The Trade Secrets Directive – consistency of approach required, with or without Brexit

Abstract

A year ago, when I agreed to write this editorial once the new Trade Secrets Directive (the Directive) had entered in to force, I thought that I would be discussing a harmonisation of approach to trade secrets across the EU including the UK. Well, despite the result of the UK’s Brexit referendum, harmonisation still looks likely, even if it’s only at a commercial level in the UK. The Directive will affect all businesses operating across Europe; any business with employees and research and development in multiple European states, with people and product concepts moving between states in the course of employment/development, will want to apply a consistent approach to the protection of its trade secrets and knowhow. This will now be made easier by virtue of the Directive. In fact, the UK will still be a member of the EU on the date by which the Directive must be implemented (2 years from coming into force on 5 July 2016) and so, if political will allows, the UK may even implement the Directive prior to ‘Brexit’ in any case. In any case, the minimum harmonisation required by the Directive equates to a position so similar to the current protection accorded to confidential information by the UK common law including the approach taken by the UK courts that it was always questionable whether this measure would change UK law significantly. The UK may instead find itself with no implementation but a sufficiently similar legal position that businesses can feel comfortable sharing trade secrets across borders, even if those become EU/ non-EU borders in due course. Ironically perhaps, the main tenets of the UK’s approach to the protection of confidential information have effectively been exported to the rest of the EU via this Directive, just at the moment that the UK has decided to leave. A key differentiator between the new Directive and the UK common law has been said to be in the definition of a “trade secret”. The Directive defines a trade secret as information that is secret (not generally known among or readily accessible to, persons within the circles that normally deal with this kind of information), has commercial value because it is secret, and has been subject to reasonable steps under the circumstances by the person lawfully in control of the information to keep it secret. In its assessment of whether information should be accorded protection, the UK common law considers the quality of the information and the circumstances in which it was disclosed. On closer inspection however, much of the detail of the assessments applied to confidential information under UK common law mirror those under the new Directive. If anything, UK law may be more generous in its application of the status of confidential to information being allegedly misused. Another aspect of the new Directive of particular note is the protection that will now be given to trade secrets that are revealed in the course of court proceedings. The lack of sufficient protection within the EU currently has meant that businesses are hesitant, at the very least, about initiating any court actions by virtue of which such revelations might be made. The Directive will ensure that the confidentiality clubs and redaction common in UK litigation will be made available EU-wide. The Directive introduces the concept of trade secretinfringing goods, i.e. those whose design, characteristics, functioning, production process or marketing “significantly benefits” from trade secrets unlawfully acquired, used or disclosed. The production, offering or placing on the market of infringing goods or the importation, export or storage of such goods for those purposes will be unlawful where the person carrying out such activities knew, or ought under the circumstances to have known, that the trade secrets were used unlawfully (acquired unlawfully or in breach of confidentiality agreement or other duty not to disclose or in breach of a contractual duty or duty to limit the use of the trade secret). However, these are not intellectual property rights as such and are not subject to the IP Enforcement Directive