New law protecting trade secrets now in force

Trade secrets have always been important, whether it’s the recipe for Coca-Cola or the workings of a search engine's algorithm. Their value is easily lost; once the secret is out in the open the protection falls away. And our interconnected world makes the problem worse, as the lack of a unified approach to trade secret protection under international laws means trade secrets can lose protection in one country and in effect lose it everywhere simply because the laws are not strong enough. To the rescue, now comes the EU.

A new EU trade secret protection law takes effect this Sunday, 9 June offering strong remedies to trade secrets owners, but also exceptions for example whistle-blowers, ex-employees' skills and some freedom of expression among others. To take advantage of the new law and remedies, holders of trade secrets will have to demonstrate the secrecy of the information in question, that it has commercial value and that reasonable steps have been taken to keep the information secret. This will mean reviewing existing processes and procedures – as well as technological measures – to ensure that they are reasonable.

It is tempting to think this will not really affect the UK, after all we have strong trade secret protections already through case law, and Brexit will soon be upon us when we may go our own way. But the new law will be implemented here too this weekend. It will offer a new potential cause of action with different rights and remedies so it is worth trade secrets owners taking notice of, and may take UK law in a new direction. There have been other examples of the UK taking a complacent attitude at first to new EU IP laws as our laws were already felt adequate, only to find that the Courts interpreted the new laws quite differently. It is also likely that UK law in this area will remain similar to EU law for some time, regardless of Brexit, as UK courts are likely to take notice of how laws such as this are interpreted by the EU courts.

Another important effect of the new laws is that they will be creatures of statute and not just case law. Inevitably that will make them somewhat more rigid, at least as first. It will take several years of case law to explore all the nuances hidden behind the bland statutory wording. In the meantime litigants will believe and argue strongly that the new laws can be read to favour their position and so one consequence for the next few years is likely to be a greater volume of litigation around trade secrets. Trade secrets owner and challengers would be well-advised to consider the new UK laws carefully and not assume it is business as usual.