Trade secrets are a category of intellectual property that has received significantly sharper legal protection since the Trade Secrets (Enforcement, etc.) Regulations 2018 came into force, implementing the EU Trade Secrets Directive into UK law (which was subsequently retained post-Brexit). For businesses whose competitive advantage depends on confidential processes, formulas, customer data, technical designs, or proprietary methodologies, trade secret misappropriation by an employee, a competitor, or a third party is one of the most serious and most difficult categories of commercial harm to detect, investigate, and remedy.
This article explains what a trade secret is under UK law, the forms that misappropriation takes, how a professional corporate investigation establishes what was taken and how it is being used, and the legal remedies available to a business whose trade secrets have been stolen.
What Constitutes a Trade Secret
Under the 2018 Regulations, information constitutes a trade secret if it meets three cumulative conditions:
It is secret: not generally known among, or readily accessible to, persons within the circles that normally deal with information of the kind in question.
It has commercial value because it is secret: the secrecy is what gives the information its commercial significance. Information that would be equally valuable if it were public knowledge is not a trade secret.
It has been subject to reasonable steps to keep it secret: the owner must have taken steps proportionate to the value and sensitivity of the information to maintain its confidentiality. What constitutes reasonable steps is assessed in context, but typically includes: confidentiality provisions in employment contracts and supplier agreements; restricted access controls on systems containing the information; physical security for paper records; and a culture of confidentiality that is actively maintained rather than nominally asserted.
The third condition is the one that most often creates difficulty in practice. Businesses that have valuable confidential information but that have not invested in the protection framework needed to maintain it as a trade secret may find that the 2018 Regulations do not protect them even where the information has clearly been stolen. Assessing the adequacy of the protective measures in place is therefore an early step in any trade secret investigation, and addressing any gaps is both an operational necessity and a legal one.
Forms of Misappropriation
The 2018 Regulations define unlawful acquisition, use, and disclosure of a trade secret by reference to specific categories of conduct:
Unauthorised Access
Accessing systems, documents, or physical media containing trade secrets without authorisation. This most commonly occurs when a departing employee accesses files they have no legitimate business reason to access in the period before their departure, when an employee with authorised access copies or transfers trade secrets to personal storage outside the scope of their authorisation, or when an external party obtains access to trade secret information through hacking or social engineering.
Breach of Confidence
Disclosing or using a trade secret in breach of a confidentiality obligation, whether under an employment contract, a non-disclosure agreement, a supply or distribution agreement, or the general law of confidence. The obligation of confidence arises from the relationship between the parties and from the circumstances in which the information was shared, and it persists after the relationship ends. A former employee who uses trade secret information in their new role is in breach of their post-employment confidentiality obligations even if they did not physically take any documents.
Industrial Espionage
The acquisition of trade secrets through deliberate covert means: recruiting an employee specifically to extract trade secret information, deploying technical surveillance to capture confidential information in commercial premises, or using deception or bribery to obtain access to trade secrets. This is the most serious form of misappropriation and typically involves the most sophisticated investigation response.
Third-Party Acquisition
A third party who acquires, uses, or discloses a trade secret knowing that it was obtained from the original owner without authorisation. This provision is significant because it can extend liability to a competitor who receives trade secret information knowing it has been stolen, even if the competitor did not participate in the theft itself.
The Investigation Process
A Bond Rees trade secret misappropriation investigation follows a structured sequence informed by the urgency that these cases typically demand: the longer the stolen information is being used by a competitor, the harder it becomes to establish causation and quantify the loss, and the greater the harm to the business.
Emergency Evidence Preservation
Before any other step, the relevant digital evidence must be preserved. For a suspected employee misappropriation, this means: a forensic image of the employee’s work devices; a server-side preservation of their email and file access records; a review of USB, cloud, and email transfer logs for the period of concern; and a preservation of the access control records showing what systems the employee accessed and when. This evidence can be overwritten or deleted if the investigation is not begun immediately, and it is the foundation of everything that follows.
Digital Forensic Analysis
Systematic forensic examination of the preserved evidence to establish what information was accessed, when, how it was transferred, and where it went. The digital forensic analysis produces a specific and documented answer to the central questions: what did the employee take, when did they take it, and through what mechanism did it leave the organisation’s control. The specificity of this analysis is important: a claim that ‘files were accessed’ is a weaker foundation for proceedings than ‘the following 47 files containing the XYZ formula were copied to a USB drive on the following date at the following time and the USB drive has not been returned’.
Corporate Intelligence on the Destination
Investigation of the competitor, new venture, or other entity to which the employee has gone, establishing the extent to which the stolen trade secret is being used in their current business. This may involve analysis of their current products, services, or marketing materials for evidence of the specific information taken; investigation of the new employer’s product development timeline to establish whether their progress is consistent with independent development or with the use of stolen information; and open source investigation of the new employer’s technical capability and the individuals they have recently recruited.
Establishing the Protective Measures
As noted above, the adequacy of the reasonable steps taken to protect the information as a secret is a legal element of the trade secret claim. The investigation establishes what specific steps were in place: the employment contract provisions, the access control framework, the physical and digital security measures, and the training and culture that maintained the information’s confidentiality. Where gaps are identified, advising on their remediation is part of the investigation output.
Legal Remedies
The 2018 Regulations provide a specific suite of remedies for trade secret misappropriation that supplement the remedies available under the general law of confidence:
Interim injunction: an emergency application to the court to prevent the continued use or disclosure of the trade secret pending the full hearing of the claim. The injunction application is typically the most urgent step in any trade secret case and must be made as soon as the investigation has produced sufficient evidence to support it. Speed is critical: delay in applying for an injunction can be used to argue that the urgency is insufficient to justify interim relief.
Final injunction: a permanent order preventing the future use or disclosure of the trade secret.
Damages or account of profits: compensation for the loss caused by the misappropriation, or alternatively an account of the profits the defendant has made through the use of the stolen information. The choice between damages and an account of profits is a strategic decision that depends on the relative size of the claimant’s loss and the defendant’s gain.
Delivery up or destruction: an order requiring the defendant to deliver up or destroy all materials containing or derived from the trade secret.
Frequently Asked Questions
What if the employee didn’t physically take any documents?
This is one of the most common misunderstandings about trade secret protection. The 2018 Regulations protect against the use of trade secret information, not just the physical removal of documents. A former employee who retained the information in their memory and is now using it in a competing business may have misappropriated the trade secret, depending on the specific circumstances and the nature of the information. The distinction between knowledge and skill that an employee is entitled to use, and specific confidential information that belongs to the employer, is a legal question that requires advice from an IP solicitor.
How do we show that the competitor is actually using our trade secret?
This is the most challenging evidential question in trade secret cases. Direct evidence — documents showing that the defendant is using the specific information — is available only in exceptional cases. More commonly, the evidence is inferential: the defendant’s product or process is shown to replicate features of the claimant’s trade secret that they could not have developed independently in the time available; or the defendant’s development timeline, combined with the specific personnel who joined them from the claimant, is inconsistent with independent development. This inferential case is built through corporate intelligence and technical analysis, and it is one of the most demanding elements of a trade secret investigation.
Is this the same as a breach of confidence claim?
Trade secret misappropriation under the 2018 Regulations and breach of confidence under the general law are related but not identical. The 2018 Regulations provide a more structured framework with specific statutory remedies and a definition of the protected subject matter that differs in some respects from the general law. In practice, most trade secret claims are also brought as breach of confidence claims, and the investigation supports both. The specific advantages of the statutory route relate to the available remedies and to the clearer definition of the protected subject matter.
Investigating trade secret misappropriation? Contact Bond Rees for expert investigation and litigation support.
