The EU Trade Secrets Directive was adopted on 8 June 2016 to harmonise EU law. It came into force on 5 July of the same year.
Protection of trade secrets is a company must-have, no less vital than protecting your patents, design rights or trademarks. Yet in Europe, for many years, trade secret protection was not as advanced as protection for other IP rights and varied significantly across the European Union.
While the UK remains a member of the EU it is under an obligation to ensure it complies with European legislation. Each member state must implement the Directive by June 9th 2018.
The Trade Secrets Directive sets out minimum standards for measures, procedures and remedies that should be available in the unlawful acquisition, use or disclosure of trade secrets. It includes a definition of a trade secret and provisions for protecting confidential information during legal proceedings.
What is a trade secret?
The UK has a strong and well established legal framework that allows effective enforcement of trade secrets.
A trade secret is a form of confidential business information that can give a business a competitive edge in the market. It is important businesses are able to protect their trade secrets because they can be of great commercial value.
Trade secrets take the form of a wide range of information. They may include, for example, commercial data such as customer information, business plans and market
strategies; technological information such as process know-how; and product information such as formulas for recipes, ingredients and manufacturing techniques and methods.
What does the Trade Secrets Directive do?
The Directive’s main objective is to give innovators confidence that their trade secrets will have the same level of protection in each EU Member State. In the event of misappropriation of their trade secrets, they will have the same assistance to remedy the situation. It provides minimum standards for measures, procedures and remedies. Trade secret holders should be able to rely on these standards in the event of an unlawful acquisition, use or disclosure of their trade secrets.
The remedies which victims of trade secret misappropriation can seek protection include:
- stopping the unlawful use and further disclosure of misappropriated trade secrets;
- the removal from the market of goods that have been manufactured on the basis of a trade secret that has been illegally acquired;
- the right to compensation for the damages caused by the unlawful use or disclosure of the misappropriated trade secret.
In the UK, trade secrets are protected by the law of confidence. The unlawful acquisition, use or disclosure of a trade secret would give rise to an action in the civil courts for breach of confidence.
The Directive will also bring changes to the way trade secrets can be enforced in court proceedings. This has been a major problem between the confidentiality of a trade secret and the public nature of proceedings. The Directive sets out various steps courts may take to ensure confidentiality. This starts with limiting the number of persons allowed to participate in proceedings. Enforcing trade secrets in courts is complicated and will remain a balancing act requiring experienced legal counsel.
How does it affect employees?
The Directive strengthens the position of employees. Notably, their freedom to bring any knowledge and experience gained during their employment with a company to their next employer. Companies should therefore take steps to contractually ensure confidentiality during an employee’s tenure.
Who makes any changes?
The Intellectual Property Office ran a technical consultation on Trade Secrets Regulations which ran from 19th February to 16 March 2018. There were 19 responses to the consultation. Following the submissions received, the Government has made a number of changes to the draft regulations. The final version will be made public when they are put before Parliament.
If you have any questions regarding the legality of a trade secret or you are having a problem with misappropriation of your trade secret please get in touch.