Intellectual Property Rights: Trade Secrets

What are trade secrets?

In England and Wales, trade secrets are a type of intellectual property. Common law of confidence and the Trade Secrets (Enforcement, etc.) Regulations 2018, as well as case law provide trade secret protection.

The Trade Secrets (Enforcement, etc.) Regulations 2018 provides additional protection for trade secrets. These regulations implement the EU Trade Secrets Directive and provide a statutory framework for the protection of trade secrets. The regulations define trade secrets as business information that:

• Is secret or confidential information in the sense that it is not generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question
• Has commercial value because it is secret
• Has been subject to reasonable steps under the circumstances, by the person lawfully in control of the information, to keep it secret

Under the regulations, the trade secret owner can take legal action against anyone who unlawfully acquires, uses, or discloses the trade secret.

It is important for businesses to take steps to protect their trade secrets under the law. This may be done using confidentiality agreements or patent protection, limiting access to sensitive information, and monitoring for potential leaks or theft.

Businesses should also take steps to ensure that their employees are aware of their obligations to keep trade secrets confidential. They should be prepared to take legal action in the event of misappropriation.

Examples of trade secrets

Trade secrets can include a wide range of confidential and proprietary information that give a business a competitive advantage. Common examples of trade secrets and confidential information include:

Recipes and formulas:

A recipe for a popular soft drink such as Coca Cola, or a formula for a high-performance lubricant, can be a trade secret.

Manufacturing processes:

Trade secrets may include industrial processes used to manufacture certain products. This may include the process for making a popular snack food or a specialised type of glass.

Customer lists:

A company’s list of suppliers and clients, along with their contact information and buying history, can be considered trade secret information.

Research and development:

Information related to a company’s research and development efforts, including experimental results and ongoing projects, can be a trade secret.

Software code:

The source code for software applications can be a trade secret, particularly in the technology industry.

Marketing strategies:

A company’s marketing and advertising strategies, including information about target audiences, media buys, and creative campaigns, can be trade secrets.

Financial information:

Information related to a company’s finances, such as profit margins, pricing strategies, and budget projections, can be a trade secret.

Design and engineering plans:

Plans for new products or designs, including schematics, blueprints, and technical drawings, and reverse engineering can be trade secrets.

 

Intellectual property rights: Trade secrets protection

In England and Wales, legal protection is afforded to trade secrets through the common law of confidence and the Trade Secrets (Enforcement, etc.) Regulations 2018, which implemented the EU Trade Secrets Directive. Listed below are some ways trade secrets are protected:

Confidentiality agreements:

Businesses can use confidentiality or non-disclosure agreements (NDAs) to ensure that anyone who has access to their trade secrets is legally bound to keep them confidential. Breach of confidence could lead to legal action being taken.

Access control:

Businesses can limit access to trade secrets by restricting access to certain areas of their premises or computer networks, or by using passwords or encryption to protect electronic data.

Employee contracts:

Businesses can include provisions in employment contracts that require employees to keep trade secrets confidential. This can include the time both during and after their employment.

Trade secret audits:

Businesses should periodically review their trade secrets to ensure that they are still confidential. They may wish to take steps to strengthen their protection where necessary.

Legal action:

Businesses can take legal action against anyone who unlawfully acquires, uses, or discloses their trade secrets. They can seek remedies such as injunctions, damages, account of profits, and corrective measures.

 

Intellectual property rights & trade secrets misappropriation

If a business believes that its trade secrets have been misappropriated, it should take prompt and appropriate actions to protect its interests. Here are some steps that a business should consider taking in the event of trade secret misappropriation:

Identify the misappropriated information:

Determine the exact information that has been misappropriated and who has access to it. It is important to know what exactly has been stolen, and what impact it could have on the business.

Notify the misappropriator:

Notify the person or entity that is believed to have misappropriated the trade secret. This notification could be in the form of a cease-and-desist letter. This is used to demand that they stop using the information.

Initiate legal action:

If the misappropriator does not comply with the cease-and-desist letter or continues to use the trade secret, the business may need to initiate legal action. This could involve initiating a legal case for trade secret misappropriation.

Preserve evidence:

Collect and preserve any evidence of the misappropriation. This could include emails, documents, or any other relevant information.

Review and update policies:

Review the business’s policies and procedures related to trade secrets and update them as necessary. This could include improving security measures and implementing stricter access controls.

Educate employees:

Educate employees about the importance of protecting trade secrets and the potential consequences of misappropriation.

Monitor for further misappropriation:

Keep a close eye on the situation and monitor for any further misappropriation. This could involve conducting regular audits and reviewing access logs.

 

Remedies for trade secrets misappropriation

If a business is successful in proving trade secret misappropriation, there are several remedies that may be available. Outlined below are some of the most common remedies:

Injunctive relief:

Injunctive relief is a court order that requires the misappropriator to stop using or disclosing the trade secret. This is a common remedy in trade secret misappropriation cases because it can prevent further harm to the business.

Monetary damages:

The business may be entitled to monetary damages to compensate for any losses suffered as a result of the misappropriation. These damages may include lost profits, as well as any other damages that the business can prove.

Punitive damages:

In some cases, a business may be entitled to punitive damages in addition to compensatory damages. Punitive damages are intended to punish the misappropriator for their actions and deter others from engaging in similar conduct.

Legal costs:

If the misappropriation was wilful and malicious, the business may be entitled to recover its solicitor fees and costs incurred in pursuing legal action.

The remedies available will depend on the specific facts and circumstances of the case.

How can Expert Commercial Law assist?

Expert Commercial Law have a panel of experienced intellectual property solicitors with a track record of success in these types of cases. A solicitor from our panel can be invaluable in helping with an intellectual property rights/ trade secrets misappropriation case.

Our solicitors also help with commercial claims, such as breach of contract and CCJ removal

Please note, we are not a firm of solicitors; however, we maintain a panel of trusted and regulated high profile legal experts. If you contact us in relation to a commercial law case, we will pass your case onto a panel firm in return for a fee from our panel firms. We will never charge you for passing on your case to a panel firm.