Trade secrets and other IP protection

Trade secrets

Guide

Trade secrets constitute valuable business assets. Businesses can use them alongside other intellectual property rights - including patents, designs, trade marks and copyright - or as an alternative to them, to provide a competitive advantage in the marketplace.

As long as you don't disclose them, trade secrets have an infinite lifetime.

Definition of a trade secret

A trade secret is information that:

  • is not be generally known or readily accessible
  • has value because it is secret
  • is subject of 'reasonable steps' to keep it secret

The European Union (EU) Trade Secrets Directive established a common definition for trade secrets across the EU.

Different types of trade secrets

Trade secrets come in various forms and consist of a wide range of confidential information, such :

  • commercial data
  • technological information
  • product information

They can exist in many different types of business activities, including:

  • sales and distribution
  • understanding of customers and their needs
  • marketing or advertising
  • working with suppliers and clients
  • manufacturing processes

Examples of trade secrets include the Coca-Cola recipe, search engine algorithms, customer lists or sales methods.

Using trade secrets

You may use trade secrets to protect an invention that does not meet the patentability criteria, or to protect the information you don't want to disclose. For example, the ingredients and/or formulation for a foodstuff, pharmaceutical product or perfume, which would be difficult for someone else to find out simply from examining the product itself. In these cases, a trade secret might provide the right kind of protection.

However, bear in mind that trade secrets do not guarantee exclusivity or prevent someone else from inventing the same (or similar) product or process, independently of you.

Trade secrets infringement

The best way to protect an idea may be to keep it secret. However, you may find it difficult to keep a trade secret confidential within your business. If it is necessary to disclose information (or parts of it) to partners or other people in your business, make sure that everyone involved signs a non-disclosure agreement (NDA).

If, after signing the NDA, they share the information with other people, you can sue them for breach of confidence.

To establish that a breach of confidence has taken place, the following all have to be present:

  • the information must have a quality of confidence to it
  • there must have been an obligation of confidence, whether express or implied
  • there must have been an unauthorised use of the information

Other unfair practices in respect of trade secrets include industrial or commercial espionage and breach of contract.

Protecting trade secrets

Measures and remedies to protect trade secrets vary across the world. In the UK, trade secrets are protected by contract and/or the common law of confidence.

In 2018, the Trade Secrets (Enforcement, etc.) Regulations were introduced in the UK. The regulations implement the provisions of the EU's Trade Secrets Directive (2016/943), which requires member states to introduce laws and administrative provisions to:

  • establish a minimum level of protection of trade secrets
  • introduce the remedies available to trade secrets holders in cases where their rights were infringed
  • ensure court procedures protect secrecy while remedy is sought

International standards for protecting trade secrets exist as part of the World Trade Organisation's Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement.