Trade secrets directive becomes law (but will we have to implement it?)

The European Commission proposed a directive to harmonise protection of trade secrets throughout the European Union in 2014. The directive was unanimously adopted by the Council and three weeks later published in the Official Journal on 15 June 2016, and came into force on 5 July (Directive (EU) 2016/943 of the European Parliament and of the Council of 8 June 2016 on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure.) Between publication and entry into force, of course, the UK's referendum on EU membership reduced the importance of the directive to this country.
Being a directive, the new law has to be implemented by the Member States. In the general confusion about how the UK will effect its exit, no one knows whether the directive will be implemented. Member States have two years in which to do is that, and two years is also the interval after giving notice under article 50 of the treaty when the UK will leave. However long passes before the UK gives notice, will determine how long the UK will be required to comply with the directive. That could be only a few months.
As with other areas of intellectual property law, however, it does seem quite likely that the UK will continue to ensure that its laws are aligned with those of the European Union. Depending on the future relationship with the EU, the UK might be obliged to comply with the directive anyway. In any event, it is hard to imagine that Parliament could possibly find time to replace more than a tiny part of our EU-derived law. The trade secrets directive is likely to remain important. However, the detailed shape of the Directive is likely to emerge only once the Court of Justice is seised of some cases in which it can give its interpretation of the law – and its rulings will cease, at some point, to apply to the UK.
Article 2 defines a trade secret as information that

• Is secret in the sense that it is not generally known among or readily accessible to persons within the circles that normally deal with this kind of information;
  
• Has commercial value because it is secret; and
  
• Has been subject to reasonable steps under the circumstances, by the person lawfully in control of the information, to keep it secret.
  

While the first and third of these requirements are at least similar to English law, the requirement for commercial value narrows the scope of the definition – which is hardly surprising, as the Directive is seeking to define a narrower class of information than the broad class of confidential information which our law protects.
The acquisition of a trade secret is unlawful when it is carried out by unauthorised access to materials, or any other conduct which is considered contrary to “honest commercial practices”. Where the trade secret is acquired from a third party and the person who acquired it knew or should have known that the third party was acting unlawfully, that acquisition will also be considered unlawful. Using or disclosing a trade secret will be considered unlawful when it is in breach of a confidentiality agreement or some other duty not to disclose the trade secret or to limit its use.
Remedies are dealt with in Article 11. They include the usual remedies in intellectual property cases – damages, interim and final injunctions, destruction of unlawful goods. There are no criminal offences, but Member States remain free to introduce their own.
The Directive has been criticised as “a threat to public interest and democracy” because of the perceived threat it poses to whistle-blowers and the press. The Panama Papers scandal in 2016 highlighted these concerns. The Directive does provide some protection for whistle-blowers and the press, so the question is whether the exceptions are sufficient. They are set out in Article 5 and cover disclosure of a trade secret for:

• exercising the right to freedom of expression and information as set out in the [European] Charter [for Fundamental rights], including the respect for freedom and pluralism of the media;
  
• revealing misconduct, wrongdoing or illegal activity, provided that the respondent acted for the purpose of protecting the general public interest.
  

Recital 20 says that “the measures, procedures and remedies provided for in this Directive should not restrict whistle-blowing activity. Therefore, the protection of trade secrets should not extend to cases in which disclosure of a trade secret serves the public interest insofar as directly relevant misconduct, wrongdoing or illegal activity is revealed.” Nevertheless, critics argue that the burden for showing that disclosure is in the public interest will fall on the whistle-blower or journalist, and there have been calls for a further directive to give more extensive protection to them.
English law on breach of confidence, non-statutory as it is, gives narrower exceptions to protect whistle-blowers and the like. The changes demanded by the Directive would not be great, but some extension of the public interest rule (covering, remember, only trade secrets) might well be needed.