I.

Introduction

The Philippines has an economic system that lies on varieties of scheme to

stimulate its growth. Private economic freedom, including industries that are privately
owned, together with centralized planning and government regulation. As an
industrialized country, the Philippines is moving from an economy that was based on
agriculture to an economy dominated by manufacturing services.

The state ensures the fair and impartial distribution of opportunity amongst the
people, as reflected in our law that, "The goals of the national economy are a more
equitable distribution of opportunities, income, and wealth; a sustained increase in the
amount of goods and services produced by the nation for the benefit of the people; and
an expanding productivity as the key to raising the quality of life for all, especially the
underprivileged."1

Furthermore, "The State shall promote industrialization and full employment

based on sound agricultural development and agrarian reform, through industries that
make full and efficient use of human and natural resources, and which are
competitive in both domestic and foreign markets. However, the State shall protect
Filipino enterprises against unfair foreign competition and trade practices." 2

Unfair trade practices (UTPs) demonstrate anti-competitive behavior 3 which

prohibits by the laws of the land.

This research would focus on a certain category of Unfair Trade Practices in the
Philippines and to the issues that surrounds it.

1
CONST. Art. XII, sec. 20, par. (1)
2
CONST. Art. XII, sec. 20, par. (2)
3
Abad, Anthony A. et.,al. Unfair Trade Practices in the Philippines. Makati City:
Philippine Institute for Development Studies, 2012.
What is Unfair Trade Practice?

Unfair trade practices (UTPs) demonstrate anti-competitive behavior which can

be characterized into two general types: exclusionary abuse an act of the firm (or a
group of firms) to prevent entry of potential firms; or exploitative abuse referring to
actual abuse of market power (Medalla 2002). Examples of exclusionary abuse are
predatory pricing, arrangement to divide the market, unjustly raising rivals cost and
unjustified refusal to deal with other firms. Examples of exploitative abuse include cartel
agreement to fix prices (such as set price above competitive levels) and limit levels of
output.5

Meanwhile, Cornell Universitys Legal Information Institute (2010), [as cited in

Abad, et., al, (2012)] defines the law of unfair competition as tortsdeceptive or
wrongful practicesimplemented by a business that cause an economic injury to
consumers or other businesses. Unfair competition can be broken down into two
categories. These are "unfair competition" which is sometimes used to refer only to
those torts that are meant to confuse consumers as to the source of the product and
"unfair trade practices" which includes all other forms of unfair competition. According to
the Institute, what comprises an "unfair" act varies with the context of the business, the
action being examined, and the facts of the individual case 6.

The Institute cited two common examples of unfair competition i.e. trademark
infringement and misappropriation. The latter includes the unauthorized use of an
intangible assets not protected by trademark or copyright laws 7. These intangible assets
that are not protected by trademark or copyright laws are the Trade Secrets.

What is Trade Secret?

A trade secret is defined as a plan or process, tool, mechanism or compound

known only to its owner and those of his employees to whom it is necessary to confide
it.7

Generally, Trade Secret involves information, including a formula, pattern,

compilation, program, device, method, technique, or process, that derives independent
economic value, actual or potential, from not being generally known to or readily
ascertainable through appropriate means by other persons who might obtain economic
value from its disclosure or use; and is the subject of efforts that are reasonable under
the circumstances to maintain its secrecy.
4
ibid. Note3
5
Medalla, Erlinda. Competition Policy in East Asia. Abingdon, Oxon: Routledge, 2005
6
Cornell University's Legal Information Institute, 2010. Ibid. Note3
7
BLACKS LAW DICTIONARY 1494 (1991), 6TH ed.
How is Trade Secrets protected?

As a member country of the WTO, the country is also a signatory to

the Trade-Related Aspects of Intellectual Property Rights (TRIPS)
Agreement.

Under the agreement, member state should provide for trade secret
protection. As a realization to that purpose, to safe guard trade secrets,
parties may sign for a Non- Disclosure and Confidentiality Agreement.

What is the difference between a Trade Secret and a Patent?

Trade Secrets are not publicly disclosed by its owner. In contrast,

patents are publicly disclosed by its owner. In return, the government grants
the patent owner an exclusive right to exclude others from making, using,
importing, and offering for sale the product of his invention.

Patent protection lasts for twenty years from the date of application.
Trade secrets are not protected under the Intellectual Property Code of the
Philippines.8

1
CONST. Art. XII, sec. 20, par. (1)
2
CONST. Art. XII, sec. 20, par. (2)
3
Abad, Anthony A. et.,al. Unfair Trade Practices in the Philippines. Makati City:
Philippine Institute for Development Studies, 2012.