view inside filing cabinet with brown file folders, green folder with "confidential" label in focus

A trade secret is a piece of knowledge that gives you a competitive advantage over others in the field.

It must not be widely known,  the owner must have taken deliberate steps to keep it confidential  ( including restrictions internally to those who need to know) and it must have value because it is a secret.  Trade secrets can be things like formulae, industrial processes and methodologies but might also be supplier or customer lists.  Often these cannot be patented or a company chooses not to patent because the product is still at an early stage of development or because if it can be kept a secret the advantage may be extended beyond the 20 years of a patent. While most of the developed world offers some protection the manner in which you can enforce your rights and the remedies available vary enormously.  Some countries such as the US have specific laws while in Europe for example there is no specific law and  so the victim must pursue actions through  principles of breach of confidentiality, breach of fiduciary duty or unfair competition.  This variation and complexity is  particularly problematic for small companies acting across a range of countries which is often the case in our sector where even very small organisations can be involved in international trials.

Clearly you can do a lot to protect yourself through carefully constructed contracts and limiting access to the information  however that will not cover every eventuality so the European Union is looking to bring in a directive to specifically protect trade secrets.  This would make it much easier for small companies to understand and enforce their rights and  would not only allow actions to prevent use or disclosure of the trade secret but would also allow seizure of goods made through the use of misappropriated information.  This type of remedy is generally available in the US but can be difficult to obtain in some European countries including the UK as you have to use laws that were really designed for other purposes and are often dependent on their being some pre existing relationship between the parties and so particularly difficult where there has been a third party theft. Although widely supported by industry the proposals  are opposed by those who fear that public interest whistle blowing could be stifled and  there has also been some concern that workers might be discouraged from moving job for fear of accusations of breach of the new laws if they were employed on a similar project with a new employer.  This last concern seems misplaced however as workers in sensitive positions usually have clauses in their employment contracts at least as tight as any proposed law.  The other concern is more serious and I think that some form of safeguard will be included before the directive finally becomes law.  Industry must be vigilant to ensure that any such exemption is fair and balanced and that any ongoing attempts to refine the various definitions in the draft do not weaken their current rights as to material covered and rights of action.

By Patricia Barclay