Protecting Trade Secrets and implementation of the new Directive

On the 8 June 2016, the European Commission, European Parliament and the Council adopted a Directive which had the aim of harmonising the approach to protecting trade secrets across the EU so that businesses would benefit from the same minimum standard of protection against the misuse of their trade secrets.

Subsequently, EU member states were required, by 9 June 2018, to bring in to force the laws and administrative provisions to comply with the Directive (EU) 2016/943 on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure (the Directive).

What will change?

A key factor of the Directive is the new definition of “trade secrets”, namely information which:

• is secret in the sense that it is not, as a body or in the precise configuration and assembly of its components, generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question;
• 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 comparison to the UK’s common law concept of “quality of confidence” this is a more narrow definition with the secret nature of the information having commercial value and the reasonable steps that must have been taken to keep the information secure.

Another key factor of the Directive is the remedies that can be sought by a business in such an event where their trade secrets have been misappropriated including:

• 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.

Such remedies will allow businesses of all sizes a level of reassurance as to the options available to them following a misappropriation of their trade secrets as the previous and inconsistent levels of protection and remedies often made enforcement complicated and expensive.

Implementation

EU member states were given until 9 June 2018 to bring the Directive into force and on this date, the UK implemented the Trade Secrets (Enforcement, etc.) Regulations 2018 (SI 2018/597). Compliance to this implementation deadline however has varied across member states with countries such as Croatia and Slovakia being ahead of the game but countries such as France and Hungary lagging slightly behind and Belgium’s new Trade Secrets Law to implement the Directive only coming into force on 22 August 2018. It is surprising however that many countries are still debating the matter in their respective parliaments including Germany, Austria, Romania and Bulgaria with no indication as to the timescales of implementation.

Ongoing protection of Intellectual Property

It is, more than ever, important that businesses stay vigilant to the protection of their intellectual property rights. Alongside the registration of trade marks and designs as well as online monitoring for infringing activity, in respect of the protection of trade secrets, this can take the form of non-disclosure agreements, limiting access to trade secrets to specific personnel and through the use of password protected documents. By taking such steps, businesses can ensure that they are taking reasonable measures to meet the new requirements for keeping information a secret.

If you would like any further information on trade secrets, the impact of the Directive or have any queries concerning infringement of intellectual property rights please contact Blake Morgan’s Intellectual Property team.