Directive 2016/943, commonly called the EU Trade Secrets Directive (the “Directive”), was published yesterday in the Official Journal of the European Union. The Directive will come into force on 5 July 2016.

A trade secret is a piece of confidential information kept by a business that gives it an edge over its competitors. In the UK the definition of a trade secret has been developed through case law but can often be difficult to draw the line between information that is commercially sensitive in a general sense and information that can be protected as a trade secret. Across the EU the issue becomes even more complex because Member States have different approaches as to how (or even if) trade secrets are defined and protected. 

The Directive recognises that although businesses commonly use trade secrets to protect their intellectual property and innovative know-how, until now they have not been as well protected by the EU legal framework as other forms of intellectual property rights such as trade marks or patents. The Directive aims to harmonise the position in the EU by providing a single definition of a trade secret that will apply across all Member States. It also explains the circumstances under which a trade secret will have been unlawfully acquired and the remedies that should be available to a trade secret holder to protect the trade secret.

The days of a company’s trade secrets being locked in a safe are (for the most part) long gone. The ease with which large volumes of confidential information that is stored electronically can be unlawfully acquired means that being able to protect that information is essential. The Directive emphasises that the person in control of the information must have taken reasonable steps to keep it secret in order for it be considered a trade secret. What is considered reasonable will depend on the circumstances, however identifying and marking confidential documents and restricting access to them internally are two practical ways to highlight that a document is considered a trade secret.

It remains to be seen whether the Directive will have any significant impact within the UK. Notwithstanding the referendum on 23 June, the European Scrutiny Committee has already expressed its view that the current common and contract law across the UK is consistent with the terms of the draft Directive.

For further information, please contact John MacKenzie, Partner on +44 (0)131 473 5437 or Matt Phillip, Solicitor on +44 (0)131 473 5777.

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