The status of trade secrets as an item of property is not clear; the more generally accepted view is that trade secrets are not property. However, trade secrets may be protected either through a breach of contract action, where a non-disclosure agreement exists or can be implied, another obligation of confidentiality, or a common law action for breach of confidence.
A common law action for breach of confidence is based on the principle that, for information received in confidence, a person cannot take unfair advantage of that information or prejudice the person giving the information. The same principle applies both in Scotland and in England.
To qualify, information must have the "necessary quality of confidence" and must be "disclosed in circumstances importing an obligation of confidence," eg, imposed by contract, implied by the circumstances of disclosure, or implied due to the relationship between the parties, such as employer/employee. However in employer/employee relationships in particular, there are limits as to how far information can be protected after termination of the relationship (information must be confidential to a sufficiently high degree, with highly confidential trade secrets possibly being protected indefinitely).
In May 2016, the European Council adopted the EU Trade Secrets Directive, which EU member states (including the UK) were required to implement by May 2018. The Directive was implemented in the UK through the Trade Secrets (Enforcement, etc.) Regulations 2018, although these do not significantly change existing case law.
The Directive defines a trade secret as information that:
- Is secret (ie, not generally known or readily accessible to persons within circles that deal with such information)
- Has commercial value as it is secret
- Has been subjected to reasonable steps by the person in control to keep it a secret
The meaning of "reasonable steps" will be developed as the courts apply this law. Labelling something a trade secret is unlikely to be enough of itself.
The Directive prevents unlawful acquisition, use or disclosure of trade secrets (including unauthorized access). "Unlawful" requires the act to be unauthorized, or contrary to honest commercial practices.