Protecting trade secrets under the Trade Secrets Directive

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Protecting trade secrets under the Trade Secrets Directive

Published 6 December 2018

Confidential information has long been protected in the UK under contract and the common law of confidence, with no restriction on the type of information protected.

Now an additional level of protection is available for trade secrets, although the existing law protecting confidential information will continue.

What are trade secrets?

Trade secrets can be a process, practice or other form of confidential information that has commercial value to a company.  Ideas before they are expressed in a form that is protectable by copyright, experiments or designs that may result in a patent, or designs for a new logo that may become a registered trade mark, for example, may all fall within the remit of trade secrets.

The Trade Secrets Directive

The Trade Secrets Directive (the “Directive”) harmonises the trade secrets regime across Europe and introduces a minimum standard of protection.

Introducing a definition of “trade secrets” – a higher standard?

The Directive defines a trade secret as information that:

  • is secret, being not generally known or readily accessible to people within the relevant field;
  • has commercial value as a secret; and
  • a person has taken reasonable steps to keep secret.
  • It is this last point that should be of particular interest to those looking to ensure the continued protection of confidential information as trade secrets under the Directive. This is because the reasonable steps necessary to keep information secret are likely to vary between companies and will to a certain extent depend on the confidential information in question.

If the trade secret holder maintains these steps, protection can last indefinitely.

Reasonable steps to ensure continued protection

“Reasonable steps" are not currently defined in the Directive and it is likely that each country within the EU will develop its own guidance around this in due course. The following will help demonstrate reasonable steps:

  • Being clear on what information is a trade secret – this is likely to include documenting and maintaining a centralised database of a company's trade secrets, and training staff on what these are.
  • Putting in place practical steps to protect information in the work place – this may include implementing and enforcing a trade secrets policy, restricting access to the information to those on a need-to-know basis, ensuring that employee contracts contain appropriate provisions around the use of information (such provisions to survive termination of the contract); the return of information following an employee leaving the company, and putting physical and electronic security measures in place to protect the information in storage.
  • Having a strategy in place to deal with unlawful use and disclosures – being able to identify unauthorised access to trade secrets and disclosures will be key in the event that a company wishes to take enforcement action to protect trade secrets.

Finally, now that trade secrets are covered by the Directive as another type of intellectual property right, holders of trade secrets will be able to access slightly greater protection from the courts.  This includes the possibility of enhanced damages for moral prejudice, which could be more generous than the compensation damages previously available.

Authors

Andrew Allan-Jones

Andrew Allan-Jones

Bristol

+44 (0) 117 918 2251

Susanna Read

Susanna Read

Bristol

+44(0)117 918 2160

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