The new European Union (Protection of Trade Secrets) Regulation 2018 (the Regulation) introduces a radical change in law for whistleblowers in Ireland.

The Regulation came into operation on 9 June 2018 and transposes the Trade Secrets Directive 2016/943 (the Directive) on the protection of undisclosed know-how and business information (trade secrets) against unlawful acquisition, use and disclosure.

The Regulation introduces an amendment to the Protected Disclosures Act 2014 (the 2014 Act) requiring whistleblowers who use or reveal a trade secret in the course of their disclosure, to prove that their disclosure was motivated by a general public interest concern. The Directive did not require the creation of this test and there is a legitimate fear that the introduction of this test will deter potential whistleblowers from voicing genuine concerns.

Aim of the Trade Secrets Directive 2016/943

The protection of trade secrets varies considerably amongst member states making it difficult and costly to enforce them across the EU. The aim of the Directive is to harmonise the existing patchwork protection and to provide a common framework for minimum standards that member states must provide for the protection of trade secrets. It introduces a common definition of trade secrets and rules on their unlawful acquisition, use and disclosure. It also provides a minimum standard for the form of remedies and procedures, and includes rules for the preservation of trade secrets during court proceedings.

Definition of a Trade Secret

A trade secret is considered such if the information has a commercial value because it is a secret. The onus is on the employer or trade secret holder to prove this.

Introduction of a Motivation Test to the Protected Disclosures Act 2014

As originally drafted, under section 5(7) of 2014 Act, the motivation for making a disclosure was irrelevant. The Regulation radically alters that position by providing for the examination of a whistleblower’s motivation when making a protected disclosure, in the context of an allegation of unlawful acquisition, use or disclosure of a trade secret.

Pursuant to the Regulation, whistleblowers are potentially liable to a three-year custodial sentence and a fine of €50,000 for making a protected disclosure, using trade secrets, where it cannot be proven that the disclosure was motivated by the protection of the public interest. Other member states have transposed the Directive to the satisfaction of the European Commission without a similar requirement.

Future of Whistleblowing in Ireland

The original purpose of the 2014 Act was to encourage workers to raise genuine and reasonably held concerns about matters of public interest where that knowledge is gained through their employment. The legislation served to encourage whistleblowing by providing protection against sanction or retaliation. The 2014 Act has been praised internationally as setting a new level of best practice in combatting white-collar crime. The new motivation test was introduced with little public consultation and critics have argued that it represents a significant setback in the fight against white-collar crime. The amendment creates a legal difficulty whereby it may be a criminal offence for an employee to report an alleged crime using evidence, which constitutes a trade secret unless the employee can prove that they were motivated to protect the general public interest.