"Three aspects of information: Current issues in trade secrets, client confidentiality and privilege": a report

"Three aspects of information: Current issues in trade secrets, client confidentiality and privilege", CIPA-IPKat seminar, took place this Wednesday at the CIPA headquarters in Chancery Lane, in the heart of Charles Dickens' legal London. The speakers were John Hull (consultant, Farrers), Gary Moss (EIP) and Ian Kirby (Carpmaels & Ransford), with IPKat blogmeister Jeremy in the chair, when he wasn't out of it.  This note has been written by former guest Kat Rebecca Gulbul, who now works for CIPA as a spreader of cheerful smiles, though it is rumoured that she may have other duties. Here's her report, with a few Kat-comments from Jeremy interspersed in bold red:
John Hull opened the discussion with the topic of trade secrets. He spoke of the Trade Secrets Directive proposed by the European Commission in November 2013 and officially known as the Directive on the Protocol of Undisclosed Know How an Business Information (Trade Secrets) Against Unlawful Acquisition, Use and Disclosure. The proposed Directive, subsequently amended and considered by the Committee on Legal Affairs, now awaits the scrutiny of a Plenary Sitting on 8 September 2015.

Does she need an
owner, or a holder?
John explained the changes that would take place. Member States would have to abide by a minimum standard. No new IP right would be created, which explains the new terminology of a trade secret 'holder' instead of 'owner'. The two substantive requirements are that Member States must allow trade secret holders to apply to their national courts to remedy unlawful use or acquisition of their trade secrets and that the remedies and procedures of the national court be be "fair, equitable, economical and effective". Articles 3 and 5, the main provisions of the Directive, deal respectively with unlawful acquisition, use and disclosure of trade secrets and Member States’ obligations to provide remedies. A limitation period for bringing a claim was initially proposed to last two years, but has now gone up to three.

John then explained the various legal remedies available to an aggrieved trade secret holder: injunctions, recall of infringing products, destruction or delivery up and damages. Damages would depend on various factors, the amount being determined by criteria such as the amount of unfair profits made and the ‘moral prejudice’ (the meaning of which was questioned) caused [we might get some guidance from the Court of Justice of the European Union on this: Case C-99/15 Liffers, a reference from Spain, deals with the relationship between damage for moral prejudice and lump-sum compensatory damages awards. See Valentina's Katnote here]. Breach of a trade secrecy obligation would remain a civil wrong, since the Directive does not cover criminal activity.  John concluded that an important area had been overlooked, that of trade secret misappropriation in relation to employees. It remains unclear where the boundary lies between an employer’s confidential business information and an employee’s know-how or skill and experience. A recent proposal may adopt an exemption based on “…knowledge, qualifications and skills gained by an employee in previous employment.”

Gary Moss was next to address the packed audience.  He drew on his own experience, as a solicitor in a patent attorney practice whose conduct was effectively regulated by separate Codes of Practice of the Solicitors Regulatory Authority (SRA) for solicitors and IPReg for patent and trade mark attorneys. Speaking on the topic of client confidentiality and the duty of disclosure, he explained how confidentiality can arise under common law, from the nature of certain relationships or from the standards prescribed by professional bodies. He noted in particular Rule 8 of the IPReg Code of Conduct and Chapter 4 of the SRA Code of Conduct, which both deal with confidentiality and disclosure.

Gary then discussed the circumstances in which clients could waive the obligation of confidentiality. For example, a solicitor may be asked to represent a client who has an opposite interest to his former client, about who he holds confidential information which is material to the new client. The situation in the USA where a firm cannot act against an existing client was contrasted with that in the UK, where the question asked would be whether the firm possessed information on one client which would have an effect on the way it conducted the case on behalf of the second client [from the Q&A session it transpired that in the US obligations relating to client conflict are dealt with on a state-by-state basis and may therefore differ in their application as between US law firms which also maintain offices in Europe, Asia and elsewhere]. Lastly, he discussed confidentiality in litigation and noted that the fact that some information was confidential was no basis to refuse its disclosure, in contrast to matters of legal privilege.

This led to the final topic of the evening, when Ian Kirby tackled privilege and 'without prejudice' communications. Ian reviewed the main concepts of privilege in the UK, explaining how it arises in common law jurisdictions and balances the duty of disclosure. It gives parties the right to seek legal advice without having to disclose it to the other side or to the Court. The most encountered type is legal professional privilege, which applies only to confidential communications and belongs to the client, who can decide to waive it. He pointed out the statutory extensions of this privilege through s.280 of the Copyright, Designs and Patent Act 1988 for patent attorneys and s.87 of the Trade Mark Act 1994 for trade mark attorneys.

Ian then discussed the term 'without prejudice' which, he said, was often misused. He clarified that the term applies only to statements made in a genuine attempt to reach a settlement in a dispute. A 'without prejudice' communication will not be put before the Court, though if it is marked "Without Prejudice save as to costs", the court will only look at the documents in order to determine costs. Marking a document ‘without prejudice’ does not make it inadmissible in court unless it was communication sent in an attempt to settle a case. Similarly, even if not marked as such, some documents will still be 'without prejudice'.

Questions were then taken from the audience, one of which concerned the commencement of the limitation period where trade secrets had been disclosed -- an act that is not always apparent to its holder at the point at which disclosure occurred. After discussion within the panel, it was concluded that the time would be when the trade secret holder became aware of the disclosure [it being a warm evening, the questions soon dried up, so the packed audience duly unpacked itself and adjourned to the adjacent room for some urgent rehydration in the form of liquid refreshments].
"Three aspects of information: Current issues in trade secrets, client confidentiality and privilege": a report "Three aspects of information: Current issues in trade secrets, client confidentiality and privilege": a report Reviewed by Jeremy on Friday, June 12, 2015 Rating: 5

1 comment:

  1. Good report.

    "The proposed Directive, subsequently amended and considered by the Committee on Legal Affairs, now awaits the scrutiny of a Plenary Sitting on 8 September 2015"

    I've seen and heard many state that the review/vote is on 8 September but it says 24 November 2015 on the Parliament's website? No? http://www.europarl.europa.eu/oeil/popups/ficheprocedure.do?reference=2013/0402(COD)&l=en


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