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Trade secrets laws consulted on in the UK

New regulations on trade secrets are being consulted on in the UK.20 Feb 2018

The proposed new regulations seek to apply the EU's Trade Secrets Directive in the UK. The Directive was introduced as a means of trying to harmonise the existing patchwork protection that applies to trade secrets across the EU and came into force in 2016. It has to be implemented into national laws by 9 June 2018.

The Intellectual Property Office (IPO) said that some of the provisions set out in the Directive already exist in UK law and so do not require to be provided for within the new regulations it is consulting on. However, it said that some new rules have been proposed, primarily in relation to court procedures, to "provide clarity, transparency and consistency across the UK’s various jurisdictions".

The definition of a trade secret would be set out in legislation in the UK for the first time, under the draft Trade Secrets (Enforcement, etc.) Regulations 2018. The definition proposed would mirror that set out in the Directive.

Under the Directive, a trade secret is considered to be information that is secret, 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. Information is only considered secret if it is "not … generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question".

The Directive includes rules that protect businesses against the unlawful acquisition, use and disclosure of their trade secrets, including in respect of second-hand sharing of that information.

However, there are protections built into the Directive, and within existing UK laws, that permit the acquisition of trade secrets through, for example, reverse engineering.

"The proposed regulations provide for a statutory definition of the term ‘trade secret’ and set out rules concerning time periods for bringing proceedings," the IPO said. "The regulations include provisions concerning the preservation of confidentiality of trade secrets during and after proceedings have concluded, as well as measures relating to interim orders for delivery up. They also set out time limits within which a claim needs to be brought after an interim order for delivery up has been made."

"The proposed regulations include provisions relating to measures which may be imposed on an infringer and set out the factors that need to be considered. The regulations also provide for compensation to be paid under certain conditions, set out the factors that need to be taken into account when awarding damages, and include measures concerning the publication of information relating to judicial decisions in legal proceedings for breach of confidence," it said.

Stakeholders have until 16 March to submit responses to the IPO's technical consultation (40-page / 683KB PDF).

Emmanuel Gougé, a specialist in trade secrets and intellectual property law at Pinsent Masons, the law firm behind Out-Law.com, said previously that he expects courts to shape the extent to which businesses can protect their trade secrets under the new Trade Secrets Directive.

James Robb, also of Pinsent Masons, said: "Given the existing UK law is broadly compliant with the minimum standards set out in the Directive, we expect the UK courts will continue to develop the laws of confidentiality and trade secrets as they have done historically, albeit against the backdrop of the new Directive. The new Directive will essentially codify the existing common law, but the scope of what is protectable as a trade secret is unlikely to shift too much."

Robb said, though, that some aspects of the Directive could "provide new avenues for enforcement and thereby strengthen how trade secrets owners can seek to enforce their rights".

"For example, the Directive contains specific provisions which deal with 'infringing goods', giving direct rights of action against the importers of goods which infringe trade secrets, as well as the infringers themselves," he said.

"It is in any event critical that UK businesses ensure that their internal procedures comply with the Directive, however it might be implemented in the UK, particularly now that they will be under a positive obligation to take 'reasonable steps' to keep their trade secrets secure. This will ensure that they can access the harmonised regime and preserve their EU-wide rights to enforce their trade secrets, which will be important in a post-Brexit environment," Robb said.