This article has been written by Shruti Chaturvedi, a 3rd year student of Agra College Agra 

                 Abstract 

This whole topic revolves around the discussion of the role of trade secrets in protecting fintech algorithms and models. This topic consists first of an introduction, then it moves towards the most important section of this whole article, which is the trade secrets of COVID-19. With this, the next topic is the definition of trade secrets, and then, respectively, it is forwarded with reasonable measures, remedies, and a comprehension of trade secrets, then the cases that are related to this topic, then it tells the benefits of patents over trade secrets and international legal rights, and in the end, this topic concludes with a summary of this topic that a reader can understand about this topic and what this topic is basically all about. Trade regulations affect AI innovation, adoption, and administration in a global economy that is becoming more digitally connected. However, trade regulations as they currently stand have serious flaws and need to be updated to support efficient AI governance. Updates are occurring, but they primarily serve to advance artificial intelligence (AI) and disproportionately represent the interests of big tech companies, which are the primary creators and proprietors of AI. Stricter intellectual property rights for source code and algorithms, as well as resolute pledges to facilitate unrestricted international data movement, are features of the recently introduced digital trade regulations. But very little has been done to address the risks and negative effects of AI across borders in areas like competition law, responsible, legal, and transparent AI utilisation, and personal data protection.

Keywords– Algorithm, Trade Secrets ,Confidentiality, Reverse Engineering, COVID-19, Intellectual Property (IP)

INTRODUCTION 

An algorithm can be different for different types of businesses. If it is a business of food, then the recipe of that product is an algorithm; if it is clothes, then the secrets of design can be its algorithm; if it is medicine or injection, then their solutions or chemical mixture are their algorithms; and if it is any soft drink, then their flavouring agent and its taste are their algorithms. If a programmer is developing their code, then their source code can be subject to algorithms for trading secrets. These types of algorithms are also kept confidential so that in the future, if there are any legal remedies the person wants or if they have rights, they can use them. Failing to maintain the confidentiality of the trade secrets may lead to the loss of their valuable legal rights. The source code is protected by copyright with respect to trade secrets. Copyright is a type of intellectual property right that prevents unauthorised parties from duplicating or reproducing the code in whole or in part. The extent of copyright protection additionally extends to freely available source codes that may have been reverse-engineered or have not been hidden from the general public, as copyright protection does not require confidentiality as an essential condition for this right to exist, unlike trade secrets. As long as the code is created independently and isn’t copied from open sources or other parties, copyright protection automatically becomes available without the requirement for registration for the applicant.

Trade Secrets of Covid -19 Vaccine 

• A vital foundation for the proprietor’s business is provided by trade secrets. Both the company’s earnings and its legal rights are enjoyed by the proprietor, so long as confidentiality is upheld. But as soon as their trade secrets revealed their losses, their company profits. 
• The nations that created the vaccine attempted to conceal the vaccination’s manufacturing technique during the COVID-19 pandemic. Numerous lives have been lost as a consequence of this.
• The purpose of trade secrets is misunderstood by many of the supporters of a World Trade Organisation proposal that would permit members to disregard or invalidate innovators’ COVID-19-related intellectual property rights (IPRs), also known as the “TRIPS waiver.” Some claim that by refusing to give over trade secrets, inventors are causing the pandemic to worsen. As we clarify here, trade secrets facilitate increased and expedited technology transfer by building mutual trust amongst collaborators.
• Enforcing the disclosure of trade secrets would undermine voluntary agreements and shift supplies away from areas where they are most urgently needed, which would hinder the production of desperately required doses of the COVID-19 vaccine.
• India and South Africa have demanded that the Agreement on Trade Related Aspects of Intellectual Property (TRIPS) be disregarded amid the COVID-19 outbreak. Biopharma firms deal with numerous issues as a result of the disdain for intellectual property rights, ranging from company losses to reputational damages.
• First and foremost, trade secrets aren’t really secrets—at least not in the sense that the phrase is typically used. Secrets are typically kept private and known to very few. Trade secrets, on the other hand, provide legally protected proprietary knowledge that has commercial value. Information cannot be widely known in the business to qualify as a trade secret, and the owner must take reasonable precautions to preserve it. Nonetheless, when given the right safeguards, a trade secret owner frequently divulges their information extensively within as well as outside of their organisation.

• Trade secret protection has facilitated collaboration, investment, and invention that have allowed for the quick development and distribution of COVID-19 vaccinations.

Definition of Trade Secrets

Trade secrets are essentially defined as situations in which trade-related knowledge is maintained in confidence. Stated differently, this information serves as the company’s cornerstone and generates unusual revenues for it.

                       OR

Trade secrets shield against the unauthorised use or disclosure of confidential information about the business. Information that is difficult to find or not widely or any field of research, from customer lists to algorithms, may be included that cannot be find  outside of a company is called a trade secret. It needs to be profitable for the company, which benefits from keeping it a secret. Understanding the intent and nature of this legal protection requires an understanding of the commercial nature of trade secrets. Instead of encouraging the hoarding of important information, the goal of this legal protection is to foster an environment where individuals are motivated to develop it and use it for business purposes.

 Thus, as long as a company takes reasonable steps to secure its trade secrets, it can communicate sensitive information with both its employees and other companies. It must, for instance, limit access to its sensitive data to those who are truly required to know and implement strong security measures on its computer systems. It typically requires agreements to be signed by employees or partner companies before disclosing trade secrets.

Protection of trade secrets is somewhat brittle. Trade secret protections, in contrast to patent protection, do not stop rivals from using any knowledge they independently acquire or uncover. Trade secret protection does not apply as long as they complete their own work instead of improperly stealing that of others. Reverse engineering is another way that rivals can obtain trade secrets from publicly available data, such as the product itself. The trade secret loses its protection if it is widely known, which frequently occurs as a result of leaks, publications made by independent researchers like academics, or general advancements in industry understanding.

Reasonable measures

The company needs to take some extra precautions to keep its secrets. Because the law will protect the company as long as it is able to maintain its secrets. 

Remedies

The owner can give the warning to the one who is using unauthorized, and if it still continues, then the owner has the power to sue the unauthorised person. The Constitution provides legal rights to the owner.

And for the cross check the courts usually look at whether a corporation has followed “best practises” or “reasonable efforts” given the type of IP as well as appropriate industries to evaluate if an invention may be protected as a trade secret.

A Comprehension on Trade Secrets

People frequently have misconceptions about trade secrets. The circle of trust that allows businesses to use and exchange proprietary information was established by trade secrets. Confidence has been promoted among inventors and those making innovation investments by the assurance of legal protection. The COVID-19 vaccine is an effective demonstration of how collaboration and information sharing may have a bigger impact.

Trade secrets in the context of AI/ML platforms can incorporate the model’s structure, formulas, proprietary training data, a specific way to utilise the model, any output the model calculates that is then transformed into the final outcome for a client, and other similar features of the platform. The value of the trade secret can be jeopardised in a variety of methods.

For instance, in the event that an AI/ML model is marketed as a platform that offers the customer the algorithm’s raw output and a set of initial training data, the raw output and the training data would no longer be protected as trade secrets. By establishing into effect legal obligation arrangements to safeguard the parties’ ownership and confidentiality rights, businesses are able to prevent this trap. It is also common for businesses to waive trade secret protection when it comes to knowledge that can be separately obtained (like when a product is reverse-engineered). Businesses can, once again, adopt certain procedures to prevent losing the security of trade secrets in the event of an attempt to reverse engineer. Thus, in order to safeguard their right to claim trade secret misappropriation and regain the worth of their invention, the owners must exercise extreme concern in ensuring that the knowledge they wish to protect cannot be found through use or inspection of their invention itself. If this is not possible, owners must make sure that such access is governed by agreements that forbid such activities. 

Court Cases

Intertek Testing Services, N.A., Inc. v. Frank Pennisi et al., 443 F. Supp. 3d 303, 323 n.19 (E.D.N.Y. Mar. 9, 2020). 

Yellowfin Yachts, Inc. v. Barker Boatworks, LLC, 898 F.3d 1279 (11th Cir. Aug. 7, 2018) whereby the court ruled that, in the absence of effective safeguards to protect data kept on employee devices, demanding password protection for accessing trade secrets was insufficient. Should the court rule that the company did not follow best practices, the owner may no longer be protected by trade secrets at all.

Benefits of Patent over Trade Secrets

Intellectual property that rivals have learned via reverse-engineering an AI or ML product is not protected by trade secrets. Certain elements of the innovation (such as the training information that must be presented to the platform, the platform’s end product, and other features) may have to remain accessible to a customer, depending on the intended application of the platform. However, an entity could potentially be able to safeguard against reverse-engineering of certain components of the invention via agreements among parties with approval to access the AI/ML product or through creative packaging of the product. Since a patent will safeguard the claimed innovation regardless of whether it may be reverse-engineered, such characteristics, when patent-eligible, may benefit more from patent protection than via trade secret protection.

 Limitation: In return for explaining how their innovations work, a patent grants its holders the only right to use or market their claimed innovations.

International Legal Rights 

Article 39 of the 1995 Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement provides protection for trade secrets on a global scale. The agreement protects “undisclosed information,” which is referred to in language akin to trade secrets, even if the phrase “trade secret” is not used. Although TRIPS requires members of the World Trade Organisation to implement rules protecting trade secrets, there have always been issues with these laws’ efficacy and enforcement, especially in large, growing economies like China, India, and Brazil. Inadequate protection and enforcement overseas may have a major influence on a company’s capacity to secure its trade secrets as AI firms and innovations operate more and more beyond international borders.

 Conclusion

As we are moving on to the last stage of the article, it can be clearly noted that the role of trade secrets in protecting fintech algorithms and models is minimal due to their confidential nature, which can have both its own effects and side effects. So sometimes it is stated to prefer other rights, like patents and copyrights,  over trade secrets.

References 

 OXFORD ACADEMIC https://academic.oup.com/oxrep/article/39/1/70/7030588 ( Last seen on November 11)

      Mintz  https://www.mintz.com/insights-center/viewpoints/2231/2022-02-10-benefits-and-best-practices-protecting-artificial ( Last seen on November 11)

Geneva Network https://geneva-network.com/research/trade-secrecy-and-covid-19/ 

( Last seen on November 11)

Al Tamimi & Co   https://www.tamimi.com/law-update-articles/fintech-innovation-and-intellectual-property-rights-a-wake-up-call-for-financial-institutions-and-techcompanies/#:~:text=An%20algorithm%20may%20be%20subject,by%20employees%20and%20third%20parties. ( Last seen on November 11)

University of Nevada Las Vegas https://scholars.law.unlv.edu/cgi/viewcontent.cgi?article=1835&context=nlj ( Last seen on November 11)

MONDAQ https://www.mondaq.com/india/trade-secrets/1162614/algorithms-and-intellectual-property-the-complexity-in-protection ( Last seen on November 11)