protection of trade secrets in Iran and stock exchange market act
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Methods to protect trade secrets in Iran law

Any confidential business information which provides an enterprise a competitive edge may be considered a trade secret. Trade secrets encompass manufacturing or industrial secrets and commercial secrets. The unauthorized use of such information by persons other than the holder is regarded as an unfair practice and a violation of the trade secret. Depending on the legal system, the protection of trade secrets forms part of the general concept of protection against unfair competition or is based on specific provisions or case law on the protection of confidential information. See (What is a Trade Secret?) in WIPO Website.

There are two types of protections for trade secrets in Iran Legal System: 1- Civil Liability 2- Criminal Liability.

  • Civil Liability

Depending on nature and function of a particular trade secret, three types of civil liability can be distinguished in Iran law: A- Absolute liability B- Liability for losses C- Liability for fault.

A- Absolute liability

1- Absolute liability is a liability that arises merely by taking possession on other’s property. According to Article No. 308 of Iran Civil Code: “Seizure of another’s right by violence is called usurpation. Laying hands on another’s property without justification is also considered as usurpation.”
2- Origin of this liability is based on Islamic Law so it is important to consider the requirements of this kind of liability. The most important requirement for resort to this liability is the notion of “Property”. Since the notion of property in Islamic Law only includes tangible properties, the trade secret which could be protected under this type of liability must have very strong nature.

B- Liability of losses

1- In this type of liability, if anyone causes damage to other’s property will be liable for compensation of losses. According to Article No. 328 of Iran Civil Code: ” If anyone destroys the property of another person, intentionally or unintentionally, he or she will be held responsible and must either produce its equivalent or pay its value, whether it was the actual property or profits of that property; if he or she causes defect or damage to such property, he or she is responsible for the depreciation in price.” In this Article, the liable person has an active role in destruction.
2- According to Article No. 331 of Iran Civil Code: “Anyone who causes some property to be destroyed must compensate its equivalent or its value, and if he or she causes a defect or damage to it, he or she will be held responsible for any depreciation in value.” In this Article, the liable person has a passive role in destruction.

C- Liability for fault

1- Since those two types of liabilities were not sufficient to properly cover all damages, another act adopted in 1960 under title of “Civil Liability Act”.
2- According to this Act: If anyone causes any type damages to the rights and properties of others, will be responsible for compensation. In this Act, the scope of property widens to intangible properties and damage includes any financial or intellectual damages.
  • Criminal Liability

There is not any specific legal document on criminalization of violation of trade secrets but under special circumstances, disclosure of trade secrets can be considered as a crime.

A- Islamic Criminal Code

According to Article No. 648 of “Islamic Criminal Code”: If, anyone who due to his or her job or career have access to other’s secrets, exposes these secrets will be imprisoned for 91 days to one year or fine from one million and five hundred thousand Rial to six million Rial. As it is apparent from this Article, if someone has access to secrets in a way other than his or her job or career, disclosure of secrets does not considered as a crime.

B- Stock Exchange Market Act

 According to Article No. 46 of “Stock Exchange Market Act”: If, anyone one who due to his or her career have access to secret information about stocks: 1- Uses them to detriment of others or 2- Uses them in his or her benefit or 3- Uses them in benefit of his or her other clients or 4- Expose them before public disclosure, will be: 1- Imprisoned from three months to one year or 2- fine twice to five times in the rate of acquired profit or Incurred losses or 3- Both of these punishments.

C- Electronic Commerce Act

According to Article No. 64 and 75 of “Electronic Commerce Act”: 1- Unlawful access to trade secrets of other companies or entities in cyberspace 2- Disclosure of trade secrets of other companies or entities in cyberspace is punishable by imprisonment from six months to thirty months and fifty million Rial fine.
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