Update on Trade Secrets Directive

By Will Smith

05-2018

The UK IPO today published the Government's response to the consultation on the draft Trade Secrets Regulations which will implement the Trade Secrets Directive. This is available here.

The Trade Secrets Directive

The Trade Secrets Directive entered into force on 5 July 2016 with a deadline for implementation of 9 June 2018. While the UK remains a member of the EU it continues to have an obligation to comply with European legislation and the UK IPO is therefore taking steps to implement the Directive before the deadline.

From February – March 2018 the UK IPO ran a technical consultation on the draft Trade Secrets (Enforcement, etc.) Regulations which will implement the Directive.

In today's announcement the UK IPO has indicated that in response to the submissions received, the draft Regulations will be amended. However, a revised draft has not been published and so the new proposal will not be known until the Regulations are laid before Parliament.

What are the issues?

Defining a trade secret

The first key issue is the definition of a 'trade secret' and how this will interact with the current understanding of 'confidential information' under UK law. The original draft proposed an amendment to the definition of trade secret under the Directive to the effect that only confidential information could be a trade secret (rather than just 'information'). This suggested that a trade secret was a subset of confidential information generally, with the effect that the provisions of the Directive would apply to confidential information only if it was also a trade secret.

The Government has indicated in its response that it will revisit the Regulations to clarify the relationship between the measures, procedures and remedies provided for in the Regulations and those under the common law in a breach of confidence action.

Limitation period

Regulations 4-9 all address Art 8 of the Directive regarding limitation periods. In general the limitation period is six years but the Regulations also specify when the period should begin to run and the circumstances in which it may be interrupted or suspended. Rather than rely on the existing law in this area (as some respondents suggested), the Government has drafted these Regulations as standalone rules which disapply s36 Limitation Act 1980.  

Preserving confidentiality during proceedings

This was one of the key issues during the course of the negotiation of the Directive. Art 9 of the Directive provides that the Court, upon application by one of the parties, should be able to restrict the use or disclosure of trade secrets which come to the parties' (or their representatives' or anyone else's) awareness during the course of proceedings. The Government has now indicated that it intends to bring the wording of the draft Regulations more closely in line with Art 9. This seems to suggest that, whilst the Court will retain some discretion, orders relating to confidentiality may become more readily granted in future proceedings concerning trade secrets.

Other matters

The Government still intends to takes steps to implement Arts 10-15 of the Directive. Even though these Articles relate to procedural measures and remedies which are generally thought to be already available via the inherent powers and discretion of the Court, the Government appears to be taking the general view that it is still necessary to implement these Articles to ensure consistency and clarity.

Next steps

There is currently no indication when the next (final) draft of the Regulations will come before Parliament however it now seems likely that the Trade Secrets Directive will be implemented into UK law before the 9 June 2018 deadline. Unfortunately it will not be until the final draft is published that we will know precisely how the provisions of the Directive will interact with the existing UK law of confidence.

 

Authors

The Trade Secrets Directive (TSD) came into force on 9 June 2018. Keep up to date with how Member States are progressing with implementation using our TSD Tracker