Until 9 June 2018, there was no legislation regulating trade secrets in the UK. The law in this area was developed through a series of cases over the 19th century setting out the main principles. Many have seen this approach as a great advantage as the law has developed under the needs of an evolutionary society. Generally speaking, the law has sought to balance the need for protecting trade secrets without inhibiting competition in the market while at the same time not discouraging employees in fair and honest attempts to compete with their former employers.

On 5 July 2016 the EU Trade Secrets Directive (EU 2016/943) entered into force giving the EU member states 2 years to implement the directive into national law. The directive was mainly enacted to address uneven protection of trade secrets across the EU as the measures and remedies to protect trade secrets have varied between member states. It provides for minimum standards for measures, procedures and remedies that holders of it can rely on in the case of unlawful acquisition, use or disclosure.

Following a consultation process, the Government pushed a proposal for Regulations before the Parliament in May 2018. The Government generally followed an approach to copy the Directive as much as possible, however this was not possible to a full extent. The Regulations came into force on 9 June 2018.

In line with the Directive, the Regulations offer a definition on trade secrets according to which a “trade secret” means:
“information which:
• 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;
• 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.”

The Regulations generally prohibit a person from “infringing” by way of unlawful acquisition, usage and disclosure of a trade secret. Goods are also infringing if they significantly benefits from a trade secret unlawfully acquired, used or disclosed. This is in line with the approach in the existing law. The real “news” the Regulations brings are rather procedural changes, putting forward limitations periods and various measures that can be obtained by court order (both interim and final), including measures of damages and of confidentiality during court proceedings.

Some commentators have pointed out that the interplay between the existing case law developed regime and the new Regulations is not crystal clear as there may now be both statutory and common law causes of action available to be brought.

As the new Regulations does not in general provide for material changes in the law, the rule of thumb in this area remains the same: Make sure to have non-disclosure agreements in place with employees and business partners and to have proper procedures in place to identify trade secrets within the organisation and to make employees aware when they are in touch with information that amounts to a trade secret.
For further information, please contact Koichiro Nakada – Head of Japan Business Group (koichiro.nakada@lewissilkin.com) and Yoko Nakada - Senior Associate, Deputy Head of Japan Business Group (yoko.nakada@lewissilkin.com).
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