How well protected are your trade secrets?

Businesses are increasingly aware of the value that registered intellectual property rights such as patents, trade marks and design registrations can bring, both in terms of protecting a company’s position in the marketplace and also as assets in their own right. However, recently a spotlight has been shone on another aspect of intellectual property that has not normally been given as much attention, that is: trade secrets.

New trade secrets regulations* came into force in June 2018. Whereas previously businesses had to rely on the law of breach of confidence, as developed by the courts over the years. these new regulations have consequences for a wide variety of businesses, whether or not they are focused on intellectual property.

What is a trade secret?

A trade secret is a piece of information that brings commercial value to a company because of the fact that it is confidential. Trade secrets can cover a wide variety of information, that may be technical in nature (such as details of a manufacturing process) or non-technical (such as a list of client contacts). Other examples of trade secrets include business plans, test data, marketing information and, famously, the secret recipe for Coca ColaTM.

The importance of taking reasonable steps

An important change introduced by the new regulations is that for information to qualify as a trade secret, it is not enough for it to have a commercial value arising from its confidential nature: on top of that, the business has to show that it took “reasonable steps” to keep the information secret. At the moment, it is not clear what exactly is meant by “reasonable steps” and it is likely that this will only become known once one or more cases have passed before the courts. Having said that, it is likely that courts will expect a business to have systems in place to record and manage trade secrets.

Systems you can use to manage trade secrets

You will typically need a database in which your trade secrets are listed and categorised, for example, according to their subject matter, origin, date of recordal, and the names of personnel who have access to the information. Procedures should be in place to make sure that any new trade secrets are identified, and their details added to the database.

Additionally, employees will need to be trained to understand the importance of protecting trade secrets.

Precautions will need to be taken to make sure that individual trade secrets are protected, for example through the use of password-protected documents, non-disclosure agreements, marking documents “confidential,” and/or restricting copying of documents.

* The Trade Secrets (Enforcement, etc.) Regulations 2018 (SI 2018/597) came into force on 9 June.

We would be happy to help you manage your trade secrets, for example, by assessing the systems you currently have in place for recording trade secrets, and suggesting further steps that you might need to take to improve your position. To follow up on this, please get in touch with your usual contact at Chapman IP.

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