Can Personal Data Be Considered A Trade Secret?

(MENAFN- The Conversation) Have you ever wondered why some people say“Data is the New Oil”?

First coined by British mathematician Clive Humby in 2006, the statement illustrates how, similar to oil/mining, personal data is a valuable asset that generates huge profit . Businesses, governments, and SMEs treat data as a key intangible asset for success.

Humby's view has both received traction and rebuttals . But with the rise of the digital economy era, some organisations such as Google and X (Twitter) increasingly treat personal data as a trade secret.

In contrast, other institutions, such as the Court of Justice of the European Union on General Data Protection Regulation (GDPR), reject such notion . It argues that personal data is a fundamental right that is different from a trade secret, thus cannot be protected under trade secret law. It is not a commodity that can be traded for.

Can personal data truly be considered as a trade secret? How do data ownership and trade secrecy overlap in practice?

Trade secret vs personal data

Data comes with insights that can retain customers, highlight key selling points, drive innovation, or help formulate effective advertising, thus making it a fuel as valuable as oil.

Meanwhile, a trade secret is business information kept confidential through appropriate efforts for commercial or economic value. Failure to protect trade secrets from the public may result in the loss of legal protection for their value, formula or information. Thus, trade secrets must be protected from public access.

Trade secrets include the fields of technology or business that can generate market value, including information or data with selling value or potential in increasing economic profits.

apichatn/ shutterstock.

However, personal data is information that can identify an individual and is typically protected by data privacy or data protection law . It does not inherently confer competitive value unless aggregated or analysed in a specific way or in specific circumstances – explained below.

The arrest of Huawei executives by Washington is one example of the strategic nature of data today. tom hollett/ shutterstock. How to protect personal data using trade secrets

Personal data has become an important asset that must be kept safe and confidential. Every collection process must be based on the consent of the data subject

When personal information is used as 'fuel' or an asset for predictive algorithms and other emerging technologies, it becomes a trade secret that should be protected, under certain conditions.

First, control and license . Individuals have the right to manage their data, including its use, sharing, and access. A licensing framework can help protect data while allowing negotiations with companies. Similarly, businesses can control and license trade secrets to prevent them from unauthorised disclosure.

Second, commercial standards. As data becomes the 'fuel' of business operations, companies must treat it with the same confidentiality as trade secrets. Given its significant economic value, protecting personal data is crucial to prevent leaks or theft.

In this case, personal data can be protected by governing rules related to trade secrets since it is used for commercial activities in the scope of business and is considered a market-oriented purpose. E-commerce and digital marketplaces – which use, process, and access personal data of their users for the sake of their operations and business – can actually use trade secrets as a way of protecting the personal data they collect.

Besides, using personal data as a 'fuel' for a business must acknowledge the right to confidentiality. Some EU countries, under the GDPR, allow individuals to claim compensation.

Nevertheless, some scholars believe that personal data lacks commercial value in secrecy . Trade secrets require confidential information to have economic value due to their secrecy.

In fact, personal data is often shared with businesses, service providers, and public entities, meaning its value lies in use, not secrecy.

Safely unlocking the potential of personal data

When personal data is controlled and processed by businesses, especially marketplaces and tech companies, it can, under certain conditions, qualify as a trade secret. Treating users' data as a trade secret encourages stricter compliance and accountability in its protection.

However, organisations must be mindful of the boundaries between data portability and trade secret protection , especially when balancing user rights and corporate privacy. Failing to maintain confidentiality could result in data breaches, expose sensitive information to competitors, and trigger serious legal consequences.

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