Why Business Secrets Are or Should Be a Concern for Companies?

This chapter reviews the macro-level drivers for the need to develop better practices for business secrets, which include but are not limited to trade secrets and sensitive information, and are the basic elements necessary to build Intangible Assets. Many companies focus on specific types of Intangible Assets particularly patents, which may bring high value due to their monopoly power. But patents may no longer ensure good future revenues in an IT and data driven economy; in many sectors, technologies’ lifetime is shorter, and it becomes easier for competitors to bypass patented technology. Business secrets have become more important, as secrecy is sometimes the only way to protect their competitive advantage (whether strategic, business, technical, financial, etc.) in a context of strong competition worldwide (and even more so where international trade restrictions are imposed). But an increasing digital world creates new risks of information leakage. We set out the global trends and some of the obstacles that companies face when trying to control business secrets; we look at how financial reporting standards play a role in establishing support for proactive management of business secrets as well as how HR, IT, and Legal functions support an overall governance—to address the question: “How can Confidential Information become a business secret, benefiting from legal protection and, as a consequence, how can its value and even therefore its recognition as an Intangible Asset be established to the benefit of the company and its users?”