In today’s increasingly competitive business environment, trade secrets such as business strategies, customer databases, and source codes have become valuable assets with significant economic value. However, many companies still fail to adequately protect this confidential information.
As a result, when information leaks occur through employees or business partners, companies often struggle to take legal action due to the absence of a clear protection system. Under Indonesian law, trade secrets are only protected when the owner actively takes reasonable measures to maintain their confidentiality.
Failure to Actively Protect Confidential Information May Result in Loss of Legal Protection
One of the most common and critical mistakes in trade secret protection is the failure to actively and systematically safeguard confidential information. Many businesses assume that all internal information is automatically protected as a trade secret. In reality, Indonesian law requires concrete efforts to preserve the confidentiality of such information.
This requirement is stipulated under Article 3 paragraph (1) of Law Number 30 of 2000 concerning Trade Secrets (“Trade Secret Law”), which provides:
“Trade Secrets shall receive protection if the information is confidential, has economic value, and its confidentiality is maintained through appropriate measures.”
This provision confirms that trade secret protection does not arise automatically. Information will only qualify for legal protection if it remains confidential, possesses economic value, and is properly safeguarded. If a company fails to implement adequate protection measures, the information may lose its status as a legally protected trade secret.
In practice, many companies still lack proper information security systems. Important documents are often accessible to all employees without restrictions, company files can be easily shared, and digital security procedures may not exist at all.
Reasonable protection measures may include:
- Restricting access to confidential information only to authorized parties;
- Marking important documents as “confidential”;
- Implementing password protection and digital security systems;
- Establishing standard operating procedures (SOPs) for information protection;
- Creating internal confidentiality policies;
- Providing regular employee training regarding trade secret protection.
In addition, Article 4 of the Trade Secret Law grants trade secret owners the exclusive right to use the information themselves or license it to other parties. However, such rights remain effective only as long as the confidentiality of the information is maintained. Once confidential information is disclosed due to negligence, its exclusivity and legal protection may be lost.
Lack of Contractual Protection Increases the Risk of Information Leakage
Another critical mistake is the absence of clear contractual protection for parties who have access to confidential information. Many companies continue to engage in employment relationships and business partnerships without adequate confidentiality clauses. Consequently, when confidential information is disclosed by employees, vendors, consultants, or business partners, companies face difficulties in pursuing legal accountability.
Contracts play an essential role as a legal protection instrument in business activities. This principle is affirmed under Article 1338 of the Indonesian Civil Code (“Civil Code”), which states:
“All legally executed agreements shall bind the parties as law.”
This provision confirms that agreements legally entered into by the parties carry binding legal force. Therefore, confidentiality clauses and Non-Disclosure Agreements (NDAs) are crucial elements in protecting a company’s trade secrets.
Unfortunately, many business owners still assume that NDAs are only necessary for large corporations. In fact, small businesses and startups also possess strategic information that may be misused if not contractually protected.
Legal protection against trade secret violations is further regulated under Article 13 of the Trade Secret Law, which provides:
“A Trade Secret violation shall also occur when a person intentionally discloses a Trade Secret, breaches an agreement, or violates a written or unwritten obligation to maintain the confidentiality of the relevant Trade Secret.”
This provision demonstrates that confidentiality agreements play a significant role in proving trade secret violations. In other words, contracts become crucial legal instruments when companies seek to take action against parties who unlawfully disclose confidential business information.
However, in practice, many companies still:
- Do not use NDAs;
- Use standard employment agreements without confidentiality clauses;
- Fail to regulate sanctions for information leakage;
- Do not restrict the use of company data;
- Lack document return obligations after employment or cooperation ends.
Such conditions place businesses in a vulnerable position. In many cases, disputes arise because former employees bring customer databases or business strategies to competing companies without strong legal protection in place.
Trade Secret Protection Is Not Merely a Formality
Trade secrets are strategic assets with substantial economic value for businesses. However, their protection cannot function effectively without concrete action from business owners. Mistakes such as failing to actively maintain confidentiality and neglecting contractual protection may result in the loss of legal protection over valuable business information.
Protection efforts should not rely solely on internal policies. They must also be supported by clear contractual arrangements, robust information security systems, and continuous education for all parties with access to company data.
Companies that properly safeguard their trade secrets not only protect their business assets but also strengthen long-term trust with partners, investors, and consumers. On the other hand, negligence in protecting strategic information may become a critical mistake that threatens business sustainability.***
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Daftar Hukum:
- Law Number 30 of 2000 concerning Trade Secrets (“Trade Secret Law”).
- Indonesian Civil Code (“Civil Code”).