As a special feature of our blog—guest postings by experts, clients, and other professionals—please enjoy this blog entry from Jeremy Morton, Partner at Harbottle & Lewis LLP, London, UK.
The UK government has finally launched a consultation on its proposed “Trade Secrets (Enforcement, etc) Regulations 2018,” in advance of the June 9, 2018, deadline to implement the EU Trade Secrets Directive of 2016. Responses to the consultation are due by March 16.
The UK must comply with the Directive until Brexit takes effect and has committed to keeping any such EU-based laws (at least in the short-term) after Brexit. The move to enshrine the Directive in legislation thus clarifies the UK’s intention to align itself fully and expressly with European trade secrets law, so that the new provisions are likely to remain in place well after Brexit. That provides comfort to businesses looking to implement EU-wide policies. It also potentially offers, for the first time, the possibility of Europe-wide enforcement against misuse of information, as long as the UK and EU agree appropriate jurisdiction and judgments rules for the post-Brexit era.
Many commentators had suggested that the UK might not implement specific legislation to implement the Directive, since we already protect trade secrets reasonably well, albeit without any governing statute. The government says that “It is our view that the majority of the Directive’s substantive provisions already exist in UK law, either in common law, statute or by means of court rules.” However, the Directive in fact introduces several new concepts.
The proposed regulations “provide for a statutory definition of the term ‘trade secret’ and set out rules concerning time periods for bringing proceedings. 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.”
Apart from the new definition of “trade secret” which raises several issues of interpretation, one of the most interesting and perhaps controversial aspects is the proposed new definition of “infringing goods,” which are “goods which benefit from a breach of confidence in relation to a trade secret (as regards amongst other matters the design, characteristics, functioning, production process or marketing of the goods) to the detriment of the trade secret holder.” This will obviously be open to considerable argument as to its intended scope and effect, for example as to whether any breach of confidence must be continuing for the goods to be “infringing” and whether the required “benefit” must be apparent in the goods themselves. Until we leave the EU, these ambiguities must be clarified by references to the CJEU. English judges will then need to decide the extent to which historic English case law is of any continuing relevance to how they exercise their discretion in trade secrets cases.
Businesses will want to review their policies and contractual protection for confidential information to ensure that terminology is appropriate and options for governing law and jurisdiction are carefully selected.