UK Law and Practice Contributed by: Nicola Dagg, Steven Baldwin, Rory Clarke and Ashley Grant, Kirkland & Ellis International LLP
1. Legal Framework 1.1 Sources of Legal Protection for Trade Secrets In the UK, trade secrets are protected by: • common law/equity that protects confidential information; • the implementation of the EU Trade Secrets Directive ((EU) 2016/943) (the “Directive” ) through statute and the Trade Secrets (Enforcement, etc) Regulations 2018 (SI 2018/597) (the “Regulation” ) and • contractual measures, typically in employ - ment contracts or non-disclosure agreements (NDAs). These sources are interlinked. For example, con - tractual arrangements can support or be raised in addition to claims under the Regulation or under common law/equity. The Directive/Regulation does not displace the protection afforded by common law/equity. This is acknowledged in, for example, Mulsanne Insurance Company Ltd v Marshmallow Finan - cial Services Ltd and another [2022] EWHC 276 (Ch). Following the UK’s exit from the EU and the expi - ry of the Brexit transition period on 31 December 2020, CJEU case law continues to apply to lower courts in the UK as a result of the application of the European Union (Withdrawal) Act 2018. However, future CJEU decisions, including in relation to the Directive, will not apply. Given the Directive/Regulation did not significantly change the position under common law/equity, this is unlikely to cause significant disruption to the law. Trade secrets are now also subject to criminal liability under the National Security Act 2023 (the
“NSA 2023” ) in cases involving national secu - rity risks. The NSA 2023, Section 2, introduced criminal offences for the unauthorised acquisi - tion, use, retention, copying, recording or disclo - sure of trade secrets when intended to benefit a foreign power or where actions pose a national security risk. 1.2 What Is Protectable as a Trade Secret Trade secrets protect information with a high degree of confidentiality that is of commercial value by virtue of it being secret, in the sense of not being generally known to the public. There is no limit on the type of information that can be classified as a trade secret. Under common law, the court has given exam - ples such as “secret processes of manufacture such as chemical formulae, designs or special methods of construction” and “other information which is of a sufficiently high degree of confi - dentiality as to amount to a trade secret” . This is contrasted with confidential information that is not a trade secret, to which there is a lower degree of obligation and that an employee is free to use and disclose once out of the employ of their employer. Under common law, the relevant factors to be considered in determining whether information held by employees falls into the former or latter class of confidential information (or is not confi - dential at all) include:
• the nature of the employment; • the nature of the information;
• whether the employer impressed the confi - dentiality of the information on the employee; and
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