Trade Secrets Directive Has Not Changed Substantive English Law Principles Protecting Confidential Information

In a recent judgment of the Intellectual Property Enterprise Court (IPEC), Trailfinders Limited v Traveller Counsellors Limited & Ors [2020] EWHC 591 (IPEC), it has been held that the 'Trade Secrets Directive' has not affected the substantive principles governing the protection of confidential information under English law.

Terms of confidence implied into contracts of employment and equitable obligations of confidence in employment and business contexts remain governed by the English jurisprudence, although HHJ Hacon suggested that the Directive "shines an occasional light" on the relevant principles.

Common law breach of confidence and the introduction of the Directive

In England and Wales, the legal protection for confidential information, including trade secrets, has (until the introduction of the Directive) been governed exclusively by the common law: the UK had not legislated to create a statutory tort.

The common law protects information having the 'necessary quality of confidence' which is imparted or obtained in circumstances objectively importing an obligation of confidence, and which is used (or threatened to be used) in an unauthorised way to the detriment of the owner (Coco v A. N. Clark [1969] RPC 41, Attorney-General v Guardian Newspapers (No 2) [1990] 1 AC 109, Campbell v MGN Ltd [2004] UKHL 22 [2004] 2 AC 457). This is the equitable obligation of confidence.

As between a company and its employees and other workers, in addition to the equitable obligation of confidence, contractual terms - express and implied by the common law - govern obligations of confidentiality.

Directive (EU) 2016/943 on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure (the Directive), came into force in 2016, with a deadline for implementation by Member States in June 2018.

In the UK, the Directive was implemented by The Trade Secrets (Enforcement etc.) Regulation 2018 (the Trade Secrets Regulation). The preamble stated that certain provisions of the Directive - those specifying where an acquisition, use or disclosure of a trade secret is lawful and where it is not - had not been included as they were implemented into UK law by the principles of common law and equity relating to breach of confidential information, amongst others. The Trade Secrets Regulation did, however, adopt the definition of 'trade secret' set out in Article 2(1) of the Directive, and so introduced such a definition for the first time:

"trade secret" means information which-

(a) is secret in the sense that it is not, as a body or...