The EU Trade Secrets Directive (2016/943) required EU member states to introduce laws, regulations and administrative provisions to establish a minimum level of protection for trade secrets. Specifically, it required individual member states to ensure that remedies were available to the victims of a breach of their rights and to ensure court procedures are in place to protect secrecy while such protection is being sought. />
Whether English law and civil procedure needed to be amended to comply with the Directive is open to debate. Our existing common law relating to breach of confidence and contract already provides relatively good protection for trade secrets and the Civil Procedure Rules give judges a wide discretion to impose both interim and final orders to effectively enforce those rights.
Trade Secrets (Enforcement, etc.) Regulations 2018
Whilst our current law may have been sufficient to comply with the Directive, the Government decided to introduce new Regulations which introduce a number of changes to UK law with effect from 9 June 2018.
The key change is the introduction of a statutory definition of trade secret, which was previously undefined, derived from the wording of TRIPS, which states as follows:
"trade secret" means confidential information which—
(a) 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;
(b) has commercial value because it is secret; and
(c) has been subject to reasonable steps under the circumstances, by the person lawfully in control of the information, to keep it secret.
Whilst the definition is new to UK law, it seems unlikely to cover any new classes of information which were not previously protected under the common law.
The Regulations specify the time limits for proceedings in England being six years from the later date of either:
- the day on which the breach of confidence that is the subject of the action ceases
- the day of knowledge of the trade secret holder
This follows the six-year periods for breach of contract or tort under the existing Limitation Act 1980.
Confidentiality during proceedings
The Regulations also set out procedures that may be adopted by courts to ensure the protection of trade secrets during proceedings. These include orders that participants must preserve the confidentiality of information revealed during proceedings, restricting access to hearings and redacting public copies of judgments. The Regulations also introduce an interim remedy of seizure and delivery up of suspected infringing goods before a final judgment has been made. In addition, the Regulations set out what the Court needs to consider when making such an interim order and impose time limits for claims to be brought after the order has been made.
Whilst these measures are already available to the English courts, they have been included in the Regulations to ensure that they are available in all UK jurisdictions, including Scotland.
In terms of remedies, the Regulations also ensure that courts have the power to require an infringer, at their expense, to modify the infringing goods to deprive them of their infringing quality; withdraw them from the market; deliver up and forfeit them to the trade secret holder; or destroy them. In addition, to these orders the Regulations provide for compensation to be awarded in lieu of a final injunction, however, the amounts awarded will be limited to the cost of a hypothetical licence to use the trade secret.
If a defendant has knowingly breached a trade secret, damages are to be assessed with reference to the actual prejudice suffered. This includes negative economic consequences including lost profits, as well as non-economic losses such as moral prejudice. Damages may be awarded on the basis of royalties or fees under a hypothetical licence and are similar to those stated in the Intellectual Property (Enforcement etc.) Regulations 2006 for breaches of IP rights.
In general, the Regulations codify the law in a manner consistent with the Directive, but which does not vary significantly from the current powers available to the Courts of England and Wales, with many of the provisions having been introduced to ensure consistency across the whole of the UK. In addition, owners of trade secrets should be reassured to know that, as all EU member states are required to implement similar provisions, the ability to enforce obligations of commercial confidentiality across all EU jurisdictions can only have been improved by the Directive.
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.