1. Trade Secrets under the EU

Until 2016, at EU Level, there were no harmonized laws related to the protection of trade secrets. As a solution to patchy trade secret protection between the different EU Member States, Directive (EU) 2016/943 of the European Parliament and of the Council of 8 June 2016 on the Protection of Undisclosed Know-How and Business Information (trade secrets) against their Unlawful Acquisition, Use and Disclosure (the "Trade Secrets Directive") was adopted.

The aim of the Directive was to align different national rules that were often sporadic, outdated, opaque or had significant gaps, as well as to harmonise the definition of trade secrets, define the various forms of legal and illegal acquisition, use and disclosure of trade secrets, and propose remedies for those affected by such misappropriation.

Below we have set out a non-exhaustive list of what we consider to be the most noteworthy advancements achieved in regulating trade secrets in Malta, resulting in a single New Trade Secrets Act. 1

2. Trade Secrets in Malta

Before the enactment of the New Trade Secrets Act, Malta relied purely on contract law when it came to the protection of proprietary know-how or proprietary technology.

The New Trade Secrets Act transposed 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").

The question begs... why are trade secrets so important that they require special protection? The process of research and creation leads to development of substantial knowledge that might often fall outside the scope of the protection provided by traditional Intellectual Property Rights (IPRs). Furthermore, some enterprises might not find it apt for their information to be protected through such traditional IPRs. Having said that, such information is invaluable for industry innovation and competitiveness and such trade secrets need to be kept "confidential" as the contrary would deter enterprises from investing heavily in their R&D.

3. Definition of Trade Secrets

Despite various mentions scattered in different pieces of Maltese legislation, before the implementation of the new Trade Secrets Act, Maltese law provided no formal definition of a 'trade secret'. Such scattered references were purely conceptual and trade secrets per se were never formally defined or properly regulated. In fact, trade secret holders would many times commonly safeguard their rights and interests through fiduciary obligations and non-disclosure agreements, with contract law being the main limb of law covering this area.

By way of example, some noteworthy and well-known trade secrets include Coca-Cola's Coke recipe, KFC chicken coating recipe, the Google algorithm, or the New York Times Bestseller List. In general trade secrets would include business methods, market analyses, business relationships, pricing information, office techniques, customer or supplier lists and related data, recipes, computer programmes and computer databases.

Notwithstanding that trade secrets are still an unregistrable intellectual property right in Malta, it is fair to say that the Maltese New Trade Secrets Act2 has upgraded this legal concept to a higher level by giving it official legal recognition in a formal Act of Law, thereby granting increased certainty to the right holder.

The said Act incorporated the main objectives of the Directive (EU) 2016/943 by:

  • ensuring an equivalent level of protection of trade secrets to that of the EU and other member states,
  • adopted a uniform definition of the term "trade secret", and
  • provided common measures against the unlawful acquisition, use, and disclosure of trade secrets.

It defines a 'trade secret' as a method of information which meets all the following cumulative requirements:

  1. It is capable of being a secret, i.e. generally not known among or accessible to persons within the circles that normally deal with that kind of information,
  2. has commercial value because it is secret, and

it has been subject to reasonable steps under the circumstances, by the person lawfully in control of the information, to keep it secret.3

4. Conclusions

The New Trade Secrets Act was a very welcome addition to the whole range of laws regulating IPRs. According to national experts, the previous sporadic legal system touching upon trade secrets used to deter right-holders from bringing an action before the courts due to the lack of formal legal recognition and protection of such secrets. Previously any plaintiff would have to face an uphill struggle in obtaining recognition for his/her rights and for the enforcement thereof.

Footnotes

1. Act XXIX of 2018 which came into force on the 14th May 2019, as Chapter 589 of the Laws of Malta.

2. Chapter 589 of the Laws of Malta

3. Chapter 589 of the Laws of Malta, Article 2

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.