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Understand different types of IP

1b. Confidential Information / Trade Secrets

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Confidential information communicated in circumstances importing an obligation of confidence.

What is

Protected?

  • New products and manufacturing methods not disclosed to the public.

  • Ideas for scientific research or promising areas of research.

  • Pricing and customer information. 

  • The design of internal mechanisms in a medical device.

Examples

Until the information is disclosed to the public.

Duration of Protection

None.  The right arises automatically when protectable information and technology are developed.  Contracts can assist in maintaining the confidential nature of the information.

Application Costs

Introduction

Confidential information can be used as an alternative form of IP protection where patents may be unsuitable, e.g. in the case of food or drink with a secret formula.  As an unregistered right, it is also a cheaper method of protecting information than applying for patents.  This is, however, counterbalanced by the fact that it is generally difficult to obtain clear evidence of misuse of confidential information in advance of commencing court proceedings.  Moreover, confidential information cases can be more expensive and unpredictable than patent cases due to an increased need for disclosure of documents as well as witness and expert evidence. 


Appropriate procedures must be put in place so that the information does not enter the public domain and lose its confidential nature and there is a cost associated with implementing such procedures. For example:
 

  • Ensure that everyone who has access to the information is informed of its confidential nature and signs appropriate non-disclosure agreements.  If necessary, any non-disclosure obligations should continue beyond termination of your relationship with the recipient of the information (e.g. after an employee leaves your business).

  • Ensure that the information is only distributed to people on a "need to know" basis in order to reduce the risk of leakage.

  • Take care when discussing confidential information in public, so that it does not lose its confidential nature by being overheard by a member of the public.

  • Use IT and physical security (e.g. safes) to limit access to confidential documents to a limited set of people within your organisation.

How is it Obtained?

Trade secrets are unregistered rights which can be protected in two different ways – under English common law and under the EU Trade Secrets Directive (Directive (EU) 2016/943).  These two systems run in parallel.

Under English common law, trade secrets arise when:

  • the information is confidential in nature'

  • the information is discolsed in circumstances which ether explicitly or implicitly impose an obligation to keep it confidential; and

  • unauthorised use of the information would be to the detriment of the person who discussed it. 

The EU Trade Secrets Directive aims to harmonise trade secrets protection across the EU and sets out common minimum standards of protection that member states must provide.  It  defines a trade secret as information which meets all of the following requirements: 

  • It is secret in the sense that it is not generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question;

  • It has commercial value because it is secret; and

  • it has been subject to reasonable steps by the person lawfully in control of the information to keep it secret. 

While it is always recommended to enter into appropriate non-disclosure agreements, confidential information can also benefit from protection in the absence of such agreements.  A common example is where there is a pre-existing relationship between the discloser and recipient of the information, such as in the case of disclosure by a client to a consultant or a lawyer.  Confidential information can sometimes benefit from protection even where there is no such relationship, for example if the information is clearly confidential but inadvertently falls into the wrong hands. 

What does it protect?

See 'How is it Obtained' above. Information may be protected if it has the necessary quality of confidence and is disclosed in circumstances which impose an obligation in confidence. 

Examples:

  • The result of a confidential study into genetics

  • The design of the internal mechanisms in a pacemaker

  • Pricing information for the components of an electrocardiograph

This project was joint-funded by the National Institute for Health Research (NIHR) Brain Injury MedTech Co-operative based at Cambridge University Hospitals NHS Foundation Trust and University of Cambridge. The views expressed are those of the author(s) and not necessarily those of the NHS, the NIHR or the Department of Health.

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