1. Protection of Trade Secrets in Malta

Before the enactment of the Malta New Trade Secrets Law, the most significant provisions which were usually used to protect trade secrets were set forth in:

  • the Maltese Civil Code1 - with its provisions on fiduciary obligations that could apply in certain circumstances to protect trade secrets, in particular, those obligations arising by virtue of law, contract, quasi-contract, trusts, assumption of office or behavior and when a person receives information from another person subject to a duty of confidentiality and he or she is aware, or should have been aware, that the use of such information was meant to be restricted. A fiduciary is obliged by law to carry out his or her obligations with utmost good. 2
  • the Maltese Criminal Code3 - although this law does not directly deal with trade secrets, it regulates certain general offences which can be applied to trade secrets, in particular, the general offence related to the disclosure of professional secrets that punishes any person who discloses a secret of another, obtained by reason of its profession or office. 4 Another general provision that could potentially apply to trade secrets concerns the disclosure of secrets by public officers or servants.5
  • the Maltese Competition Act6 - again, although this law does not directly deal with trade secrets, it also contains general provisions which could have potentially be applied to trade secrets, in particular, if the disclosure or unauthorized use of trade secrets causes a practice prohibited under the Maltese Competition Act, such as the abuse of a dominant position,7 or an agreement with the effect of distorting, preventing or restricting competition.8

2. Lawful & Unlawful Acquisition, Use & Disclosure

Part of the objectives of the Trade Secrets Act is to set out rules to safeguard against the unlawful acquisition, use and disclosure of trade secrets.

The trade secrets law in Malta provides that the acquisition of a trade secret without the consent of the trade secret holder shall be considered unlawful, whenever carried out by:

  1. unauthorized access to, appropriation of, or copying of any documents, objects, materials, substances or electronic files, lawfully under the control of the trade secret holder and
  2. any other conduct which is considered contrary to honest commercial practices.9

Additionally, the unlawful use or disclosure of a trade secret happens when carried out by a person who acquired the trade secret unlawfully; or was in breach of a confidentiality agreement or a duty not to disclose the trade secret; or in breach of a contractual or other duty to limit the use of the trade secret.10

The acquisition, use or disclosure of a trade secret is also to be considered unlawful whenever a person, at the time of the acquisition, use or disclosure, knew or ought to have known that the trade secret had been obtained directly or indirectly from another person who was using or disclosing the trade secret unlawfully within the meaning of sub-article (2) above.11

Similarly, the production, offering or placing on the market of infringing goods, or the importation, export or storage of infringing goods for those purposes, is also considered an unlawful use of a trade secret where the person carrying out the activity knows or ought to have known that the trade secret was used unlawfully.12

The law also provides for situations where an application for the measures, procedures and remedies provided for in the New Trade Secrets Act shall be dismissed where the alleged acquisition, use or disclosure of the trade secret is carried out in any of the following cases (exemptions from infringement):

  1. for exercising the right to freedom of expression and information as set out in the Charter of Fundamental Rights of the European Union, the Constitution of Malta and the European Convention Act including respect for the freedom and pluralism of the media,
  2. for revealing misconduct, wrongdoing or illegal activity, provided that the respondent acted for the purpose of protecting general public interest,
  3. disclosure by workers to their representatives as part of the legitimate exercise by those representatives of their functions in accordance with the law, provided that such disclosure was necessary for that exercise; or
  4. any disclosure by an employee to a whistle-blowing reporting officer or a whistle-blowing reports unit as provided for in the Protection of the Whistleblower Act, and/or
  5. for the purpose of protecting a legitimate interest recognised by law.13

The remedies provided by the New Trade Secrets Act in cases of infringement include:

  • the award of damages to the right holder,
  • imposition of sanctions on the infringer and
  • publication of the court decisions. 

The law also provides for the preservation of confidentiality of the trade secrets in the course of legal proceedings and the provision of provisional and precautionary measures.14

3. Trade Secrets Law in Malta: Conclusions

Under Maltese Law, trade secrets do not need to be novel; protection does not require registration or payment of any official fee (as opposed to trademarks, patents or designs) and is not for a limited period. For these reasons, the protection of valuable business information under the New Trade Secrets Act has become particularly attractive to SMEs who are planning to invest more in R&D and creative solutions but are looking for higher levels of legal certainty.

Footnotes

1. Chapter 30 of the Laws of Malta

2. ibid, Article 1124A

3. Chapter 9 of the Laws of Malta

4. ibid, Article 257

5. Chapter 9 of the Laws of Malta, Article 133

6. Chapter 379 of the Laws of Malta

7. ibid, Article 9

8. ibid, Article 5

9. ibid, Article 6 (1)

10. ibid, Article 6 (2)

11. ibid, Article 6 (3)

12. ibid, Article 6 (4) – 'Secondary liability' which refers to those cases where the recipient knew that the trade secret was unlawfully obtained from another.

13. Chapter 589 of the Laws of Malta, Article 7

14. ibid, Article 9

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.