Protecting trade secrets

New EU legislation to protect trade secrets has some “unclear” provisions that may require clarification by a judge and is not consistent in some areas with current UK law, an employment lawyer has warned.

Under the Trade Secrets Directive, a “trade secret” is defined as a secret that has commercial value and has been subject to reasonable steps to keep it secret by the person in control of the information. The Directive aims to counter the problem of trade secret theft and to harmonise the definition of “trade secret” to provide clear EU-wide protection. Currently, the law across member states is fragmented.

The Directive is due to be finally approved and adopted by March 2016. Member states then have two years to implement its provisions.

Christine Young, employment partner at Herbert Smith Freehills, says: “Companies operating across the EU will welcome a more unified approach.

“However, there are some downsides to the Directive. Some of the provisions are unclear and may require clarification as to their scope by the Court of Justice of the European Union (ECJ). There are also some areas where the Directive is not consistent with the current UK position on trade secrets.

“A hurdle for companies in the UK using the Directive is that they will need to show they have taken reasonable steps to keep the trade secret confidential. That is likely to require adequate contractual and physical protections to be put in place. This is a shift in emphasis from the UK common law approach.

“The carve-outs for whistle-blowers are also wider than the current UK legislation and the test for seeking injunctive relief is more involved than the current test.”