Trade Secrets Regulations

The Trade Secrets (Enforcement, etc.) Regulations 2018 (Regulations) came into force earlier this year on 9^th June 2018. The Regulations set out the definition of a trade secret together with the rules on the unlawful acquisition, disclosure and use of trade secrets.

The legal concept of a trade secret has been well established prior to the new Regulations. However, the introduction of the Regulations raised uncertainty over its relationship with the common law duty of confidence. Broadly speaking, a trade secret is a valuable piece of business information which is treated as confidential and gives the business owner a competitive advantage. Classic examples would be the Coca-Cola recipe, the WD-40 recipe or Google’s proprietary search algorithm. However, such information could also be protected by the common law duty of confidence.

The final Regulations sought to clarify this by stating that the issue of whether the acquisition, use or disclosure of a trade secret was unlawful or not, would be determined by reference to the law of confidence. This means that the remedies available at common law would also be available to a trade secret holder bringing an action under the Regulations (including where those remedies are wider than those available under the Regulations).

The Regulations define a trade secret as information which: –

• Is secret, meaning that its configuration isn’t generally known or readily available to persons within the circles that normally deal with the kind of information in question;
• has commercial value because it is secret; and
• has been subject to reasonable steps to keep it secret.

For a business looking to protect its trade secrets, steps which could be taken could include implementing a system to identify its different trade secrets, creating a trade secrets inventory, training their employees on the importance of trade secret protection and implementing protective measures such as technical security measures, labelling documents as confidential and limiting the amount of copies made of documents containing the trade secrets.

Remedies for breach of the Trade Secrets Regulations

The remedies set out in the Regulations are as follows: –

Injunctions

If the Court finds that there has been an unlawful use, acquisition or a disposal of a trade secret, it can order one or more of the following:

• The prohibition of the use or disclosure of the trade secret.
• The prohibition of the production, offering, placing on the market, or use of infringing goods, or the import/export of the infringing goods.
• The adoption of collective measures with regards to the infringing goods including;
• Recalling the infringing goods.
• Depriving the infringing goods of their infringing quality.
• Destruction of the infringing goods or their withdrawal from the market so long as their withdrawal from the market, doesn’t undermine the protection of the trade secret.

When deciding which of the above injunctive remedies to enforce on the liable party the Court will consider an array of factors including the value of the trade secret, the measures taken to protect the trade secret and the conduct of the infringer in acquiring the trade secret.

Compensatory damages

The liable party can apply to the Court to have an order for compensation as opposed to the above injunctions in limited circumstances these include:

• If at the time of use or disclosure, the liable party didn’t know and could not have reasonably been expected to know that the trade secret was obtained from another person who was using or disclosing the trade secret unlawfully.
• If the execution of the measures in question would, cause disproportionate harm to the person liable to the measures.
• If it appears reasonably satisfactory to pay compensation to the injured party.

If you would like to discuss ways to protect your confidential information, then please contact BHW’s corporate team on 0116 289 7000 or email info@bhwsolicitors.com.