The EU Trade Secrets Directive 2016/943 contains a variety of confidentiality protections expressly protecting the publicity of the proceedings because “[t]he prospect of losing the confidentiality of a trade secret in the course of legal proceedings often deters legitimate trade secret holders from instituting legal proceedings to defend their trade secrets, thus jeopardising the effectiveness of the measures, procedures and remedies provided for. For this reason, it is necessary to establish, subject to appropriate safeguards ensuring the right to an effective remedy and to a fair trial, specific requirements aimed at protecting the confidentiality of the litigated trade secret in the course of legal proceedings instituted for its defence.” Article 9 of the Directive specifically required EU member states to implement rules creating such protections, such as by restricting access to hearings and creating so-called “confidentiality rings” or “confidentiality clubs” limiting the dissemination of confidential information and documents to designated persons.

The United Kingdom’s implementing law, the Trade Secrets (Enforcement, etc.) Regulations 2018, requires that the court have the power to restrict access to documents containing alleged trade secrets and to hearings. s. 10(5). There is already significant maturity in the kinds of confidentiality protections available in English litigation so this is unlikely to lead to significant change. Although the principle of open justice is a fundamental feature of the legal system and departures are permitted only if necessary in the interests of justice, exceptions and restrictions to openness and respect for confidentiality are actually already well-established in the United Kingdom. See McKillen v Misland (Cyprus) Investments Ltd and others [2012] EWHC 1158 (Ch).

“Confidentiality rings” or “confidentiality clubs” have been expressly contemplated in cases involving trade secrets for some years. The necessity of a confidentiality club is driven by the facts of the case:

Each case has to be decided on its own facts and the broad principle must be that the court has the task of deciding how justice can be achieved taking into account the rights and needs of the parties. The object to be achieved is that the applicant should have as full a degree of disclosure as will be consistent with adequate protection of the secret. In so doing, the court will be careful not to expose a party to any unnecessary risk of its trade secrets leaking to or being used by competitors. What is necessary or unnecessary will depend upon the nature of the secret, the position of the parties and the extent of the disclosure ordered. However, it would be exceptional to prevent a party from access to information which would play a substantial part in the case as such would mean that the party would be unable to hear a substantial part of the case, would be unable to understand the reasons for the advice given to him and, in some cases, the reasons for the judgment. Thus what disclosure is necessary entails not only practical matters arising in the conduct of a case but also the general position that a party should know the case he has to meet, should hear matters given in evidence and understand the reasons for the judgment. [1]

A confidentiality club typically imposes restrictions on the disclosure process by stipulating one or more of the following:

  • Who should have access to the disclosed documents.
  • How those documents may be copied.
  • Where the documents may be viewed.
  • The dissemination of information contained in the documents.

Parties to a confidentiality club are also typically required to provide undertakings regarding their compliance with the confidentiality club. This is little different from the Regulation’s requirement that a participant in proceedings may be ordered by the court to keep trade secrets confidential. s. 10(1).

It is also possible to seal the court file by making an application under CPR 5.4C(4). Very recent guidance from the Supreme Court has also indicated that third parties, while having an inherent right to seek documents from a court file, can be denied it even without a seal having been expressly put in place:

There may be very good reasons for denying access. The most obvious ones are national security, the protection of the interests of children or mentally disabled adults, the protection of privacy interests more generally, and the protection of trade secrets and commercial confidentiality. In civil cases, a party may be compelled to disclose documents to the other side which remain confidential unless and until they are deployed for the purpose of the proceedings. But even then there may be good reasons for preserving their confidentiality, for example, in a patent case. [2]

Parties may request a hearing be held in private under CPR 39.2 which is relatively common-place where confidential information is at issue. However, parties can expect a departure under the Regulation from the general position on the issue of judgments. Although there is generally a strong presumption that judgments be public, R (Mohamed) v The Secretary of State for Foreign and Commonwealth Affairs [2010] EWCA Civ 65, in trade secret cases, redactions are expressly contemplated under the new Regulation. ss. 10(4) and 10(5)(c).

More to come on how confidentiality clubs have been implemented in other jurisdictions…