AIPPI Congress Report 2: Trade Secrets – Views from In-House Counsel

“Trade secrets can be a valuable tool to protect valuable know-how. One of the last panel sessions of day 1 saw six panellists discuss the new trade secrets regimes implemented by the EU and US in 2018. The US enacted the ‘Defend Trade Secrets Act’ and the EU formally adopted the ‘Directive on the Protection of Undisclosed Know-How and Business Information’. 

1.  Practical Steps to protect trade secrets

The panellists were asked to share what policies and practices they had developed with their companies to help protect its trade secrets.  These included:

• Written, global policies to ensure clarity and consistency of policies across all relevant jurisdictions. Sascha Schalkwijk commented that such policies will necessarily be commensurate with a company’s size and resources. The key is to identify valuable information and high risk areas to enable sufficient and achievable policies to be put in place.

• Document marking and classifications to show when documents are confidential or privileged.

• On-board training to serve two purposes: first, to teach all new staff both the importance of trade secrets and the company’s policies on protecting them (scripts can be useful in this regard). Second, to understand the new-joiner’s background so as to consider how to prevent and reduce the risk of their utilising another’s trade secrets.

• Continuous training to remind staff about trade secret policies. Options could include in-person teaching sessions or interactive e-learning modules. Such training might comprise general corporate training or more specific training for specific roles – Loek Steffanie pointed out the importance of using appropriate language to ensure that the policies are understood.

• Leaver policies to be conducted by HR departments, including, for example, computer audits and checklists that all confidential documents have been returned. Stephen MacKenzie noted that employees don’t always take documents for their use, but sometimes simply to have copies of their works. However, control must be retained over such documents and must be returned upon their leaving.

• Working with IT to monitor outgoing document traffic or to conduct computer audits upon an employee’s departure. It was noted that this option is not allowed in some jurisdictions.

• Spot audits, e.g. in a factory, whereby an undercover visitor is sent to see if anything confidential can be seen or accessed. Loek Steffanie made the valuable point that public relations are important when conducting such audits – it should be stressed that it is for the asset’s protection that such an audit was conducted rather than to judge their performance or actions.

• Global policies – to ensure consistency of policies across jurisdictions and with all parties – both internally and in working with third parties. Sascha Schalkwijk commented that such policies will necessarily be commensurate with a company’s size and resources. The key is to identify the valuable information and high risk areas to enable sufficient and achievable policies to be out in place.

• Non-disclosure Agreements for use with third parties. Emily O’Neill suggested having both a standard template and a playbook of useful clauses to allow for some flexibility when negotiating such agreements. Consider what you are doing and what must be shared and tailor the agreements accordingly.

• Following up confidential discussions in writing. For example, by sending an email summarising the meeting and stating that, as was understood by all of the parties present, the information was confidential. Copies needn’t be provided to the legal team – it’s not their role to monitor – but they should be saved and accessible if they are ever required.

2.  A magic wand

A creative question was put to the panellists by the Kat’s very own Annsley Merelle Ward: what would they change if they had a magic wand?

• Stephen MacKenzie would impose more serious penalties for the use of trade secrets. He considered that a slap on the risk by way of a fine is not sufficient and thinks that there should be criminal liability.

• Pirke Fustinoni on the other hand was generally satisfied with Finland’s laws on trade secrets. She emphasised that it is was simply a matter of continuously building a corporate culture to facilitate and maximise protection.

• Emily O’Neill would improve IT infrastructure for obtaining and recording evidence.

• Loek Steffanie would use the magic wand to enable him oversight of all activities that might lead to a trade secrets leak to enable him to act quickly to prevent them and/or to have knowledge of such leaks as soon as they happen to be able to take immediate steps to mitigate the damage. Rapid response, Loek said, was absolutely critical.  

• Sascha Schalkwijk considered that there wasn’t anything specific that she would use the magic wand for. She reiterated that, working for a relatively new and small company, it is a matter of taking baby steps so as to do what is needed at each stage. As it grows, it will need to consider how to update and upscale its trade secret policies.

• Linda Lecomte opted to use her magic wand to have a cyber-awareness unit to investigate and obtain evidence about trade secret infringements.”