The status of trade secrets as an item of property is not clear. Most practitioners share the view that trade secrets are not property. Strictly speaking, trade secrets in the UK may be protected either through a breach of contract action or alternatively by a statutory trade secrets action.

Common-law

A common-law action for breach of confidence is based on the principle that, for information received in confidence, a person cannot take unfair advantage of that information or prejudice the person giving the information.

The information, however, must have the “necessary quality of confidence” and must be “disclosed in circumstances importing an obligation of confidence” (e.g. imposed by contract, CDA/NDA), implied by the circumstances of disclosure, or implied due to the relationship between the parties e.g. employer/employee.

However, in employer/employee relationships in particular, there are limits as to how far information can be protected after termination of the relationship. For instance, the information must be confidential to a sufficiently high degree, with highly confidential trade secrets possibly being protected indefinitely!

Trade Secrets Regulations 2018

In addition, trade secrets are protected under the Trade Secrets (Enforcement, etc.) Regulations 2018. These regulations define a trade secret as information that:

• Is secret (not generally known or readily accessible to persons within circles dealing in such information);
• Has commercial value; and
• Has been subjected to reasonable steps by the person in control to keep it a secret.

The meaning of “reasonable steps” will be developed as the courts apply this legacy European law. It is safe to say that merely labelling something a trade secret is unlikely to be in itself sufficient.

The Regulations prevent unlawful acquisition, use or disclosure of trade secrets (including unauthorised access). “Unlawful” requires the act to be unauthorised, or contrary to honest commercial practices.

Are TRADE SECRETS VALUABLE IP property?

Lots of start-up companies rely on Trade Secrets. However, due to the lack of established case law and the likelihood of varying and uncertain interpretation of what defines a trade secret by the courts, it is advisable to file targeted patent application to protect technological innovation and reassure investors with tangible IP.