Wednesday, 18 July 2018

Trade Secrets

Confidential information/trade secrets are currently protected through case law in the UK. In order to successfully claim for a breach of confidence, it is necessary to establish that:

·       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); and
·      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 UK implemented the EU Trade Secrets Directive (2016/244/EU) on 9 June 2018. There was previously no statutory definition as to what constituted a trade secret in the UK. In essence, a trade secret is a form of confidential information (all trade secrets will be confidential information, but not all confidential information need be a trade secret).  A trade secret is therefore a rarefied form of confidential information. The aim of the Directive is to harmonise the protection of trade secrets in all Member States. The substance of the Directive largely reflects the existing UK law on trade secrets.

The Directive introduces a new harmonised definition of a trade secret. In terms of the Directive, information will be considered a trade secret if it:

·      is secret – in the sense that it is not generally known among, or readily accessible to, persons who 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.

This definition should make it easier for businesses to protect their trade secrets but 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.

As always with confidential information generally think before any disclosure is made. The quote from Jeremy Bentham in 1735 is as true today as it was then:  Three men may keep a secret only if two of them are dead”.

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