New Statutory law to Protect Trade Secrets

The Trade Secrets (Enforcement, etc.) Regulations 2018 came into force in June 2018 with little media coverage. It is the first time that English law has provided statutory protection for trade secrets. In the absence of a claim for breach of a contractual obligation of confidence, protection was previously largely available only under the tortious remedy of breach of confidence. That remedy continues and so both statutory and tortious claims can now be made.

The Regulations define a trade secret as being confidential 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…..". The claimed trade secret must have commercial value and the owner must have taken reasonable steps to keep it secret.

The Regulations also contain a definition of "infringer". A "…person who has unlawfully acquired, used or disclosed a trade secret".

The time limit for proceedings in England under the Regulations is six years from the later of the day on which the breach of confidence the subject of the action ceases and the day of knowledge of the trade secret holder.

The Regulations introduce an interim remedy of seizure and delivery up of suspected infringing goods before a final judgment has been made. They give the Court the power to require an infringer, at his expense, to modify the infringing goods to deprive them of their infringing quality, to withdraw the goods from the market, to deliver up and forfeit the goods to the trade secret holder or to destroy the goods.

Damages awards where the infringer knew or ought to have known that unlawful acquisition, use or disclosure of a trade secret was being engaged in will be assessed by reference to the actual loss suffered and can include economic loss such as lost profits and non-economic loss such as moral prejudice. Damages can be awarded on the basis of royalties or fees which would have been due had the infringer obtained a licence to use the trade secret. These provisions are similar to those in the Intellectual Property (Enforcement etc.) Regulations 2006 for breaches of intellectual property rights.

We will have to wait to see how these new Regulations will be applied in the context of the existing body of case law on the law of confidence. The obvious question will be whether the new statutory definition imposes the same or a lower threshold for defining a trade secret, perhaps not, but the Regulations are a welcome addition for anyone wishing to bring a claim for misuse of a trade secret where there is no formal contractual obligation of confidentiality, and increase the available remedies.

This article is for general guidance only. It provides useful information in a concise form. Action should not be taken without obtaining specific legal advice.