The European Commission proposed a directive to harmonise
protection of trade secrets throughout the European Union in 2014.
The directive (
2016/943) was unanimously adopted by the Council and three weeks
later published in the Official Journal on 15 June 2016, and came
into force on 5 July. Between publication and entry into force, of
course, the UK's referendum on EU membership reduced the importance
of the directive to this country.
Being a directive, the new law has to be implemented by the Member
States. In the general confusion about how the UK will effect its
exit, no one knows whether the directive will be implemented. Member
States have two years in which to do is that, and two years is also
the interval after giving notice under article 50 of the treaty when
the UK will leave. However long passes before the UK gives notice,
will determine how long the UK will be required to comply with the
directive. That could be only a few months.
As with other areas of intellectual property law, however, it does
seem quite likely that the UK will continue to ensure that its laws
are aligned with those of the European Union. Depending on the future
relationship with the EU, the UK might be obliged to comply with the
directive anyway. In any event, it is hard to imagine that Parliament
could possibly find time to replace more than a tiny part of our
EU-derived law. The trade secrets directive is likely to remain
important. However, the detailed shape of the Directive is likely to
emerge only once the Court of Justice is seised of some cases in
which it can give its interpretation of the law – and its rulings
will cease, at some point, to apply to the UK.
Article 2 defines a trade secret as information that
-
Is secret in the sense that it is not generally known among
or readily accessible to persons within the circles that normally
deal with this kind of information;
-
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.
While the first and third of these requirements are at least
similar to English law, the requirement for commercial value narrows
the scope of the definition – which is hardly surprising, as the
Directive is seeking to define a narrower class of information than
the broad class of confidential information which our law protects.
The acquisition of a trade secret is unlawful when it is carried
out by unauthorised access to materials, or any other conduct which
is considered contrary to “honest commercial practices”. Where
the trade secret is acquired from a third party and the person who
acquired it knew or should have known that the third party was acting
unlawfully, that acquisition will also be considered unlawful. Using
or disclosing a trade secret will be considered unlawful when it is
in breach of a confidentiality agreement or some other duty not to
disclose the trade secret or to limit its use. (Article 4.)
Remedies are dealt with in Article 11. They include the usual
remedies in intellectual property cases – damages, interim and
final injunctions, destruction of unlawful goods. There are no
criminal offences, but Member States remain free to introduce their
own.
The Directive has been criticised as “a threat to public
interest and democracy” because of the perceived threat it poses to
whistle-blowers and the press. The Panama Papers scandal in 2016
highlighted these concerns. The Directive does provide some
protection for whistle-blowers and the press, so the question is
whether the exceptions are sufficient. They are set out in Article 5
and cover disclosure of a trade secret for:
-
exercising the right to freedom of expression and
information as set out in the [European] Charter [for Fundamental
rights], including the respect for freedom and pluralism of the
media;
-
revealing misconduct, wrongdoing or illegal activity,
provided that the respondent acted for the purpose of protecting the
general public interest.
Recital 20 says that “the measures, procedures and remedies
provided for in this Directive should not restrict whistle-blowing
activity. Therefore, the protection of trade secrets should not
extend to cases in which disclosure of a trade secret serves the
public interest insofar as directly relevant misconduct, wrongdoing
or illegal activity is revealed.” Nevertheless, critics argue that
the burden for showing that disclosure is in the public interest will
fall on the whistle-blower or journalist, and there have been calls
for a further directive to give more extensive protection to them.
English law on breach of confidence, non-statutory as it is, gives
narrower exceptions to protect whistle-blowers and the like. The
changes demanded by the Directive would not be great, but some
extension of the public interest rule (covering, remember, only trade
secrets) might well be needed.
