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Mum’s the Word

08 Mar 2018

What do McDonald’s, Coca Cola and KFC all have in common?  They all use trade secrets or confidential terms to protect the assets of most value to them: their secret recipes.

All this appeared to resurface again in the past few weeks as people attempted to recreate the Colonel’s secret recipe when there were distribution problems of chicken at various KFC eateries.

It is not just large multinationals that benefit from confidentiality or the protection afforded by trade secrets – this protection also extends to many SMEs. Know-how, valuable and undisclosed business information, and data that has been put together by the company may also be considered confidential.

At present, for protection businesses rely on principles that have developed through case law as a result of a breach of confidence and contract. To consider whether or not a breach of confidence has arisen, a business should consider:

(1) Whether the information used was publically available to begin with;

(2)What the value of the confidential information is;

(3) Whether the information was provided to a third party with the understanding that the disclosure being made was confidential; and

(4) Whether the element of confidentiality has diminished with time, reducing the value in the information.

Whilst the legal position in relation to breach of confidence and contract has firm foundations in the UK, the interpretation of the above factors has created some inconsistency in relation to what may or may not constitute a trade secret. The law in relation to confidential information and trade secrets continues to develop and the purpose of any proposed legislation is to unify the approach across the EU.

At the moment, there is a consultation taking place on the proposed Trade Secrets (enforcement, etc.) Regulations 2018 which will transpose the Trade Secrets Directive into UK law.  The purpose of a consultation is to seek any views of specialists in the area of law before the legislation is implemented.

At this stage, views are being sought on the practical aspects of the Regulations, such as how to balance clarity and transparency of proceedings whilst attempting to preserve confidentiality of the trade secrets in question, as well as the limitation periods for potential claims. It is also envisaged that the Regulations will clarify some of the otherwise grey areas relating to the definition of a trade secret.

To speak to an expert about protecting the confidential information at your business, contact us.

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