this mean that the businessman does not deem unknown information not protected by certain arrangements as a trade secret. Obviously, under conditions of an objective nature of protection pertaining to a trade secret in Russia 'the principle of life-saving of the drowning is the work of the drowning themselves', prevails over the principle of all-round legal protection of the businessman. Whereas a legally protected interest is legally protected as it is subject to protection also in the case when the businessman has failed to ensure his own protection by any reasons. Under European practices one can trace a certain degree of unconcern of the western businessman based on a firm conviction that he should not adopt today the classification mark TS to information developed by his employee yesterday as the competitor may get to know and disseminate such information tomorrow. In such cases the German doctrine has worked out the term for the classification mark TS associating a remedy at law not with the moment of making it classified. Upon assigning the secrecy grading of TS, the businessman has just begun to enjoy extra means for maintaining information security. For information to be acknowledged a trade secret the same may not bear such a secrecy grading. It is enough that the third person knew and should have known that he dealt with other party's trade secret. In such case, the right holder should not justify a missing secrecy grading of TS, but must prove that such information was viewed by him as his trade secret. Thus, should a company in Germany get to know about a special assortment of goods supplied for holding an autumn exhibition, where the competitor keeps such information secret, it has no right to use such information for commercial purposes. In such a case and if the said information is not protected by the company's bylaws: "[...] An immediate intent to keep this or that information a secret necessarily makes the unknown fact undertaken a secret protected under the law [...]. In such a case, it is enough that it should be expressly declared whether orally or in writing, including tacit actions based on specific circumstances. Mostly, it is enough that there is a presumption on the relevant intent of the businessman" (Maier, Antonia: "Der Schutz von Betriebsgeheimnissen und Geschaftsgeheimnissen im schwedischen, englischen und deutschen Recht". Schriftenreihe zum gewerblichen Rechtsschutz Bd.104. 1998. L, s. 277). Moreover, information associated with Enterprise may be protected as a trade secret also in the event where it has not yet been known to the businessman. It is crucial that due to its significance "one could assume the intent (interest) of the right holder to keep such information a secret; (...) it is not important whether the businessman intended to use such information or not" (Maier, Antonia: "Der Schutz von Betriebsgeheimnissen und Geschaeftsgeheimnissen im schwedischen, englischen und deutschen Recht". Schriftenreihe zum gewerblichen Rechtsschutz Bd.104. 1998. L, s. 277). Computer software and machines of elaborate design are taken as the most widespread example. And namely, money machines with separate computer software, installed under the body of the machine. In this case, the infringer must prove in litigation that information on material media did not represent a commercial interest for the right holder and this is practically impossible. In compliance with the Judgement of the Bavarian Supreme Court (Bayerisches Oberstes Landesgericht) dated 28.08.90 the computer software belongs to a production secret of the manufacturer, despite the fact that he had no idea about it. In this case it is enough to assume that the manufacturer, if he knew about the software, would treat it as a trade secret (BayObLG, Neue juristische Wochenschrift 1991, s.438). Thus, the western practice comes down to the subjective concept of attributing information to a trade secret and the number of law protective arrangements are irrelevant. The only requirement is that information shall not be generally known and be viewed by the right holder as a trade secret. This idea is explained by the fact that if one introduces written limits of a trade secret, it means to apply a restriction to the option of enjoying a remedy at law by the businessman based on the principle of all-round adjudication. As it is known, one could establish written requirements for attribution of specific information to a trade secret. But what should one do if information by objective reasons has not become known to the right holder? Say, if it is unknown to the businessman now as it was only worked out by the staff yesterday and has not yet been classified as a TS. Should such information be subject to protection under the regime of a trade secret? Obviously, it should be protected if the competitor stole commercial information of a right holder who has responded slowly. Thus, the concept of western legislation is to ensure a remedy at law not only for documentary fixed information but also for the right holder's interest which is expressed to keep commercial information secret. In this regard the European Juridical Practice does not place the notion of a trade secret under definite written, but also other objective boundaries, which combine with the principle of all-round protection of the businessman. The European example pertaining to protection of a trade secret shows how a customary notion of a secret in Enterprise turns to an unbreakable legal obligation to respect the other party's rights and interests. It is quite the opposite under the Russian legislation where the notion of a secret turns to a legal obligation to respect the other party's rights and interests only if the secret is objectively protected by security arrangements. However, this is not always efficient. While despite the progressiveness of European juridical thought, adoption of the subjective concept is impossible under the conditions of Russian business. This will more than likely serve not a law ascertaining guarantee, but a restriction of a legal remedy for the businessman. Firstly, the absence of certain security arrangements in respect of information, practically removes the guarantees for protection against the arbitrariness of unconscious commercial companies and places in jeopardy the guarantees pertaining to protection of the rights of the conscious right holder. Vice versa, there is a high possibility to accuse competitors of commercial plagiarism on the part of the unconscious right holder, if the personnel went to the company-competitor and based on their professional experience developed production processes of the former employer. Secondly, due to an arbitrary freedom of the definition covering the notion of a trade secret, potential business partners and consumers would often face the notorious 'trade secret'. This means that the ground for criminal and legal liability would come down to and be dependent on subjective criterion, and namely, on assumption of the right holder that certain information would be viewed by him as a trade secret if he had an idea about said information. The idea of western trade law can be explained by the fact that the subjective concept of a trade secret rests upon the exclusive bona fide nature of the businessman (morality Kodex). While regardless of the degree of trust and honesty of the western businessman, business is always associated with risk. This is always the strongest market competition. However, if the subjective basis underlies protection of a trade secret, it means not only to disrupt the objective bases of criminal and legal liability but also to violate the major law of competition - an independent economic struggle. Apparently due to harsh laws of competitors (and not mala fide nature of the Russian businessmen) Russia's legislation is based on the objective concept of the Institute of a Trade Secret which envisages the provision of security for a trade secret. In this case, if the Russian legislator stopped at the objective concept, the issue will arise how to interpret objective security measures? How far are they extended to not view certain information as public? Should the Russian or foreign businessman in Russia make an explicit list of information and apply a secrecy grading of TS to acknowledge information a trade secret or it is enough to write down briefly and clearly in the Charter that all that makes and will make the subject of business is a trade secret?
	Chapter III Features of a trade secret 1. [ : a trade secret is scientific and technical, commercial, organizational or other information used in Enterprise ] which: possessesa real or potential economic value as it is not generally known [:]; As it has already been stated the Institute of a Trade Secret is based on legislative principles, which make information a trade secret: Firstly, for information to be acknowledged a trade secret it should not be generally known. As it is unknown to the third parties, information may possess a real or potential commercial value. Here we see the terms - third parties and an actual or potential commercial value. What should be understood under these terms and how do they correlate with each other? As it is known, third parties mean any subjects, who have an interest in obtaining information. Obviously, the value of commercial information may be determined not only by its immediate use but by the fact that it is unknown. If information is known to the company's personnel, who are committed under civil agreement or contract to maintain information confidential, this fact does not prevent the acknowledgment of such information a trade secret (the staff). The by-law issued by the company's principal, establishing the procedure for access to commercial information, may restrict the number of persons who enjoy such right (fiduciary staff). Each member of the staff is a fiduciary, but not each fiduciary belongs to the staff. The persons who are named in the by-laws as fiduciaries, and equally each subject of Enterprise, if he gave a commitment not to divulge a trade secret of the right holder. In this regard there is a question whether any information may be acknowledged a trade secret? Can such information be acknowledged as a trade secret, which does not present any immediate commercial interest, for instance, personal views of the company's principal on a market strategy? How may the definition of a real or potential commercial value be interpreted? On the one hand, information, which potentially has no commercial value, does not require a remedy at law. It cannot directly influence legal competition, as it is insignificant (cost reduction of manufacturing the product or quality improvement of the product). On the other hand, Russian law does not stipulate a certain criterion for attributing confidential information to a trade secret. The legislation empowers the company's principal with full freedom to determine the subject of a trade secret (taking into consideration certain restrictions applicable to the adoption of state control over financial operations). In view of the aforesaid, the principal determines, at his own discretion, a potential value of information and protection arrangements required. In addition, the Civil Code does not disclose the notions of an actual or potential commercial value. It seems that the legislator refers the determination of potential or real commercial value of information at the discretion of his common sense. In theory it does not exclude the attribution of any information to a trade secret even if it is unable to affect the competition. If a dispute on termination of the contract with the employee on the grounds of divulging a trade secret arises, the issue on an actual meaning of the company principal's statements shall be decided by the court based on specific circumstances. What should be understood under such circumstances (objective security arrangements), taking into consideration the objective nature of protection of commercial information? 2. [ : a trade secret is scientific and technical, commercial, organizational or other information used in Enterprise ] which: cannot easily be obtained legally by other persons who could derive an economic benefit from disclosure or use thereof [:] ... Secondly, information may be confidential not only because it is known to the company's principal and his fiduciaries but if it is protected against free access on a legal ground. In the tough conditions of free-market competition, large companies thoroughly monitor the products of their competitors, spending a lot of finance for such purposes: inspecting, examining, and dismantling the samples of products - reverse engineering. This stimulates the development of competition and production of high quality and low cost goods. Obviously, such activity may involve the company's trade secrets if information is not protected by the norms of patent law due to high requirements. How is it possible to determine the boundaries for access to a trade secret, if inside closed commercial information is not provided with patent protection? Is it possible to say whether a trade secret is violated if the competitor did reverse engineering in respect of the product, which was then launched to the market and, based on the information obtained, he began manufacturing the same product of the competitor under its trade mark? On the one hand, the results of such research may be fixed by the norms of copyrights. Each citizen has the right to apply his ability to labor, and namely, to apply his special knowledge freely. The permissibility of reverse engineering is presupposed by the interests of bona fide competition and development of scientific and technological progress; the competitors have an option to achieve more qualitative results, should they apply more efforts and spend more funds, regardless of the right holder. On the other hand, production of software-pirate products is violation of a trade secret of the company by way of disclosure of the other party's secret. The law on TS specifies that information, which makes a trade secret, should not be obtained "easily". The meaning of this notion is not disclosed therefore causing legal controversies. Is it possible to say whether there is unlawful access to a trade secret if it "easily" took only a few minutes for the competitor, using a computer program, to find a digital combination of all gambling money machines of the businessman? n such cases, the European practice provides for approximate money (5000 DM) and time (70 working hours) expenses, which should not be exceeded for a lawful disclosure of confidential information (Arbeitsrechtliche Praxis. Sammlung der Entscheidungen des Bundesarbeitsgerichts, der Landesarbeitsgerichte und Arbeitsgerichte, Nr.1 zu § 611 BGB, Betriebs-Berater 1982, s. 1795). These issues are left at the discretion of common sense in Russia. Thus, the issue pertaining to the boundary of unlawful access to a trade secret remains open, if one assumes that if information making an economic value is unknown, and also the absence of free access does not make the boundaries. When may the right holder then claim compensation of material damage caused by the divulgement of a trade secret? 3. [ : a trade secret is scientific and technical, commercial, organizational or other information used in Enterprise ] which: is the subject of adequate circumstances: legal, organizational, technical and other arrangements to protect information (the regime of a trade secret) [:]; Thirdly, the right holder may approve security arrangements for preventing the divulgement of confidential information, including control over the regime of confidentiality. Clause 4 Article 6 of the Law on TS secures the rights to determine the list of information which makes a trade secret, criteria for attributing information to TS, including fixing the term for validity of information security arrangements. As the practice shows, the lack of procedural documents governing a legal regime of a trade secret, negatively influences the economic security of the company. If a dispute arises, the lack of an information protection system may show that the company did not view specific information as a trade secret. In this case, if the businessman insists on the opposite, it is unlikely that the court will interpret more widely the subject of a trade secret, as a remedy at law is of an objective nature. In this case, the question is whether the right holder must adopt security arrangements in respect of information to seek a remedy at law under the Law on TS? No, he must not. It seems that if it were not possible to establish security arrangements, it is enough to stipulate in the charter that all information, which becomes known in relation to the business, is a trade secret and to grant such information the regime of TS. It is stressed in Article 6 clause 6 of the Law, which speaks about the necessity to fix in writing supposed information whether or not it bears the secrecy grading TS at the moment of violation. The difference between the western subjective concept is that it is the responsibility of the businessman to fix only an approximate list of information (actual information). This is an essential advantage of the law as it introduces stability in the solution of possible legal differences. As in the western doctrine, an absolute subjective approach complicates the obligation to prove exact violation of a trade secret. As far as is concerned morality Kodex, then in the conditions of tough competition this is not always an efficient remedy for protection of a trade secret. Thus, information may also make a trade secret if it is not protected by objective security arrangements. For maintaining the regime of TS it is required that information is not: generally known (i.e. known to at least one competitor); easily accessible (including the right to reverse engineering); fixed in writing. One may draw a conclusion that the conditional and subjective concept underlies the Institute of a trade secrets in Russia. Any businessman may seek a remedy at law if he fixed a supposed range of information as a trade secret in the Charter. It means that a legal interest of the businessman to keep information as a trade secret is subject to protection under certain terms. While the right holder may protect his information. In view of the fact that not all arrangements may ensure 100% protection, he is not obliged to introduce the secrecy grading TS or adopt other right protective arrangements to seek a legal remedy under the Law on TS.
	Chapter IV Legal regime of a trade secret Article 3. Information, Which May Make a Trade Secret 1. Legal protection granted under this Federal Law is applicable to: [:] Information may make a trade secret, should it not be protected by local protective arrangements if such scope of information is fixed in writing. Concurrently, it is more advisable to take care of information security in order to avoid a leak of information and extra expenses related to protection of the right to a trade secret. The practice of referring to information as a trade secret is determined by the company's principal in each separate instance based on the nature and contents of confidential information. This list comprises information, which is of a commercial value for the right holder: information about the market (prices, discounts, goods specifications); engineering and economic figures pertaining to the level of production (algorithms); information on strategic plans of development and restructuring of production (profit, loans, turnover); information on the structure and managerial technique; information on partners, clients, business correspondence, telephone and wire channels of communication; number of signed civil legal agreements; original bookkeeping records, intermediate financial statements and forecasts, technical papers; marketing information; computer software, etc. So-called "Negative information" may make a trade secret as well. As a rule this is information allowing for the elimination of investment of the company's funds in dead-end research and development projects. In other words, a wide range of information may be viewed as a trade secret: financial policy, engineering, actual advice of professionals, including own views and convictions of the company's director. The specific feature of TS is an introduction of an approximate list of information, which may make a trade secret. The application of such legislative technique may be disputed as it does not exclude the possibility of abuse associated with the interpretation of such list as full. Article 4. Information, Which Cannot Make a Trade Secret Pursuant to effective legislation the following documentation cannot be confidential: Information making a state secret; Information contained in annual reports and other forms of accounting, inclusive of other documents associated with computation and payment of taxes and compulsory deductions to the budget; Information on operations of charitable institutions; Documents vesting with the right to undertake business (registration certificates, licenses, patents); Foundation documents; Documents relating to the financial standing, size of assets, funds and credit liabilities; Documents comprising information on the number of the staff employed, salaries, labor conditions, and also availability of job vacancies; Documents evidencing pollution of the environment, violation of anti-monopoly legislation, failure to comply with labor safety conditions and sales of products which are detrimental to peoples health; Documents evidencing breaches of legislation and the size of damages caused thereof; Documents confirming the participation of the company's executives in business societies, partnerships, associations and other organizations involved in Enterprise; Information on the implementation of the state privatization program and privatization terms of specific projects. This list is not full and may be amended by the Federal Law. Thus, pursuant to clause 1 article 63 of the Civil Code, information pertaining to liquidation of a legal entity shall be published. Under bankruptcy procedures the company's stock price falls down, as a rule; in compliance with clause 2 article 118 of the Civil Code, the fund shall publish reports on the disposition of the assets annually. In accordance with the Temporary Regulation on Holdings established in the course of transformation of the state companies to joint-stock companies, information on a sale/purchase of more than 5% of the shares of any Enterprise by the holding shall be published, otherwise such transaction is void. Any parties involved in Enterprise are obliged to produce said information on the first request to the parties concerned, if they are authorized to receive such information. However, exercise of this right faces some difficulties related to unsatisfactory legal governance. For instance, pursuant to the Regulation on a Trade Secret of the Savings Bank of the RF, the list of information, which make a trade secret, comprises information describing the actual standing of the Bank, its solvency, and also information on the terms associated with remuneration of the bank staff. This directly contradicts Governmental Regulation No35 and the Law on TS. Information, which is of a "commercial value", cannot make a trade secret, if its application contradicts the law. In such a case, concealment of a crime takes place. Thus, information on the practices and technique of tax payment reduction such as information on reorientation of the type and subject of the agreement to business, which is the most favorable in terms of taxes; information on diversification (change) the type of business; expense enhancement program attributed to the prime cost of products manufactured; information confirming administrative inadvertence, etc. does not enjoy a remedy at law. One should know when determining confidential information that if the company's business is stonewalled too much, this may result in a loss of profit. The market laws dictate that no trade company may conduct business without promotion (presentations, exhibitions, symposiums) of products, goods and services manufactured. It is a customary trade practice in Germany that as a rule, partners exchange written material during a business meeting. Information about the company's primary activity, range of goods, specific features of such goods is provided thereat. In the matter in question it is crucial to strike the happy medium between a trade secret and the desire to use confidential information for promotion of the goods manufactured. Article 5. Rights to a Trade Secret 1. The subjects of the rights to a trade secret are the holder of a trade secret and fiduciaries of a trade secret. 2. Pursuant to this Federal Law the rights of the holder to a trade secret arises from the right to protection against mala fide competition, the right to a free economic Enterprise, the right to protect intellectual property, and also obligations undertaken by the parties when entering into employment, civil legal agreements. 3. The holder of a trade secret is an individual or a legal entity who holds a trade secret under the legal ground, shall enjoy the following rights: a) to change and cancel the regime of a trade secret in compliance with this Federal Law; b) to use a trade secret in business activity, including its use in production, disclosure to other parties under the agreement, and also other ways of incorporation of said information into business turnover; c) to seek protection in the administrative manner and in court against actions, which violate the regime of a trade secret maintained or endangering the maintenance of such a regime; In this article one should pay a special attention to the right to seek protection in court against actions, which violate the regime of a trade secret maintained on the part of the state. As it is known, a trade secret is the company's business information other than information opened for a public accessibility in compliance with the legislation of the Russian Federation. While guaranteeing protection of the creditor's interests, clients of a commercial company, and also compliance with tax legislation Governmental Regulation No35 of 5.12.91., determine the list of information, which cannot make a trade secret. Pursuant to the Regulation on Bookkeeping and Accounting in the RF approved by the Ministry of Finance of the RF dated December 26 1994, annual accounting reports are open for the users concerned: banks, investors, creditors, suppliers; they have the right to review the same freely and make copies of the documents provided that expenses for such copying should be reimbursed. The following cannot make a trade secret in compliance with clause 1 of the Regulation: information on the standard accounting forms on financial and business activity (profit and loss statement, capital account, balance sheet); information for the audit of the correctness of computation and deduction of taxes and compulsory payments to the budget system of Russia (audit opinion, explanatory comments to reports, documents confirming the company's rights to assets, opinion of the internal auditors, etc.) The issue of a public nature of financial accounting is one of the major "snags" in the Institute of a Trade Secret. On the one part, accessibility of financial accounting is fair. An extreme freedom may lead to subjectivism in the contents of a trade secret and arbitrariness in the state supervision over conducting business. Obviously, the provision that neither charter, nor its separate clauses can be closed for a free review of the counter-agents is extremely significant in terms of the safeguards pertaining to legal remedies. Information on the size of the charter capital (minimum guarantee of the creditors) cannot be declared confidential information. In this regard banks, investors and suppliers always have a conception about the reliability of a business partner. With a gradual development of market dynamics one can assert that operative provisions on the submission of financial statements are not always adequate for fair competition practice. Business is the risk of undertaking the associated with possible losses and remunerative catches. However, an extreme "transparency" of financial statements puts to doubt the factor of the risk of undertaking. This results in restricting Enterprise through the growth of a number of competitors and defamation of the company's good reputation, which is manifested through the lack of desire to continue business affairs in the constructive spirit, which becomes known to the competitors without application of industrial espionage. In such cases, the major reason for Enterprise, trade turnover, is placed in jeopardy and namely, commercial information, which is kept a secret by each company. As it is generally known, competition is impossible without information and it becomes available to any economically dependent (associated) party under the pretence of a legal safeguard. As the publicity of statements envisages not only the impossibility to declare this or that information a trade secret but also the obligation to publish it concurrently with the submission thereof to the territorial statistical bodies. It is not a secret that currently, it is easy to determine the circle of competitors proceeding from the direction of trade turnover; comparing the subject of profit with the number of competing companies and market statistics of a separate trade Reference to figure out the share of market capital; to determine market fate of a certain product; to estimate potential of an annual trade turnover in term of time and based on the review of the results of the reporting periods to examine the strategy of the competitor's market trade. Whereas the figures obtained as a result of the analysis of trade turnover are valuable not only generally but also for each separate instance. They allow not only for the analysis of the concrete reasons underlying the growth (reduction) of the company's profit in a taken definite period of time but also the evaluation of your own business tactics while applying novation in your own research and development projects. In its turn, the set above may lead to the loss of the company's business image and pirating of the competitor's customers and also decrease capitalization with further takeover of the company, should fair results be achieved in annual performance results. As Russian legislation has not yet developed a relevant legal remedy for the businessman, an extreme accessibility of bookkeeping records gradually erodes the boundaries between fair and unfair competition. In this connection a question arises whether all the company's financial statements make a trade secret given that the annual statement is neither more nor less than the entire picture of the financial and credit operations of the business company. It describes the key property issues and the company's tax policy, which under the pretence of a legal safeguard arrives on the competitor's desk. As the financial statement is a full picture of the company's structure of assets and the state of the commercial company's capital, 80-95% of limited liability companies in Germany (GmbH) refuse to publish annual statements. In July 1995 the European Commission approached Germany with a request to approve more strict measures in respect of obligatory Publicationss of annual reports as operative legal sanctions are not adequate. Despite the above, the policy of commercial companies is quite clear. Not every businessman wants to table his "cards" to the competitor and rather, he prefers to limit the opportunities of the competition. Furthermore, the major task of financial statements is to show the financial standing of the businessman (balance evaluation between property complex and obligations undertaken). The German practice of Enterprise gradually comes to the conclusion that information contained in business books should make a trade secret. As it not only shows the progress of the businessman's trade operations, restricting the principle of free Enterprise but nullifies the notion of a trade secret. Thus, pursuant to § 275 II Nr. 5, Nr. 6, § 267 I, II of the German Trade Establishment (HGB) (§ 242 para. 2 HGB), information of major, average and small limited liability companies (GmbH) on material and resources costs for production of a certain product shall be published, and namely all costs of an auxiliary, raw material, production nature, inclusive of the data on expenses for maintaining the staff. This information gives not only a full picture of the internal organizational structure of the company to the competitor but is also an indicator for the determination of the level of quality of goods. It is obvious how significant such information is for making "macroeconomic forecasts" of the competitor's business. As a rule the matter in question is reclassification of financial and business operations by the results of loss and profit estimation, which pursuant to  242 para. 2 HGB together with the balance sheet (§ 242 Para. 1 HGB) make the annual financial statement on business. However, financial statements in Russia, despite the disadvantageous position of Russian businessman, cannot be considered a trade secret. However, the said does not exclude the option to assert the right to a trade secret even if the businessman notwithstanding the law does not want to make available to competitors the secret he has scrupulously been working at. The issue of a correlation between public and private interests based on the principle of contested action will be settled by Arbitration in each separate case. The second provision of Regulation No35 speaks about the impossibility to attribute information to a trade secret, which is required for checking the correctness of tax computation and deductions thereof and other compulsory payments to Russia's budget system. However, in terms of modern tax practice, a public legal exception is not always made from the rules of confidentiality when conducting affairs. It seems that Regulation No35 clause 1 (fixing of the company's obligation to submit information on financial and business operations in the established form of reporting) in the Reference of tax legislation formed, provides for an extremely high degree of public interest in the businessman's affairs. The legislator may introduce restrictions to the exercising of civil rights vested by the state, including Enterprise. However, under conditions of imperfect tax legislation and abuses in the accounting practice of tax authorities, this directly facilitates further methods to find ways of profit use. Even if information on the use of the funds remains a secret, information filed with the tax authority in the established form of accounting methods may discredit Enterprise. As it is known, the operative procedures for tax accounting are based on control over incoming funds from various sources, which the businessmen would prefer to keep back in view of commercial reasons. Obviously, the matter in question is not to change the imperative approach to the state tax policy but about the possible revaluation of a formal legal approach to tax accounting on the level of legislation. It is possible to settle the issue on separation of tax accounting and bookkeeping with a gradual transformation of approach to the accounting policy in commercial organizations under the Tax Code. In such a case, they would file with the tax authority, without any fear of loss of information, statements on computation of taxes and bookkeeping (tax balance sheet) separately by the results of sales of products without reference to the sources of income (trade balance). A trade balance means a financial result of the business (major figures or factors, which influenced the financial result of business in the period reported: decisions to distribute profit left at the company's disposal; evaluation of the financial position and business performance of the company for a long-term perspective, etc.); a tax balance means a statement of the results pertaining to sales of products without detailing the sources of income, which should be itemized in the trade balance. As the company may loose its competitive position in the market not because modern techniques of industrial espionage are inadequate but because rights and legal interest will be violated as there is no state program of economic security. In the real world, the idea of an absolute business consciousness appearing is impossible in today's Russia. As long as a flexible policy in respect of taxation can be formed on a legislative level, the Russian businessman in search for a more supportable tax regime and maintenance of information security would seek new ways: to change grounds, interpretation, accounting practice, execution of bookkeeping records by the results of a transaction, by restructuring the company to the ownership form and the organizational structure with a lesser tax burden. [:] 3. A trade secret holder is an individual or a corporation, who holds such trade secret under legal ground has the following rights: d) to demand the maintenance of the regime of a trade secret by the persons who got access to a trade secret incidentally or as a result of mistake, including the obligation of said persons to maintain the regime of a trade secret in court where they will be paid remuneration for the obligation undertaken not to disclose a trade secret; e) for remuneration in monies for use of a trade secret by the third party in his interests provided that: the said information was obtained by such persons incidentally, as a result of a mistake or was communicated to the same by the fiduciary without due authorization from the holder; and such a person had no satisfactory reasons to view such information obtained and use of the same as unlawful; and the holder had no and/or has no any actual possibility to preclude such use of a trade secret. In such cases, if the imposition of a civil legal liability to the party at fault in dissemination of a trade secret does not allow for the recovery of losses, the law vests the right to compensation in monies from an unfair competitor. This preventive norm is aimed at precluding a leak of information from state officials and local self-governing bodies, engrossers of production technologies or "commercial agents", who are engaged in the provision of information and consultancy services through illegal ways. In such cases, if the matter in question is the production of the secrets of the businessman, which became known to the competitor as a result of tapping the staff, the company who benefited from the same, shall be obliged to pay compensation. And on the contrary, where a businessman, bona fide or mala fide in a case where it is impossible to prove an intentional participation, disclosed another party's commercial secret incidentally, the right holder may waive compensation and enter into the license agreement to use commercial information (compulsory license). n compliance with the agreement the licensor may undertake to approve steps for the prevention of a further divulgement of information. The licensee shall undertake to pay royalties. Article 6. Maintenance of the Regime of a Trade Secret 1. The party who obtained information lawfully has the right to maintain the regime of a trade secret in respect of such information... [:] Article 7. Maintenance of the Regime of a Trade Secret When Entering into Civil Legal Agreements 1. When entering into and the performance thereof of civil legal agreements (contract of work and labor, contract for research and development, engineering and design work, etc.) the parties upon mutual approval, may apply the regime of a trade secret for information received and used during the performance of work. 2. A precondition for the maintenance of the regime of a trade secret when entering into and performing a civil legal agreement is entering into a special agreement by the parties concurrently with the agreement or incorporation of relevant provisions into the agreement. Article 8. Duration of the Regime of a Trade Secret Duration of the regime of a trade secret shall be governed by the validity of the conditions, which are necessary and satisfactory to acknowledge the relevant information of a trade secret in conformity with this Federal Law. Article 9. Alteration or Cancellation of the Regime of a Trade Secret 1. The holder of a trade secret may alter or cancel the regime of a trade secret ... [:] First of all, with regard to the protection of intellectual property it, is more advisable to seek legal protection from the state based on effective norms. In Germany pursuant to §§ 93,99 of the Criminal Code a hard criminal liability is established for a divulgement of commercial information in the established form (§ 17 Para. 1, 2 Law on Unlawful Competition). For imposition of a liability it is valid for the right holder just to assume that there is a fact, which had not been known to him at the moment of breach but which he would view as a trade secret if he had a specific idea about it. Therefore, since criminal legal steps do not always compensate for material losses of the right holder, civil legal sanctions are envisaged for violation of a businessman's trade secret in the civil legislation of Germany (§ 1, 17 Law on Unlawful Competition, §§ 828, 823 I The Civil Establishment of Germany). The French criminal law in its Criminal Code specifies as corpus delicti an unlawful divulgement (revelation) of the right holder's trade secret. Specific forms of divulgement of commercial information are insignificant in the same way as in the German trade law, whether it was disclosed to the party for certain purposes, in full or in part. As a rule, in today's Russia, scientific and production information may be protected by statutory acts and also information in the Reference of culture and arts (literature, art, and musical works). For protection of commercial information, the applications of laws are quite complicated in terms of inadequate legal governance. Protective systems independently developed by the businessman become crucial. The maintenance of security measures in respect of a company's trade secret may envisage the following arrangements: administrative measures The procedure for the determination of the subject of a trade secret: documents, products, materials; rules for revision and adjustment of validity; classification of information - "secret" or "for official use only". The maintenance of the system of access of the staff and private individuals to information making confidential information, rules of registration thereof and also control over undertaken written commitments pertaining to the maintenance of a trade secret; duty regulations for handling the document or adoption of a special (secret) record management; the company's staff who have access to the documents assigned the secrecy grading TS associated with their office duties or under the agreement, must observe all the rules of confidentiality customary for the company's record management; a detailed briefing of the staff pertaining to the procedures for handling of business commercial information and the arrangements pertaining to its use in a confidential record management; issuance by the security service of an individual written commitment to keep a trade secret (a pretest in knowledge of the requirements to the maintenance of confidentiality of information is also possible). Exercising control over circulation of documents: drawing up and execution of the consolidated description of files; numbering and marking of documents; registration of distribution; making copies from the documents by the author only with the assignment of an identification number to each copy; distribution of documents in sealed, marked envelopes; filing in closed depositories; simulation of possible channels of leak of information, technique and practice of unauthorized obtainment of restricted use information; obliteration of information. Technical arrangements Engineering technical protection: crypto graphical technique of encoding information during telefacsimile, computer and telephone communication, technical means of filing, handling, transmission of information. Arrangement of procedures for handling commercial information accumulated in computer databases (working out of the system for protection of electronic information). Economic measures Maintenance of confidentiality when entering into agreements while establishing the circle of persons who are directly involved in their performance. In such cases, when mailing documents containing a trade secret to the partners' addresses, appropriate conditions for filing such confidential information shall be arranged. Legal measures Establishment of a moral and material liability for divulgement of information or loss of documents assigned the "secrecy grading" in compliance with the legislation of the Russian Federation. Moral and Psychological Measures May comprise the system of incentives and benefits to the fixed salary of the company's employee. If there are many commercial operations and information associated therewith, which make confidential information, it is advisable to establish the Information and Analytical Research Department. The department will be responsible for the processing of information pertaining to the method of conducting affairs: system analysis of market conditions and development of relevant guidelines for closing (opening) of the company's separate information (information audit). Pursuant to the Law of the RF "On Private Detectives and Guarding Businesses in the RF" of 11.03.92 the facts of violation of a trade secret and production secrets from any parties (save and except detective techniques) shall be found out by the Security Service of the commercial company. Supervision over keeping records on documents and non-disclosure of confidential information shall be carried out by authorized staff of the Security Service and managers of the structural divisions of the company. The Security Service shall report directly to the company's principal and be headed by the executive who exercises the centralized organizational and methodical management of the Information and Analytical Research Department, coordinating the day-to-day business of the Security Service aimed to keeping information a secret. The Security Service is an executive and regulating unit, which ensures day-to-day management of the structural divisions in respect of securing the safety of information: maximum restriction of the circle of persons; physical safety of documents containing confidential information; computer processing of information assigned with the secrecy grading TS; introduction of confidentiality clauses associated with specific information into the agreements with domestic and international partners; other measures pertaining to the implementation of the management's decisions. Thus, the businessman determines, at his own discretion, what should be classified as intellectual property, which is better to keep a secret and protect by all means available. The company's principal approves the list and contents of information making a trade secret in the manner as prescribed by law, other statutory acts and by way of local by-laws (orders). Also, he is personally liable for the timely development and implementation of measures aimed at keeping information a secret. An individual who is engaged in business cannot issue local by-laws governing protection of a trade secret, therefore it is advisable to enter into the agreement with the partners on confidentiality. As concerned with employees, one should incorporate a separate clause imposing the obligation not to divulge confidential information into the employment agreement (confidentiality clause). In the business practice of Great Britain, the contractual guarantees of confidentiality are the major prerequisites for seeking successful protection of the law. The British courts keep to literal interpretation of the confidentiality clause and consider the rights and obligations of the parties in conformity with specific provisions of the agreement (whether oral or written). As a rule a broad construction of the agreement is not allowed. However, this rule may be completed by the option to apply "implied" terms arising out of tacit actions in compliance with the signed agreement. Article 10. Legal Disclosure and Use of a Trade Secret Concurrently with a disclosure of a trade secret in virtue of the agreement, information, which is protected under the regime of a trade secret may be disclosed as a result of research undertaken at one's own discretion and at the expense of systematic monitoring and collection of data without the application of unlawful means, in such cases, it shall be deemed disclosed lawfully and independently whether or not such information makes a trade secret of the other party. An individual or a legal entity that disclosed and independently obtained a trade secret of the other party may apply it without any restriction thereof. They may also decide the issue on the application of the regime of a trade secret to such information. This article vests each party with the right to obtain information by their own means and reach a certain creative result whether or not the subject of research is the object copyrighted. The article addresses the principle of combination of the right holder's private interest with the interest of community, which secures the legal monopoly of the right holder. However, the above said does not mean that the right holder should have an unrestricted right to his labor result. In this connection everyone has the right to use social achievements freely and secures the rights to the results of research in the established manner.
	Chapter v Protection of a trade secret in labor relations Article 11. Obligations of the Employed to Keep a Trade Secret of the Employer The obligation to keep a trade secret of the employer is charged to the employees to whom a trade secret is divulged in connection with the employment agreement (contract) signed upon recruitment and/or related to essential modification of employment conditions in the manner as is specified under para. 3 article 25 of the Labor Code of the Russian Federation and secured in the in-house rules of the employer provided that there is a written consent of the employee hereto. Admission of the employee to a trade secret shall be executed upon his consent and provide for: the commitment of the employee to the employer to maintain the established regime of a trade secret; making available to the employee the list of information making a trade secret of the employer and to which the employee is granted access; making available to the employee the norms of legislation of the Russian Federation on a trade secret imposing a liability for violation of the regime of a trade secret. The Employer has the right to refuse to hire a person who does not undertake a commitment to maintain a trade secret or to transfer the person to another job upon his consent which is not related to maintenance of a trade secret or to dismiss an employee, should it be impossible to transfer him to other job and should he refuse to undertake the commitment to observe the regime of a trade secret in compliance with clause 6 article 20 of the Labor Code of the Russian Federation. Article 12. Obligations Which Survive Termination of Employment Upon termination of labor relations by the employer with the employee to whom a trade secret became known in connection with such relations, the employee's obligations pertaining to the maintenance of a trade secret shall survive for two years, if otherwise is not provided for under the agreement (contract). During the said term the employee is not authorized to use information, which has become known to him and which makes a trade secret of the employer during employment for any purposes and/or assist other parties in doing so. This procedure is applicable to the parties, which have an access to a trade secret in the course of the performance of a license or other civil legal agreement. Upon termination of the employment the employee must return all documents in his possession, at the employer's request, containing a trade secret, and also undertake a special obligation in writing governing the term for the maintenance of a trade secret by the employer, should such an obligation have not been signed before. In case of refusal to sign the agreement in question, the employer may go to court to seek protection of his rights to a trade secret. The obligation to keep a trade secret may arise from an employment agreement or a law. Thus, a commercial agent who executed the businessman's assignment under an agreement, should keep information confidential about a trade transaction of the principal in virtue of the law (clause 3 article 184 of the Civil Code of the RF). Pursuant to article 857 of the Civil Code, article 26 of the Law "On Banks and Banking" private banks shall undertake to guarantee the confidentiality of operations of its customers and correspondents (banking secrecy). Although, information which became known to the bank in the virtue of entering into a civil legal agreement is distinguished from the secrecy of the bank itself as an independent entity in business (a trade secret). However, as it has been already noted the establishment of confidentiality terms of commercial information under by-laws determined by the company's principal is the most significant. Thus, only the staff who have access in virtue of their official duties to the documents assigned the secrecy grading TS may guarantee a non-disclosure of confidential information entrusted in virtue of their official status. In such cases, it is crucial to execute all rights and authorities pertaining to the procedure of accessing and handling a trade secret legally. Files and Publications bearing the secrecy grading TS shall be issued and accepted from the executives against signature in the Charter for registration of files and Publications being released. As a rule no legal confusions pertaining to protection of a trade secret arise during the employment period of the employee as a local system of information security is maintained. Obviously, the employee under contract may undertake and meet the commitment to maintain the regime of a trade secret set (pacta sunt servanda) during a definite period of time. Let's say that under a written obligation undertaken, the company's employee commits not to divulge a trade secret of the right holder and undertake actions that contradict the right holder's commercial interests. However, the issue arises how one should treat a trade secret and personal experience gained upon termination of the employment? As generally, the issue pertaining to the distinction between commercial information from personal experience does not arise during the employment period. How should one treat the creative abilities of an expert who has been dealing with a trade secret for a long time and based on his own experience has developed professional expertise and skills? Will it be a disclosure of a trade secret to apply the expertise of a professional in the company-competitor, if they are based, this way or that, on a trade secret of former employer? How does the law address a situation where the requirement of the right holder not to apply or disseminate commercial information and the constitutional right to a free choice of occupation and the principle of free Enterprise meet with a professional who wishes to take up another job with a competitor company for any reason? These issues in question are addressed differently in foreign practice. In Germany, in accordance with the decision of the Federal Court on labor disputes, the law-enforcement practice acknowledges the employee's obligation to keep a trade secret of his employer upon termination of employment relations. One should stress that the issue in question is whether business information, expertise and skills acquired conscientiously, may be freely applied by the employee should the same take up another job. Concurrently, there is no principally strict differentiation of the definitions under the law. Under French law should a dispute occur in respect of a divulgement of a trade secret, the jurisdiction fixes an unconditional priority of the rights and interests of the businessman in respect of a former employee. The courts proceed from the fact that the former employee must keep a trade secret of the ex-employer upon termination of the employment, even if there is no appropriate legal Commentary available. Under British practice a trade secret (however, more rarely) is subject to protection upon termination of the employment based on the official duties of the ex-employee. Nevertheless, the allegation that upon termination of the employment the employee does not bear any civil legal obligations to the ex-employer underlies the century old legal doctrine of restraint law. It seems that the introduction of such an optional obligation to keep information upon termination of the employment disrupts the accessory nature of its accrual. This leads to a unilateral restriction of rights and interests of the subjects of civil and legal relations and is not in line with the major legal idea - to maintain the balance of rights and legal interests. The main idea of the law is lucid - to avoid doubts when dealing with bona fide third parties. Concurrently, it would be more advisable not to establish a general declarative norm prohibiting the use of commercial information by ex employee for two years but to provide to the ex-parties involved, guarantees to settle the civil legal obligation upon its completion. In such cases, it would be stressed that not only a major feature of the Civil Law, discretionary polarity, is reflected but also the very idea of discretionary settlement - to ensure the balance of rights and interests of the participants of civil legal relations. In this connection the agreements on a non-disclosure of a trade secret of ex-employer by the employee are applied in the western legal doctrine. In France there are known cases where the employee signs an agreement on a non-disclosure secret d'entreprise (clause de non-communication). In Germany - the agreement on a non-disclosure Geschafts - und Betriebsgeheimnissen is known as Geheimhaltungsklausel. As a rule when drafting Geheimhaltungsklausel, a strict actual demarcation is set between information, which makes a trade secret and professional skills (expertise) of the employee. The agreement is invalid if it considerably curtails professional freedom. Such agreements are effective during a certain period upon termination of the employment agreement (two, three years) and remuneration must be paid to the employee during time period when such a restriction is operative (§ 74 a Abs. 1 Satz 3; Storp, Wettbewerbsklauseln im franzosischen Arbeitsrecht). Therefore, presumably such agreements are not known in Russian practice but may be introduced due to envisaged problems. In view of the foregoing the Russian legislator has provided for a two-year obligation not to divulge information that makes a trade secret upon termination of the employment. This provision is disputable. On the one hand, protection of the businessman's rights is a significant principle of Commercial Law. On the other hand, the right to choose the type of occupation is a significant constitutional principle. It seems that the right of the citizen to choose freely the type of occupation, despite the obligation not to disclose an ex-employer's trade secret during a period of two years is inviolable unless it transgresses the boundaries of the rights and legal interests of the right holder. In this connection, as the purpose of justice is to ensure the balance of rights and legal interests of the subjects of the law, controversy will be considered by the circumstances of the case proceeding from all subjective and objective features, taking into consideration damages caused by divulgement of a trade secret. Obviously, that an intent disclosure and application of confidential information for purpose to get benefit cannot be acknowledged, the constitutional right to choose the type of occupation freely and apply special knowledge to the prejudice of the right holder. Thus, despite the absence of the norm pertaining to differentiation of a trade secret and professional experience, one should acknowledge the obligation of ex-employee not to disclose another party's trade secret when taking up a new job. However, one should not prohibit the application of professional knowledge and experience of the employee at all, at least until the moment when upon his dismissal information looses a commercial value. In Germany the objective process of "ageing" of information covers, as a rule, the period from one to two years.
	Chapter VI Legal protection of production secrets (know-how) Article 13. Property Rights to Production Secrets (Know-How) Article 14. Transfer of Property Rights to Production Secrets (Know-How) Article 15. Property Rights to Production Secrets (Know-How) Developed in the Process of the Performance of Official Assignment Article 16. Property Rights to Production Secrets (Know-How) Developed in the Course of the Performance of a Civil and Legal Agreement Article 17. Property Rights to Production Secrets (Know-How) Developed During the Performance of a Public Contract Special attention should be paid to production secrets know-how. The innovation of the Law on TS is the acknowledgment of production secrets as a variant of a trade secret - the intellectual property object. There was no legal definition of know-how in the Russian legislation until enactment of the Law on TS as both the Civil Code and the State Secret Law did not clarify such a notion. Therefore, one should refer to international legal norms. Pursuant to the resolution of the International Commission on Protection of Production Information (AIPPI) which was held in February/March 1974, one should understand under know-how:: "Knowledge and solutions of technical, trade, administrative, financial or other natures, which are applied in practice in relation with Enterprise or when exercising professions" (Internationale Vereinigung fuer gewerblichen Rechtsschutz - Tagung des Geschaeftsfuehrenden Ausschusses in Melbourne vom 24. Februar 1974 bis 2. Marz 1974, Frage Q 53 B; GRUR Int. 1974, s.358). As a rule, know-how is scientific-engineering, design, and technological production of secrets, which have an industrial and commercial value and which are not covered by patent protection. And namely, computer programs, production regimes, technique, practice, formula, experience of applications of production processes, without knowledge of which it is impossible or considerably difficult to reproduce new equipment or production processes by samples, patent descriptions and published information. Methodical and organizational administrative ideas and solutions, which are necessary for efficient production and sales of products may make know-how as well.
	Chapter VII Protection of rights to a trade secret Article 20. Violation of Rights to a Trade Secret Article 21. Liability for Violation of Rights to a Trade Secret Article 22. Liability for Violation of the Rights of Public Authorities to Access a Trade Secret Article 23. Remedy at law of the Rights to a Trade Secret Article 24. Ways to Secure the Lawsuit in Cases pertaining to Violation of Rights to a Trade Secret Article 25. Keeping a Trade Secret a Secret at the Judicial Sitting Article 26. Entry into Force of this Federal Law The fiduciaries may be personally liable for disclosure of information making a trade secret and shall make compensation for damages caused in compliance with the legislation of the Russian Federation. The fiduciaries may be not only the company's staff who have access to the documents assigned the secrecy grading TS, and who pursuant to the labor legislation bear a restricted material liability if the obligation was violated but also the business partners. In the course of the business partnership it is very important to draw the partners' attention to the fact that it is necessary and important to keep confidential information a secret when entering into the agreement and to their direct interest specifying mutual obligations not to disclose confidential information to the third parties. The Law on TS in article 20 provides for elements of such an offence as divulgement of a trade secret for the first time in Russian legislation: obtaining a trade secret of another party by the party who knew or had grounds to know that such information has been acquired by unlawful means; divulgement of a trade secret or use of a trade secret of another party without the right holder's consent in the relevant forms; use of unlawful means to disclose a trade secret; divulgement or use of a trade secret by a party who knew or had grounds to know that such information was obtained by unlawful means or received under circumstances where there were obligations to keep its use confidential or restricted. The dispute arisen shall be settled by the arbitrator proceeding from the circumstances of the case, subjective and objective elements, inclusive of measures of objective protection in compliance of which information was ensured protection. The last point has no key significance assuming the conditional and subjective concept of the Institute of a Trade Secret in Russia. The issues pertaining to protection of a trade secret are advisable to specify in the standard agreements with one's counter-agents or in the agreement on confidentiality and non-disclosure of information. However, the said is often issued as a protocol of the parties' intent in practice. If there is no agreement, should it be violated, it cannot be enforced judicially. It is advisable that the parties should agree to property liability under a separate agreement should the obligation which caused material damage or lost of expected profit (lost profit) be violated. In other words, the businessman should approve all measures to ensure the reliability of a prospective partner. Hearing of the case regarding violation of the right to a trade secret shall take place in camera. Pursuant to clause 1 Article 53 of the Arbitration Procedural Code, each party to the case shall prove the circumstances to which the same is referred to justify its legal position. It does not exclude the option to disclose information that makes a trade secret. On the one part, all evidence may be presented in court, including a trade secret, if they prove violation of the holder's rights. On the other hand, the Law on TS does not determine the obligation of the company's employee to keep a trade secret, if the respondent during litigation informs the defendant on the contents of information, which the right holder (claimant) views as a trade secret. Finally, the Law on TS does not determine the legal status of a witness who may be called to give evidence which contains references to specific trade information. It seems that the settlement of disputable issues in such a case is given at the sole discretion of the arbitrator with due regard of the interests of the claimant and respondent. This becomes quite complicated as the law does not even give simple criteria to ensure the balance of interests during litigation applicable to the rules of procedure. The aim of litigation is a full and all-round consideration of the case. However, on the way to establish the truth in the case regarding violation of a trade secret, the main point is not only to establish the truth but also to not cause further damage to the right holder who has already had to protect his right. In other words, during litigation one should aim to achieve that the truth would not bring more disappointments upon the right holder than full establishment related to the repeated leak of a trade secret. Evidently, this complicates the mission of the court as it should consider not all possible evidence but only that which allow the right holder not to be finally disappointed in the remedy at law of his right. Legal effect of violation of a trade secret is quite extensive in the Russian legislation. It is enough to say that article 12 of the Civil Code contains more than ten remedies for protection of civil rights. And namely, if any public act of the state authority or local self-governing body prescribes to disclose information, which makes a trade secret to the holder of confidential information, he may seek legal protection in Arbitration Court.