The UK will implement the EU Trade Secrets Directive (2016/244/EU) this Saturday, 9 June 2018.
As we discussed in our recent international IP newsletter, currently, the law concerning trade secrets varies across the EU. The aim of the Directive is to harmonise the protection of trade secrets in all Member States. Here, we take a look at what this means for businesses in the UK.
How does the Directive change the existing law?
Confidential information is currently protected through case law in the UK. In order to successfully claim for a breach of confidence, it is necessary to establish 3 key requirements:
- The information has the necessary quality of confidence (i.e. it is not generally known by the general public, or persons who specialise in that subject).
- The information was shared in circumstances imparting an obligation of confidence (i.e. a reasonable person would have realised that the information was being given in confidence).
- There has been an unauthorised use of that information to the detriment of the party communicating it (i.e. it has been used by the recipient for purposes beyond the consent of the owner, or it has been disclosed to third parties without the owner’s consent).
The substance of the Directive largely reflects the existing UK law on trade secrets. The new UK legislation implementing the Directive (the Trade Secrets (Enforcement, etc.) Regulations 2018 (SI 2018/597)) therefore focus on the procedural issues associated with implementation.
At the same time, the new Regulations make it clear that the existing UK law on breach of confidence will continue to run in parallel with the new rights and remedies set out in the Directive.
For further information on the changes introduced by the Directive in relation to employers, please see our previous article.
A new definition for trade secrets
The Directive introduces a new harmonised definition of a trade secret. Information will be considered a trade secret if it:
- is secret – in the sense that it is not (as a body or in the precise configuration and assembly of its components) generally known among, or readily accessible to, persons within the circles that normally deal with this kind of information;
- has commercial value because it is secret; and
- has been subject to reasonable steps (under the circumstances) to keep it secret by the person lawfully in control of the information.
Whilst this definition should make it easier for businesses to protect their trade secrets, they must be able to demonstrate that they have taken reasonable steps to protect the secret if they wish to rely upon specific rights and remedies under the Directive.
Tips for protecting confidential information
Whilst there remains some uncertainty as to how national the Directive’s requirement for “reasonable steps” will be interpreted, it is clear that there are actions that businesses can (and should!) take to protect valuable confidential information.
Here are some of our key tips:
- Consider whether to introduce confidentiality and usage provisions within relevant supplier and/or client contracts.
- For key collaborative projects, enter into NDAs and ensure that their terms are suitable for the scope of the particular project
- Develop and implement procedures for marking, segregating and storing trade secrets. This could include new IT procedures to ensure that the information is encrypted, or warnings appear before the information is sent externally.
- Designate a team who will have overall responsibility for the protection of trade secrets and keep a record of who has access to the confidential information.
- Provide training to employees and/or suppliers who are most likely to access confidential information.
For more practical tips on protecting trade secrets see here.
Whilst the Directive will introduce more consistency across EU Member States (see here for our cross-jurisdictional guide to implementation in several key Member States), protecting trade secrets will remain far from straightforward.