Various Issues Surrounding The Use Of Undisclosed Information

The Civil Code of the Republic of Kazakhstan recognizes the concept of "undisclosed information." Indeed, the right to use such information is a recurring topic in the provisions governing licensing/sublicensing contracts, pursuant to which a rightsholder (licensor) grants a licensee/sublicensee the right to use the rightsholder's intellectual property, including undisclosed information.

According to the Civil Code of the Republic of Kazakhstan, such information can comprise technical, organizational, and commercial data, including trade secrets (know-how), that are unknown to third parties. Under Kazakh law, such information may be deemed to be undisclosed if certain statutory conditions applicable to operational and commercial information are met:

The information is of actual or potential commercial value that derives from its nonpublic nature. The information is deemed, from a legal standpoint, not to already be publicly available. The information's proprietor has made demonstrable efforts to ensure its confidentiality. In practice, when undisclosed information transmitted for use pursuant to a licensing/sublicensing contract is used by the recipient party to conduct that party's own legitimate activities, this often includes further transmission of the information for use by the licensee/sublicensee's agents (consultants, distributors, and so forth). Thus undisclosed information, after being obtained, is sometimes ultimately transmitted by the licensee/sublicensee in such a way as to make it publicly known, typically by failing to further sublicense that information's use in a manner consistent with the terms already imposed on the licensee/sublicensee and instead transmitting the information pursuant to other—less stringent—civil contracts entered into with its agents.

The prevalence of such practices notwithstanding, Kazakhstan's competent bodies tend to construe such transmissions of undisclosed information by licensees/sublicensees to their agents as violations of the provision of the Civil Code of the Republic of Kazakhstan that governs disclosure of undisclosed information whose commercial value derives from its nonpublic nature. Specifically, the nature of the licensee/sublicensee's transmission of the undisclosed information is held to have obviated that information's actual or potential commercial value by making it, to some degree, public knowledge.

Accordingly, a licensee/sublicensee's transmission of undisclosed information...