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Safeguarding your valuable business information

Whether you are designing a confidential new product, developing a new design, engineering, manufacturing or industrial technique, a brand new way of doing business, or simply a better way of doing what others in your industry have done the same way for years, no business wants to see someone else take unfair advantage of their ideas, efforts and expense.

To that end, businesses often look to protect the end results of their efforts via intellectual property rights, either registrable ones, such as patents and registered designs, or via unregistered rights, like copyright and design rights. These can be used to prevent others ‘freeriding’ (or, as the Germans might say, unlawfully competing).

But before they ‘go public’ and are ready to share their work product with the world, there are steps businesses can take to preserve their commercial advantage over their competitors. Furthermore, sometimes businesses never want others to learn how they ‘do’ or ‘take’ certain steps within their business (which give them a competitive advantage).

This is where the laws of confidential information and trade secrets can assist.

Unlike patents, designs and trade marks, businesses don’t have to apply to register confidential information/trade secrets. There are no government fees to pay to obtain them and they can, in theory, last forever, provided you maintain their secrecy.

But you do need to make sure that anyone who has access to the information you want to keep confidential knows this, is required to maintain its secrecy and not to misuse it or disclose it to others. It is prudent to set these obligations out in writing, so that recipients of the information are in no doubt, and also to limit the number of people who have access to the information. Technical and physical barriers to accessing the information will also assist in keeping it safe and secure, together with robust internal policies and procedures. Non-compete clauses in employee and consultancy contracts are an additional barrier that can be used to limit the ability of others to take advantage of the information in question.

Should the unfortunate happen and someone does misuse/unlawfully disclose the information, it is important to take action swiftly, via your lawyers, to prevent further misuse/disclosure, sometimes requiring a Court ordered injunction. Damages, or an account of the defendant’s profits made as a result of the wrongdoing, can also be awarded, together with legal costs and interest, plus an order for delivery up or destruction of any goods, the design, functioning, production process, marketing or a characteristic of which significantly benefited from the unlawfully acquired, used or disclosed confidential information/trade secret. A publicity order is also possible, by which the defendant is ordered to pay the cost of publicising the Court’s judgement under which it determined that the defendant had acted unlawfully.

The writer has been involved in drafting a multitude of contracts over the years, which have enabled clients to prevent others from misusing their valuable business information. Whilst ‘off the shelf’ precedents are available, it is the writer’s experience that these often need amendment (and bespoke clauses added) if the client is to stand the best chance of being able to protect its commercial secrets. The writer has also been involved in many commercial disputes, where clients have sought to prevent the leakage and misuse of their confidential information, often by ex-employees who join competitors or launch their own competing businesses. Urgent action is needed in such situations. It is the writer’s experience that the English Courts provide an effective mechanism for the resolution of such disputes. A lawyer’s cease and desist letter sometimes avoids the need for subsequent legal proceedings, but some defendants prove stubborn, unreasonable and perhaps do not always receive (or listen to) the advice they need to hear.

For more information please contact Carl Steele.

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