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Can You Keep A Secret?

Can You Keep A Secret?

When you hear the phrase “intellectual property” or “intellectual property rights” trade marks and patents may spring to mind but perhaps not trade secrets. When it comes to intellectual property rights there is no doubt that trade secrets are the poor relations having been overlooked by legislators who favour more attractive or well known members of the IP family. But it appears that now is the time for trade secrets to step out into the limelight and become, perhaps, less secretive. A new EU Directive is on its way this year which will clarify what secrets have to be kept and provides remedies for when that doesn’t happen.

Whilst the likes of trade marks, patents and design rights are created by filing them in a public register, for very obvious reasons, trade secrets are not. Their beauty lies in the fact that it is their secrecy that affords them protection. Trade secrets therefore rely on businesses having adequate protections and practices in place to keep their valuable information secret.

Across the EU the protection of trade secrets varies and as such the aim of the Directive is to harmonise the national laws of Member States. This harmonisation will ensure that trade secrets are protected consistently throughout the EU. If the draft Directive is approved the UK will have until the end of 2017 to enact its own national law encompassing the Directive. This will provide trade secrets with their very own legislation which the likes of trade marks and patents already have.

The draft Directive proposes a harmonised definition of trade secrets with information having to meet the following requirements;

  1. The information is a secret;
  2. The information has commercial value because it is a secret;
  3. The information has been subject to reasonable steps to keep it secret.

If a trade secret is compromised the draft Directive allows for civil remedies for the breach. Remedies which could be obtained from the court are:

  • An order to prevent use or further disclosure of the trade secret, which would include products made using the secret;
  • Recall and/or destruction of products made using the secret and which have already placed on the market;
  • If the above measures would cause “disproportionate harm” then financial compensation could be sought for lost profits or the profits made by the wrongful use of the trade secret.

What can businesses do now to protect their trade secrets?

If businesses are concerned about the protection of their trade secrets, I would advise them to put in place certain safeguards now. Even when more powerful legal protection is in place, prevention is better than the cure. Recommendations could include:

  1. Providing employees and individuals in the supply chain with training on the importance of your trade secret and the consequences of disclosure.
  2. Making sure the business has safeguards in place to avoid a disclosure which are well known, monitored and complied with.
  3. If contractual protections such as Non-Disclosure Agreements are in place, being mindful of the term the agreement is to cover and remedies should the agreement be breached.
  4. Bring Your Own Device policies.
  5. Prohibiting use of private email accounts to store work documents.
  6. Safeguarding of documents with restricted access.
  7. Technological safeguards, such as flagging documents if accessed without authorisation.

Whilst the Directive is currently only in draft form anyone with trade secrets should be looking at the risks of disclosure and safeguards now. If you believe that your trade secret has been disclosed you must be prepared to act quickly in order to protect it.

Megan Briggs
Solicitor

This article was published in The Herald on 17 August 2015. To read the full article please click here.

LChalmers