The European Union has produced a new Trade Secrets Directive which aims to provide some clarity on the distinction between trade secrets and non-trade secrets. It may well, when the final version is drafted, impact on practices relating to both whistleblowing and restrictive covenants.

The definition given to a trade secret within the Directive is as follows:

  • “[it] is secret in the sense that it is not, as a body or in the precise configuration and assembly of its components, generally known among or readily accessible to persons within the circles     that normally deal with the kind of information in question;
  • has commercial value because it is secret;
  • has been subject to reasonable steps under the circumstances, by the person lawfully in control of the information, to keep it secret.”

The Directive will make it easier for employers to protect their trade secrets, firstly be ensuring a private hearing if any proceedings are brought, however there are some requirements on part of the employer, such as demonstrating that he has taken some care to protect the secret in the first place.

The Directive clarifies that the scope of protection will not extend to whistleblowing where a trade secret is revealed during the process of revealing a misconduct, wrongdoing or illegal activity and the disclosure was made in the public interest. Fortunately for employers, this only applies if the misconduct is proven and does not rely on the employee’s belief that misconduct or wrongdoing exists.

There is a provision which allows employees, who have left an employer to start their own business, to use any “experience and skills honestly acquired in the normal course of their employment”.

It is important to note that the above rules are contained in the EU Trade Secrets Directive, and the specifics which will govern the law in the UK will be established in seperate Trade Secrets Regulations once they are created and implemented.

In the meantime, employers can take steps to prepare. Employers may wish to implement a policy and warnings to protect their company’s specific knowledge. They should give consideration to whether any trade secrets fall within a particular employee’s “experience and skills” allowing him to take them forward.