Lips are sealed

In November 2013, the European Commission proposed a draft directive for the protection of trade secrets (‘the directive’). The European Parliament voted to adopt the directive with no further amendments and this was formally done by the European Council on 27 May 2016.

The directive aims to harmonise the protection of trade secrets across EU member states and to establish a minimum standard of protection in three main areas:

• A new definition of a ‘trade secret’: information will be considered a trade secret if it is secret,has commercial value because it is secret and the person in control of the information has taken reasonable steps, to keep it secret. The definition includes ‘know-how and business information’ and therefore is designed to protect not only technical information but also commercial and strategic information.

• Greater protection for victims of trade secret misappropriation including:

• stopping the unlawful use and further disclosure of misappropriated trade secrets

  • removal of goods from the market that have been manufactured on the basis of a trade secret that has been illegally acquired; and

• the right to claim damages for losses arising from the unlawful use or disclosure of them is appropriated trade secret.

• Reduced disclosure of trade secrets during legal proceedings to a limited group of individuals, who are to be bound by an obligation of confidentiality and non-use during and after the proceedings.

It is hoped that the directive will encourage cross border research and development and knowledge transfer within the EU. This could benefit UK businesses with factories overseas and those engaged in international research and development.

The directive may also benefit smaller companies that can’t afford to invest in intellectual property rights such as patents, trademarks or registered designs and which rely more on trade secrets. Of course, once adopted, all member states including the UK will be obliged to interpret existing laws on confidential information in line with the directive.

In the UK, there is no definition of a trade secret and the law relating to confidential information has developed through case law rather than statute. Therefore, it will be interesting to see how the UK courts interpret existing case law in light of the directive.

If you require any assistance on the topics discussed in this article, be sure to get in touch with our team of expert lawyers. We’d be delighted to help.

(Please note that this piece was written prior to the EU referendum.)

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