Introduction
Commercial Companies Law
Civil Code
Penal Code
Patent and Design Law
Labour Relations Law
This article is the second in a series outlining the practical aspects of trade secrets legislation and procedure in the United Arab Emirates.(1) In particular, this article sets out the key provisions.
As there is no trade secret law or official definition of what constitutes a trade secret or a breach thereof in the United Arab Emirates, various laws must be reviewed in order to get a complete picture of the provisions that apply to trade secrets, confidential information and know-how.
Article 354 of the Commercial Companies Law provides that a person who discloses company secrets may be subject to:
- imprisonment for up to six months; or
- a fine of between 50,000 and 500,000 dirhams.
Article 905 of the Civil Code provides that employees are under an obligation to keep the industrial and trade secrets of their employer. Employees who fail to do so may be liable for claims for damages or compensation.
Article 922(1) states that actions arising out of a contract of employment are prescribed after one year from the time of termination of the contract. However, article 922(2) states that actions relating to the disclosure of trade secrets are not subject to such limitation.
Article 432 of the Penal Code provides for sanctions in cases of unauthorised disclosures that take place:
- for a person's own interest or benefit or for the interest or benefit of another; and
- if the person became entrusted with the secret by virtue of their profession, craft, position or art.
Sanctions include:
- imprisonment for up to one year; or
- a fine of up to 20,000 dirhams.
Article 61
Article 61 of the UAE Patent and Design Law includes provisions for the protection of undisclosed information where:
- the information is confidential;
- the commercial value of the information originates from its confidentiality; and
- the possessor has taken effective procedures to maintain the confidential nature of the information.
Article 62
Article 62 is particularly relevant to pharmaceutical companies looking for marketing authorisation. It provides guidelines for the management of confidential information provided to governmental bodies, at their request, to permit pharmaceutical companies to market chemical or agricultural products and use new chemical compounds necessary for tests to be performed to permit the marketing. Government bodies must protect the confidential information for a period of five years from the date of provision of the information, provided the information is not disclosed sooner.
Article 63
Article 63 places requirements on the possessor of the undisclosed information with which they must comply in order to rely on this section. Such requirements include the following:
- The legal possessor must prevent access to the information by non-competent persons.
- The information must be restricted to competent persons.
- The possessor must show reasonable efforts to maintain the information as confidential before it has recourse against third-party infringers.
- The information will remain confidential despite a disclosure, provided all the requirements under article 61 are maintained.
Article 64
Article 64 provides a list of actions that contravene fair commercial practices, which include:
- giving kickbacks to employees in the entity that possesses the information for the purpose of obtaining the information;
- incitement of information disclosure by employees, if the information is accessed by the employees ex officio;
- the disclosure of information by a contracting party to a contract of information confidentiality;
- accessing the information from the places of their maintenance in any illegitimate way, such as stealth or spying;
- accessing the information using fraudulent means;
- the use of information received by a third party through any of the previous actions while being aware of its confidentiality; and
- any other actions that are considered to contravene fair commercial practices.
Sanctions include:
- imprisonment; and/or
- a fine of between 100,000 and 1 million dirhams.
Article 10
Article 10 of the Labour Relations Law sets out the following provisions relating to non-compete clauses:
- The non-compete period of non-compete shall not exceed two years from the date of expiry of the contract.
- Dismissal of an employee for disclosure of a trade secret must be preceded by a thorough investigation (and notification in writing). An employee can only be dismissed where the disclosure "result[s] in losses to the employer, or loss of an opportunity, or brought a personal benefit to the employee".
Sanctions include a fine of between 20,000 and 100,000 dirhams. However, employers may not deprive employees of end-of-service gratuity.
Article 16
Article 16 of the Labour Relations Law provides that employees must:
- maintain the confidentiality of the information and data to which they have access by virtue of their work, not disclose work secrets and return custody of the information and data to the employer upon the end of their service; and
- not keep, in a personal capacity, any original papers, hard copies or soft copies related to work secrets without the permission of the employer or its representative.
For further information on this topic please contact Richard Gaugeler at Bird & Bird by telephone (+44 20 7415 6000) or email ([email protected]). The Bird & Bird website can be accessed at www.twobirds.com.
Endnotes
(1) For the first article in this series, see "Practical guide to trade secrets in the United Arab Emirates: relevant legislation". For the second article in a similar series on trade secret law in Saudi Arabia, see "Practical guide to trade secrets in Saudi Arabia: key provisions". For the first article in a similar series on patent law in the United Arab Emirates, see "Practical guide to patents in the United Arab Emirates: relevant legislation".