Meta Platforms, formerly known as Facebook, recently launched an app called Threads, which quickly gained over 10 million users within the first seven hours[1]. The app aims to provide a more personal and intimate way for users to connect with their friends and followers. However, Meta’s competitor, Twitter is not happy with Threads, and has accused Meta of misusing its “trade secrets and other intellectual property” to develop the Threads app.
Twitter attorney Alex Spiro claims that Meta hired several former Twitter employees who still had access to confidential information and trade secrets. Twitter also accused Meta of using such information to further develop the “copycat” app[2].
In a letter sent to Meta’s CEO and founder Mark Zuckerberg, Twitter’s lawyer Alex Spiro wrote:
“Twitter intends to strictly enforce its intellectual property rights, and demands that Meta take immediate steps to stop using any Twitter trade secrets or other highly confidential information.”
In response, Meta has denied these allegations, asserting that Threads is a “new and innovative” app that does not infringe on Twitter’s intellectual property. The company has expressed confidence that it will prevail in the face of these accusations.
So is Meta’s Thread a threat to Twitter’s trade secrets?
It’s still early to say for sure. However, the allegations against Meta are serious, and the outcome of the allegation could have a significant impact on the tech industry when trade secrets are involved. Interestingly, this turn of events includes a shift in perspective from Twitter’s owner, Elon Musk. In the past, Musk has criticised the farcical[3] nature of intellectual property registration and has made many of his own inventions open source[4]. However, in a surprising move, Musk has decided to take legal action and threaten to sue Meta for alleged trade secret violations. This suggests that Musk now sees Meta’s Thread as a genuine threat to Twitter, contradicting his previous stance on open innovation and the importance of safeguarding intellectual property, particularly trade secret.
This gripping case raised crucial questions about the importance of safeguarding trade secrets and intellectual property. Trade secrets confer a competitive edge and valuable assets for businesses, and they must be safeguarded carefully. Instead of waiting for potential infringements that could lead to future difficulties, businesses should focus on safeguarding their trade secrets.
What is Trade Secret?
A trade secret is confidential information that gives a business a competitive advantage[5]. Trade secrets can include anything from product formulas to marketing strategies. In Twitter’s case, the source codes and users’ database are their trade secrets.
Trade Secret Protection in Malaysia
In Malaysia, trade secrets are recognised as confidential information but do not require registration for protection. Unlike other forms of intellectual property, trade secret protection is enforced through legally binding contracts rather than specific legislation. Disputes regarding trade secret infringement can only seek remedy for infringement under the common law tort of breach of confidentiality as no direct statutory protection nor definition of trade secret exists.
Trade secrets are eligible for protection as long as they meet specific criteria: they must be commercially valuable, known only to a limited group, and the rightful holder must take reasonable steps to keep them confidential.
How to Safeguard Trade Secret
We learned that trade secrets confer a competitive edge to businesses. To safeguard trade secrets, it is recommended that you establish confidentiality agreements, non-disclosure agreements (NDAs), and clauses to prevent employees and other parties from divulging confidential information. These agreements should be in place during and after employments to ensure the ongoing protection of trade secrets. In Malaysia, trade secret protection relies on legally binding contracts rather than specific legislation. Disputes regarding trade secret infringement are typically resolved through Malaysian courts.
In Dynacast (Melaka) Sdn Bhd v Vision Cast Sdn Bhd[6], the court ruled that for a trade secret dispute to be actionable, the specifics on the trade secrets must be identified. In this case, the plaintiff’s failure to specifically identify the confidential information (the trade secret) led to their case being dismissed. This shows the importance of carefully identifying the trade secrets that you believe have been infringed upon.
Conclusion:
The case between Twitter and Meta is a complex one, and the outcome is still uncertain. However, the case raises important questions about the future of trade secrets in the tech industry. As the tech industry becomes more competitive, it is likely that we will see more cases of trade secret theft. Businesses in the tech industry need to be aware of the risks of trade secret theft and take steps to protect their confidential information.
[1] https://www.forbes.com/sites/siladityaray/2023/07/06/zuckerberg-says-threads-crossed-5-million-signups-in-first-four-hours-as-musk-rails-against-instagram/?sh=29ccc4ad632c
[2] https://www.cbsnews.com/news/twitter-threatens-lawsuit-meta-threads-elon-musk-mark-zuckerberg/
[3] https://www.businessinsider.com/elon-musk-patents-2012-11
[4] https://www.tesla.com/blog/all-our-patent-are-belong-you
[5] https://www.wipo.int/tradesecrets/en/
[6] [2016] 3 MLJ 417.
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About the author:
This article was written by Lim Yong Lin, Trainee Lawyer – law firm in Kuala Lumpur, Malaysia.
The view expressed in this article is intended to provide a general guide to the subject matter and does not constitute professional legal advice. You are advised to seek proper legal advice for your specific situation.
