Protection of trade secrets in Russia

Protecting confidentiality of trade secrets is a major challenge for businesses in any country, with Russia not being an exception. Effective protection of information that constitutes a trade secret makes companies more competitive and prevents valuable information from leaking to competitors.  In Russia, legal protection of trade secrets is implemented through a series of legislative acts and regulations. Companies of all sizes are increasingly active in adopting relevant technical measures to safeguard their sensitive proprietary information. Below, we will explore each of these aspects in more detail.

According to Russian laws, trade secret is defined as non-disclosure restrictions imposed on a piece of information to enable its owner to increase their revenue and avoid unjustified losses. Any information that has actual or potential commercial value due to being unknown to third parties can be treated as a trade secret.

In order for information to be subject to the requirements for trade secret protection, a few conditions need to be met:

1. Confidentiality: The information must not be publicly available.
2. Valuable nature: The information must have a commercial value due to being unknown to others.
3. Protection measures: The owner of the information must take reasonable measures to safeguard its confidentiality. 

Trade secret protection is not limited in time — the Russian laws on trade secrets of businesses do not fix any period within which a trade secret is to be protected.

A long history of trade secrets in Russia has made it possible to establish a certain procedure and legal mechanisms for protecting them.  Protection of confidential information that constitutes a trade secret is regulated by a number of legislative acts that stipulate the legal fundamentals, conditions and measures of protection, and liability for violating them.   

 Some of the basic legislative acts worth mentioning are as follows:

1. The Civil Code of the Russian Federation (the Russian Civil Code). Chapter 75 of the Russian Civil Code is devoted to intellectual property and also addresses the issues of trade secrets.  Articles 1465 to 1467 define the basic terms and conditions for the protection of trade secrets in Russia.
2. Federal Law No. 98-FZ dated July 29, 2004 “On Trade Secrets”. This Law is the key regulation that governs relations involving the introduction, modification and termination of non-disclosure requirements.  It defines what trade secret is, what measures are to be taken to protect it, and what rights and duties the parties involved in this relationship have.
3. The Labor Code of the Russian Federation (the Russian Labor Code). Article 57 of the Russian Labor Code states that an employment contract may contain terms requiring the employee not to disclose any information that constitutes the employer’s trade secret. Article 11 of the Russian Labor Code grants the employer the right to establish requirements for compliance with non-disclosure restrictions for trade secrets.
4. The Criminal Code of the Russian Federation (the Russian Criminal Code). Article 183 of the Russian Criminal Code provides for criminal liability for illegal receipt and disclosure of information that constitutes a trade, tax or banking secret, if this has caused major damage or was committed for mercenary motives.
5. The Code of Administrative Offences of the Russian Federation (the Russian Code of Administrative Offences). Article 13.14 of the Russian Code of Administrative Offences provides for administrative liability for illegal disclosure of information the access to which is restricted by federal law (including trade secrets).

The Law on protection of trade secrets No. 98-FZ deserves a closer look. Here are some of its basic provisions that elaborate on various aspects of the legal regulation and protection of trade secrets:

• Based on its definition, trade secret is information that has a commercial value due to being unknown to third parties, the access to which is limited, and which is subject to non-disclosure. To introduce non-disclosure requirements, a company has to make a list of information that constitutes a trade secret, provide the conditions for keeping this information in confidence, and have a procedure in place for treating this information, including measures to protect it.

Trade secret protection measures are part of the Comprehensive Security Development and Implementation service offered by SEVEN SENSES. Contact us with a request and we will build an effective confidential information protection system for you.

• Trade secret holders have certain rights.  For example, they can require that persons who have access to their trade secrets observe the non-disclosure requirements and comply with the measures designed to protect them.

• Employees with access to trade secrets have certain duties. They must not disclose them and must use them solely for the benefit of their employer and within the scope of their job duties.  It often happens that after having been dismissed employees continue to have access to the company’s trade secrets, which involves great risks. 

The legal fundamentals for the protection of trade secrets include not only federal laws but also secondary legislation and local regulations of companies. These include:

• Orders and directives: Internal documents of companies that govern the procedure for trade secret protection.
• Security policies: Devised and implemented measures for the protection of confidentiality of trade secrets that take into account technical and organizational aspects. As was mentioned earlier, the best solution is to entrust the development of these policies to professionals. At SEVEN SENSES, we are always willing to help you with addressing this challenge. 

The laws on trade secrets provide for several types of liability for failure to comply:

1. Civil law liability: Compensation for lost profits or damages caused to the owner of the trade secret. 
2. Administrative liability: Fines for illegal receipt or disclosure of trade secrets under the Russian Code of Administrative Offences.
3. Criminal liability: Punishment in the form of a fine, compulsory community service, arrest, or confinement for illegal receipt and disclosure of trade secrets.

Protecting information using trade secret laws is not the only way to prevent financial or reputational risk. Technical protection of information that constitutes a trade secret is another critical component in ensuring security of your company’s sensitive data. Modern technology and cyber threats require that advanced security measures be implemented to prevent data breaches and unauthorized access. In Russia, like in other countries, companies are not only entitled to the protection of their trade secrets, but are also required to take reasonable action to ensure it. Below, we will explore the key aspects and methods of technical protection of trade secrets.

1. Access control:

• Authentication and authorization: Using reliable authentication methods (passwords, biometrics, two-factor authentication) and authorization systems that grant access to information to authorized persons only.
• Role-based access model: Assigning access rights on the basis of employees’ roles, thus ensuring that confidential information can only be accessed by those directly using it in their work.

2. Data encryption:

• Storage-level encryption: Using encryption algorithms to protect data on servers, hard drives and other data storage media.
• Transmission encryption: Encrypting data whilst it is being transferred via networks, including with the use of SSL/TLS protocols.

3. Protection of networks:

• Firewalls: Installing and properly configuring firewalls to prevent unauthorized access to corporate networks.
• Intrusion prevention systems (IPS): Deploying systems to monitor the network and detect any suspicious activity.

4. Antivirus and antispyware software: Updating antivirus software and antispyware software on a regular basis to protect against malware that may jeopardize the security of trade secrets.
5. Data backup: Creating backup copies of data on a regular basis and storing them securely to provide the possibility to restore data in case it is lost or damaged.
6. Monitoring and audits:

• Deploying systems to monitor user activity and system events in order to detect any anomalies and unauthorized access attempts.
• Regular security audits and penetration testing to identify vulnerabilities. Professionals at SEVEN SENSES can also help you with this as part of our Penetration Test service.

To be more specific, there are some simple actions businesses can take right now to protect their sensitive information. Namely, these are:

1. Regular updates and patches: Updating operating systems, applications and software security systems to fix vulnerabilities that may be used by attackers.
2. Network separation: Using VLANs (virtual local area networks) and network segmentation to limit the spread of potential threats within a corporate network.
3. Establishing a password policy: Having strict password policies in place, including regular password changes, use of complex combinations of characters, and prohibited reuse of old passwords. 
4. Mobile device management: Deploying mobile device management (MDM) systems to control access to corporate data from mobile devices and protect this data. 
5. Staff training: Delivering regular skills workshops and training on cybersecurity and sensitive data protection for employees. And to test your employees for the ability to resist crypto scams, including social engineering attacks, you can use our Penetration Test service.
6. Secure communication channels: Using secure virtual private networks (VPNs) for remote access of employees to corporate resources.

Thus, regulating trade secret protection in Russia is essential in ensuring the successful operation of any company.  Effective protection of sensitive information enables businesses to remain competitive and prevent economic and reputational losses. Compliance with the trade secret protection legislation and deployment of complex technical safeguards help to ensure security of sensitive data and contribute to the stable development of companies. 

There is a number of quite effective measures for trade secret protection that you can take on your own. But it is best to seek for help from professionals in order to achieve the highest level of reliability of your security systems and resolve any essential related issues. Experts at SEVEN SENSES are always ready for your call to provide any assistance you need.