Protecting trade secrets uk
Manufacturers base their factories overseas to reduce costs; international collaborative arrangements are no longer the preserve of multinationals; employees change jobs frequently and are more mobile.
It is small wonder that disputes surrounding proprietary information are occurring more often. The proposed EU Trade Secrets Directive — likely to come into force in — will not harmonise trade secrets law. The good news, however, is that it will set up a minimum standard for trade secret protection across the EU, introducing more certainty than currently exists.
This will probably depend on a number of factors the nature of the business and its commercial landscape, for instance rather than on a particular figure or range of figures in terms of value or a percentage. Generally, the more control there has been over access to and use of the information — labelling documents, limiting distribution, restricting access physically or technically, strict contractual provisions and monitoring thereof — the higher the likelihood of that information being protected by law.
There is always going to be a trade-off for companies: If the information is valuable, however, companies are likely to find the inconvenience worthwhile. There is no definition of a trade secret in the UK, the law relating to confidential information having developed through case law.
As a result, there is much room for debate. In practice, if it can be shown that the information brings commercial or technical advantage to the company, and that the company has taken commensurate steps to protect it, the court will more readily recognize it as confidential information liable for protection. In the UK, therefore, we are unlikely to see much change as a result of the definition in the Directive.
This clearly adds to the benefit of having a Non-Disclosure Agreement or similar in place, as to breach it is likely to be contrary to honest commercial practices. It is assumed that the law to be applied would be either the one chosen by the parties if they are in a contractual relationship or the law of the place in which the act in question occurred, or both. This could and often would involve jurisdictions outside the EU. This includes acquisition through independent discovery and creation and the disassembly or test of a product or object made available to the public.
There is also a catch-all provision for acts which conform to honest commercial practices. The situation is exacerbated when the business operates across national boundaries, because although the European Commission has recently proposed a Directive for the harmonisation of trade secrets law across the Member States, no such consistency of approach currentlyexists. Businesses therefore have little certainty when sharing information under terms of confidence.
In this article our lawyers from Austria , Germany and the UK explain their respective national approaches to the issue of ex-employees in possession of trade secrets. On the other hand, Austrian case law and literature have excluded, inter alia , the following elements from the protection granted to a trade secret: The general notion of a trade secret is shared by both civil and criminal law.
The relevant information must relate to the damaged company and be of relevance to its ability to compete in a certain market. Furthermore, for a trade secret to be recognised as such by an Austrian Court, the company has to prove its legitimate interest berechtigtes Interesse in the non-disclosure of the trade secret. The provisions of Sections 11, 12 and 13 of the UWG are the most relevant ones and are criminal provisions. Nonetheless, they form the basis for civil law cease-and-desist orders and damage claims.
UWG protects against violations of employees and violations of third parties, among whom are included former employees and anybody who receives information on trade secrets. The relevant penalties are identical in either case, independent of whether the employee is still working for the company or has already terminated his employment relationship with the company of which he infringes the trade secret.
Additional provisions on the protection of trade secrets with regard to employees are to a certain extent also included in other Austrian laws:. Infringement of a trade secret can be prosecuted only upon the request of the injured party. Although Austrian law does not provide for the rendering of profits, such a remedy has been granted, in certain cases, by the Austrian Supreme Court. Concerning damages, the following non-cumulative options are at the disposal of the company that is the legitimate right holder of a trade secret infringed by its former employee: A violation of a trade secret may also trigger a criminal liability, as provided under Sections , and of the Austrian Criminal Code Strafgesetzbuch ; additionally, as mentioned above, the UWG establishes criminal provisions to protect trade secrets.
The provisions contained in the Criminal Code require the offender to possess the following categories of intent:. The more specific provisions on the infringement of professional confidentiality Section of the Criminal Code and the infringement of official secrecy Section of the Criminal Code are designed to protect the legitimate interest in the confidentiality of a trade secret.
The conduct that is considered as criminal by these Sections is the disclosure or exploitation of trade secrets that have been entrusted to the offender during a professional relationship or which have been obtained by espionage. The provisions included in the UWG require conditional intent by the offender to disclose a trade secret for competitive purposes and such mental condition requires the awareness that the information at stake constitutes a trade secret.
A conviction in criminal proceedings may represent the basis for a damage claim in civil proceedings. This can be initiated independently of the criminal proceedings.
The mere attempt to commit any of the offences mentioned above may cause, depending on various circumstances, a criminal liability as well because, according to Section 15 2 of the Criminal Code, an attempt occurs when the decision to carry out an offence has been actuated by an act that directly precedes the performance of the offence. On the other hand, there are circumstances when an employee leaves a company in which the company is not protected for trade secret violations:. The new proposals would effectively place into statute, a very similar position to that currently applicable under UK common law, although the new provisions would apply alongside the current UK law.
It is however hard to see how decisions applying such a new Directive in the UK and those of Courts of other EU states, would not in time lead to a re-interpretation of the UK common law position. Trade secrets are, as the Commission reports: The Commission recognises the risk that stolen trade secrets could be used to produce infringing goods which subsequently compete within the EU with those of the victim of the misappropriation.
The proposal is part of the optimisation of IP infrastructure in Europe and comprehensive IP strategy adopted by the Commission in May A Single Market for Intellectual Property Rights Boosting creativity and innovation to provide economic growth, high quality jobs and first class products and services in Europe — COM which included an undertaking to examine the protection of trade secrets.
Across Europe, trade secrets are currently protected in a variety of ways: The remedies and compensation available also vary across the EU, as does protection of trade secrets and confidential information within litigation. The proposals seek a unified approach to all these aspects. The Commission held a public consultation on the protection of business and research know-how launched December and published a further study on the role of trade secrets in April last year.
The proposed Directive will now go to the Council of Ministers and the European Parliament for debate and adoption. There are provisions governing what will be lawful acquisition, use and disclosure of trade secrets including: Member States are required to ensure that there will be no entitlement to remedies or procedures or measures where: Measures, procedures and remedies are required to be fair and equitable, effective and dissuasive and not unnecessarily complicated.
Their application must be proportionate, and avoid the creation of barriers to trade in the internal market. Member States must also guard against their abuse. Competent judicial authorities must determine the claims and be entitled to impose sanctions and order dissemination of information on their decisions.
Member States must set a limitation period for trade secrets theft actions of a minimum of 1 year and a maximum of 2 years. The Commission was concerned about consistency on the preservation of confidentiality of trade secrets in the course of legal proceedings. There is provision to compel those involved in a case not to disclose or use any secrets revealed in proceedings as long as the claimed secrets amount to trade secrets and these do not become generally known subsequently. The specific measure the court may use on the application of a party to the proceedings shall at least include: Undertakings intended to ensure the compensation of the trade secret holder may be given to alleviate the interim or precautionary measures.