Trade Secrets in Uzbekistan: The Legal Regime in the Corporate Environment

In the modern economy, information acquires independent proprietary value. Technological solutions, financial models, customer databases, logistics schemes, production parameters, and other data may form a company’s competitive advantage no less than tangible assets. For this reason, the institution of trade secrets serves as a key instrument for protecting the intangible interests of business.

On September 11, 2014, the Law of the Republic of Uzbekistan “On Trade Secrets” was adopted, regulating relations connected with the definition, protection, and use of information having commercial value for business entities. The Law establishes which information may constitute a trade secret, which information may not be classified as such, defines the rights and obligations of the information owner, employees, counterparties, and state authorities, and also sets out measures for the protection of trade secrets and liability for their unlawful acquisition, disclosure, or use.

The Model Regulation on Compliance with the Trade Secret Regime for Enterprises and Organizations Whose Employees Have Access to Trade Secrets, registered by the Ministry of Justice of the Republic of Uzbekistan on July 28, 2016 under No. 2818 (hereinafter, the “Model Regulation”), proceeds from the premise that a trade secret includes information in scientific-technical, technological, production, financial-economic, and other spheres, provided that such information is unknown to third parties, has commercial value, is not freely used on lawful grounds, and its holder takes measures to protect its confidentiality. At the same time, the document explains the concepts of a confidant, trade secret regime, the “trade secret” marking, the trade secret commission, and the list of information constituting a trade secret.

From a scholarly perspective, this means that legal protection is granted not to any internal company information, but only to information that meets a set of legally significant criteria and in respect of which a real, rather than merely formal, protective regime has been established.

Scope and Regulatory Function of the Model Regulation

The Model Regulation expressly states that it governs relations connected with compliance with the trade secret regime in enterprises and organizations in whose charter capital the state share exceeds 50 (fifty) percent. For other organizations, its provisions are recommendatory in nature. This legislative and regulatory choice demonstrates the dual nature of the document: for some entities, it functions as a mandatory regulatory and organizational standard, while for others it serves as a best-practice model suitable for adaptation in the local acts of private companies.

The practical significance of this structure lies in the fact that even private businesses, though not formally bound by every provision of the document, receive a ready-made architecture for an internal compliance mechanism: from defining the list of secret information to the rules for transfer, recording, and destruction of carriers. Thus, the Model Regulation performs not only a regulatory but also a methodological function.

Legal Nature of a Trade Secret

The document defines a trade secret as information having commercial value by virtue of being unknown to third parties, not being freely usable on lawful grounds, and being protected by its holder through special measures. Four key characteristics follow from this definition:

First, the information must have actual or potential economic value.

Second, it must not be generally known or publicly accessible.

Third, access to it must not be freely available on lawful grounds.

Fourth, the holder must take measures to protect its confidentiality.

Accordingly, the trade secret regime in Uzbek law is built on an objective-subjective model. The objective element is expressed in the properties of the information itself, while the subjective element lies in the will and actions of the holder in establishing the regime. The absence of any of these elements may cast doubt on the legitimacy of invoking trade secret protection in a dispute.

Also important is the provision that the holder of a trade secret may independently determine additional methods for its protection not provided for in the Model Regulation, taking into account the specifics of its activities. This indicates the dispositive nature of legal regulation in terms of strengthening protective mechanisms.

Limits of the Regime: What Information May Not Constitute a Trade Secret

One of the most significant aspects of the document is having a list of information that may not constitute a trade secret. Such information includes, in particular, information on rights to property subject to state registration, and transactions involving such property; constituent documents and registration information of a legal entity; documents granting the right to carry out business activity; environmental and sanitary-epidemiological information; information on the number of employees, remuneration systems, and working conditions; wage arrears and social payment arrears; facts of violations of the law; information on privatization procedures; certain information about non-profit organizations; the list of persons authorized to act on behalf of the legal entity without a power of attorney; as well as data subject to submission in state statistical reporting. In addition, other information whose disclosure is mandatory by law may not constitute a trade secret either.

This list has fundamental theoretical significance. It shows that the institution of trade secrets may not be used as a means of evading transparency, public reporting, labor guarantees, and state control. In other words, trade secrets protect competitively valuable information, but may not legitimize the concealment of socially significant, publicly relevant, or legally disclosable data.

From the standpoint of law enforcement practice, it is precisely at this stage that companies often make a critical mistake: they define the list of confidential information too broadly and include data which, by law, cannot be classified. Such an expansive interpretation may weaken the employer’s position in court, since an employee may challenge the unlawful establishment of a trade secret regime in respect of information to which the employee was granted access.

Organizational Model for Ensuring the Trade Secret Regime

The Model Regulation establishes a multi-level system for managing the trade secret regime. The central role belongs to the head of the organization. It is the head who approves the list of information constituting a trade secret, makes decisions on its amendment, approves the list of employees admitted to use trade secrets, supervises the development and implementation of protective measures, and resolves other issues related to the establishment and observance of the regime.

At the same time, the document provides for the establishment of a specialized structural subdivision or the appointment of a separate official responsible for day-to-day organizational and supervisory work. Such subdivision is entrusted with functions related to the organizational support of protection, development of measures jointly with other subdivisions, accounting for material carriers, assigning markings, transferring materials to confidants, conducting internal investigations in cases of disclosure or loss, preparing draft amendments to the list, and accounting for safes and metal cabinets.

In addition, a trade secret commission consisting of at least three persons is created. It conducts an examination of proposals from structural subdivisions on including information in the trade secret regime, considers issues concerning the duration of the regime, carries out inventory of carriers, and formulates proposals for preventing loss and improving the protection mechanism. The commission’s decisions are made where a quorum is present and with the participation of the chairperson.

From a scholarly perspective, such a model deserves a positive assessment, since it separates rule-making, managerial, and supervisory functions. The head of the organization forms the will of the organization, the specialized subdivision ensures ongoing administration, and the commission creates an expert filter and reduces the risk of arbitrary classification of information as a trade secret.

Formation of the List of Information Constituting a Trade Secret

The Model Regulation establishes that the list is formed on the basis of written applications from structural subdivisions. One copy of the material carrier containing commercially valuable information is attached to the application. The commission then conducts an examination and adopts a conclusion on whether it is expedient to extend the trade secret regime to the relevant information or part thereof, as well as on the duration of such regime. The conclusion is formalized in minutes, signed by all commission members, and approved by the head of the organization. Thereafter, the list is approved by an order on the introduction of the trade secret regime. The regime comes into effect from the date of adoption of the relevant order.

Particular attention should be paid to the fact that the list is not recognized as a static document. The duration of the regime may be changed, the regime itself may be canceled, and where the information changes substantially, the list is formed anew. This shows that a trade secret is a dynamic legal regime that must follow actual changes in business processes rather than exist merely as an archaic local act.

From a doctrinal point of view, it may be argued that the list of information constituting a trade secret is a key evidentiary document. In the absence of a clear list, it is extremely difficult for the employer to prove that particular information indeed had protected status on the date of the alleged violation.

Marking, Accounting, and Material Carriers as an Element of Proving the Regime

The Model Regulation regulates in detail the procedure for assigning the “Trade Secret” marking to material carriers. With respect to documents, it requires a title page indicating the name and brief annotation, binding, page numbering, indication of the number of pages, and the signature of the responsible employee. The title page must indicate the words “Trade Secret” or “TS,” the full name of the document, the name of the trade secret holder, the duration of the regime, the date and number of the order establishing the regime, as well as the object number according to the list. Similar details must also be affixed to volumetric information carriers, including external drives, CDs, DVDs, and flash cards.

This regulation is of fundamental importance. In judicial and disciplinary practice, an employer’s mere reference to the confidentiality of information often proves insufficient. It is necessary to prove that the carrier was individualized, recorded, transferred to the appropriate person, and accompanied by a warning understandable to the recipient regarding the special regime. For this reason, marking and accounting should be viewed not as bureaucratic formalities, but as a legal technique for materializing secrecy.

The document also regulates in detail the receipt of incoming materials, verification of the addressee and integrity of envelopes, registration of carriers, keeping of logs, transfer of materials to executors, formation of files, internal inventories, rules for withdrawal of documents, copying, storage in safes, archiving, and destruction. Thus, a closed life cycle of the trade secret carrier is created—from its creation or receipt to its destruction or transfer to the archive.

Employee Access and the Legal Aspect of the Trade Secret Regime

A separate set of provisions is devoted to the admission of employees to the use of trade secrets. The document establishes that admission is granted on the basis of authorization, while the list of employees having such access is compiled by the heads of structural subdivisions and approved by order of the head of the organization. If the use of trade secrets is not part of an employee’s job duties, it is allowed only with the employee’s consent.

The employer must acquaint the employee, against signature, with the list of information constituting a trade secret, with the established regime, and with the measures of liability for its violation, and must also create the necessary conditions for compliance with the regime. In turn, the employee is obliged to observe the established regime, not to disclose trade secrets and not to use them for personal purposes without the employer’s consent, and upon termination of the contract, to return or destroy the carriers in their possession under the employer’s supervision. In addition, employment or civil-law contracts must expressly provide for the mutual obligations of the parties regarding the protection of trade secrets and the duration of post-contractual non-disclosure.

These provisions confirm that the protection of trade secrets cannot be based solely on an abstract duty of loyalty. It must be embedded in the contractual structure and confirmed by acknowledgements, orders, and local acts. Otherwise, the regime risks remaining purely declaratory.

It is especially important that termination of employment does not release the employee from assumed non-disclosure obligations, while grounds for termination of access include both termination of the contract and violation of obligations to preserve secrecy.

What May and May Not Be Considered a Trade Secret

May be considered a trade secret	May not be considered a trade secret
Scientific and technical information unknown to third parties and having commercial value	Information on rights to property subject to state registration and transactions with such property
Technological solutions, internal production processes, formulas, schemes, methods	Constituent documents and information confirming entries in state registers
Production data, internal specifications, production parameters	Documents granting the right to carry out entrepreneurial activity
Financial and economic information, if it is not public and is genuinely protected	Information on the composition of the property of state institutions and their use of budget funds
Other information having actual or potential commercial value for the organization	Information on environmental pollution, fire safety, sanitary-epidemiological and radiation conditions, food safety, and other factors affecting citizens’ safety
Internal databases, customer lists, commercial strategies, if they are formally included in the list and protected by the regime	Information on the number and composition of employees, remuneration systems, working conditions, labor protection, occupational injuries, occupational diseases, and vacancies
Documents and carriers marked “Trade Secret” and included in the organization’s internal list	Information on the employer’s wage arrears and social payment arrears
Information included in the approved trade secret list following the commission’s examination	Information on violations of the law and facts of liability
Information access to which is restricted by order, local acts, employee admission, and protective measures	Information on the conditions of tenders and auctions for privatization of state-owned property
Information which the organization reasonably protects as confidential, taking into account the specifics of its activities	For NGOs: information on income, property, expenses, number of employees and remuneration, as well as the use of citizens’ unpaid labor
—	The list of persons authorized to act on behalf of the legal entity without a power of attorney
—	Information subject to submission in state statistical reporting
—	Any other information whose disclosure is mandatory by law or in respect of which the law does not permit restriction of access

 

Examples

No.	Information / example	May it be considered a trade secret?	Why
1	Internal production technology	Yes	This is scientific-technical and technological information that may have commercial value and be unknown to third parties.
2	Recipe, formula, composition of a product	Yes	If it has commercial value and a confidentiality regime is established, such information usually falls within the scope of a trade secret.
3	Customer database with contacts and order history	Yes	It may be protected as valuable commercial information if the company genuinely restricts access and includes it in the list.
4	Internal business plan for entering a new market	Yes	This is financial-economic and organizational information capable of providing a competitive advantage.
5	Purchase prices from suppliers and individual discounts	Yes	Such information may have direct commercial value and may not be known to competitors.
6	Terms of negotiations on a major transaction before signing	Yes	Before public disclosure, this may be confidential commercially valuable information.
7	Internal reports on cost price and profitability	Yes	Financial and economic calculations often belong to commercially sensitive information.
8	Sales department algorithm, scripts, funnel, KPI model	Yes	If this information ensures a competitive advantage and is protected by the regime, it may constitute a trade secret.
9	Constituent agreement / company charter	No	Constituent documents and information from state registers expressly may not constitute a trade secret.
10	Certificate of state registration or company license	No	Documents granting the right to conduct business are not treated as trade secrets.
11	Information on the number of company employees	No	Information on the number and composition of employees is expressly excluded from the trade secret regime.
12	Information on remuneration system and working conditions	No	Such information concerns employees’ labor rights and may not be classified as a trade secret.
13	Employer’s wage arrears	No	Information on wage arrears and social payment arrears may not constitute a trade secret.
14	Data on environmental pollution or sanitary safety	No	Environmental, sanitary-epidemiological, and other information affecting citizens’ safety may not be classified.
15	List of persons authorized to act on behalf of a legal entity without a power of attorney	No	This information is expressly listed among those which may not constitute a trade secret.