What qualifies as a trade secret
The Trade Secrets (Enforcement, etc.) Regulations 2018, which implemented the EU Trade Secrets Directive, protect information only if it is secret (not generally known or readily accessible within the relevant circles), has commercial value because it is secret, and has been subject to reasonable steps to keep it secret. All three limbs must be satisfied.
That third limb - reasonable steps - is where many claims fail. Marking, access restrictions, need-to-know protocols, and technical safeguards are not just good practice; they are part of the legal test. Information the business has not actually protected may not qualify, however sensitive.
The gap with confidential information
The statutory trade secret is narrower than confidential information, and the gap is commercially important. Information that is genuinely confidential but lacks commercial value derived from secrecy (much internal process and salary data), or that has not been subject to formalised reasonable steps, or that is middle-class Faccenda information, or that is a preliminary business strategy, may all fall outside the statutory regime.
That gap can only be bridged by a contractual NDA. So the NDA and the trade-secret regime are complementary: the statute gives a strong remedy for the narrow core, and the NDA protects the wider body of confidential information around it.
Liability rests on conscience
Trade-secret (and breach-of-confidence) liability is ultimately based on conscience. In Vestergaard Frandsen A/S v Bestnet Europe Ltd [2013] UKSC 31, the Supreme Court held that a person is liable only if they agree or know that the information is confidential, or knowingly participate in its misuse - an innocent recipient who neither knew nor ought to have known is not liable.
And a claimant must say precisely what the secret is. In Ocular Sciences Ltd v Aspect Vision Care Ltd [1997] RPC 289, Laddie J stressed that the confidential information must be particularised with precision, because breach-of-confidence claims can be used to oppress competitors and ex-employees; a sweeping everything claim risks being struck out as an abuse of process.
The US and EU positions
The regimes diverge across borders. In the US, the Defend Trade Secrets Act 2016 created a federal civil claim with a distinctive ex parte seizure remedy - and, importantly, requires employers to include a whistleblower-immunity notice in NDAs with employees or forfeit exemplary damages and attorney's fees (see the carve-outs guide). Some US states also apply an inevitable-disclosure doctrine (PepsiCo v Redmond, 7th Cir 1995) to restrain an employee from a competitor role, though California and others reject it.
In the EU, implementation varies: Germany's law (the GeschGehG) shifted to an objective reasonable-measures test and treats reverse engineering as generally lawful, and Dutch courts have strictly enforced the reasonable-steps requirement, with one decision finding that marking documents confidential but sharing them without NDAs lost trade-secret status. The lesson everywhere is the same: reasonable steps are essential.
The criminal dimension
Trade-secret misuse can now be criminal as well as civil. Section 2 of the National Security Act 2023 created an offence of obtaining, copying, or disclosing a trade secret where the foreign-power condition is met, carrying up to 14 years' imprisonment - aimed at state-linked economic espionage rather than ordinary commercial disputes, but a real escalation.
For drafters, the takeaway is to identify true trade secrets, protect them with documented reasonable steps, and treat them separately in the NDA (perpetual obligations, restricted access). The statutory and contractual layers reinforce each other only if the underlying information has actually been kept secret.
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Practical checklist
- Check all three trade-secret limbs - secret, valuable because secret, and reasonable steps (Trade Secrets Regulations 2018).
- Document the reasonable steps (marking, access control, need-to-know) - they are part of the legal test.
- Use the NDA to protect confidential information that falls outside the statutory trade-secret core.
- Particularise the secret precisely in any claim (Ocular Sciences [1997] RPC 289); avoid an 'everything' claim (abuse of process).
- For US deals, include the DTSA whistleblower-immunity notice (see the carve-outs guide).
- Treat trade secrets separately in the NDA with perpetual obligations and restricted access.
This guide is informational only and is not legal advice. It does not replace advice from licensed counsel on the facts of a specific transaction.
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