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Want to know a secret?

Want to know a secret?

Something is stirring inside Brussels – something big.  The pregnancy is still at an early stage, for conception took place only recently; and the gestation period might be lengthy.  But if and when there is a safe delivery, the new arrival could well cause quite a stir.

For the European Commission’s latest enfant terrible is a directive on trade secrets – specifically, “on the protection of undisclosed know-how and business information against their unlawful acquisition, use and disclosure“.  The draft has been formally adopted, and is now going through the Eurocratic motions, which means that it may well be in force by the end of this year.  It has been prompted by the Commission’s acknowledgment that the legal protection of trade secrets across the EU is “uneven” and “sub-optimal” (translation: shambolic), and that having 28 different systems of protecting confidential information is not exactly the best way of keeping up with the global competition.

If and when the draft directive matures into the laws of the various member states (it being the case that directives require transposition into domestic law) it could change the IP landscape.  For, even though confidential business information is one of the most ubiquitous types of IPRs, the laws that govern it are (at least in the UK) distinctly cloudy.  Unlike most categories of IPRs, it is not the subject of any specific legislation – instead, resource must be had to the common law, most of whose decided cases date from the pre-internet era.  Furthermore, since English law refuses to classify the action for breach of confidence as a tort, it is less than clear what sort of legal species it is; indeed there is even uncertainty as to whether, strictly speaking, confidential information ranks as intellectual property at all.

So an injection of top-down legislative certainty, with the compliments of Brussels, might be no bad thing at all.  And in this respect the draft directive gets back to basics, with no-nonsense definitions of what a “trade secret” is, who the “trade secrets holder” is, and how the acquisition, use and disclosure of trade secrets can be considered to be unlawful.

The directive (if and when it arrives) won’t sweep away our existing law: it will still be possible to sue under the common law action for breach of confidence, and (if one has put into place an NDA) for breach of contract as well.  But it will, or should, overlay these laws with legislative certainties, as well as taking a giant step towards harmonising the EU’s fragmented and often conflicting confidentiality laws.  And since every single business in this country – and in the rest of the EU – will inevitably own confidential information, that will be important.

And for the IP family, a new kid on the block!

By Jonathan Cornthwaite

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