What is a Trade Secret in the UK?

You may have heard of the term trade secret, but are not entirely sure what it means. Until 2018, there was no legal definition of a trade secret in the UK. Therefore, the term ‘confidential information’ described the information we now would call a trade secret. However, trade secrets are important to your business, as you likely have information that you do not want competitors to know. This article will explain what a trade secret is and how you can protect your business’ trade secrets and other commercially sensitive information.

What Is A Trade Secret?

In UK law, a piece of legislation called the Trade Secrets Regulations regulates trade secrets. A trade secret is information held by a business which is:

• secret;
• likely to have commercial value (i.e. your competitors would be willing to pay for that information);
• kept secret, or that you have taken reasonable steps to ensure that information remains secret.

Most businesses are likely to have trade secrets. For example, information about how you run your business, who your customers are, and specific secret formulae or procedures used to create your products or services are all your business’ trade secrets. 

What Does it Mean to “Take Reasonable Steps”?

There are court cases that give us guidance on this term. In these cases, the use of non-disclosure agreements with employees was considered evidence of a ‘reasonable step’ in ensuring confidentiality. This is because it ensured that one could only access confidential information:

• through the company’s IT system;
• on company premises; 
• by people authorised to access that IT system.

Confidential Information

Suppose the information about your company does not meet the requirements of a trade secret. In this case, it could still constitute confidential business information. UK law protects confidential information as well. 

Confidential information should obviously not be shared. For example, business information marked ‘confidential’ or business strategies shared with small groups within the business that you give or tell someone in confidence. Generally, information that you provide to an employee and is not known to someone outside your business is likely to be considered confidential information.

Protecting Trade Secrets and Confidential Information

The easiest way to keep your trade secrets and confidential information secret is to include confidentiality clauses in your employment contracts. For example, you should include a clause that prevents employees from sharing certain information with those outside the business.

Suppose you work with contractors or other agencies that need to know confidential information about your company or business processes. In that case, you can require that any such contractors sign a non-disclosure agreement (NDA). You can also require employees to sign an NDA as well. These documents mean that you will have the right to take legal action if your employee or contractor shares your confidential information with anyone else. You can also bring an action if an employee uses the information to set up a business that directly competes with yours.

You should also determine what confidential information and trade secrets you have in your business. Then, create a record of who has access to this information. Additionally, you should also ensure that your company’s IT systems have appropriate security. Then, if any third party unlawfully tries to gain access to your IT systems, the information they can then access is limited.

What if Somebody Shares My Information?

If you bring a legal action for trade secret theft or unauthorised use of confidential business information, there are various remedies that the Court may provide if you are successful. These include:

• ordering the infringer to stop using or disclosing the trade secret/confidential information;
• destruction or delivery of any products using the trade secret/confidential information;
• an order prohibiting any future sale of such goods; and
• damages or compensation. 

If awarded, compensation will generally constitute the amount a licence for the trade secret would have cost. Damages are calculated based on the foreseeable economic consequences to your business resulting from the infringer’s actions.

Key Takeaways 

Your business’ trade secrets give you a competitive advantage. To protect your trade secrets and confidential business information, you must keep such information confidential and share it only with individuals who need to know. You should ensure that all your employees are aware of the need for confidentiality. Additionally, you can use legal documents such as employment agreements and non-disclosure agreements. This will oblige your employees and contractors to keep such information confidential.  

If you need help with protecting your business’ trade secrets and confidential information, our experienced intellectual property lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.

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