Understanding trade secrets law in Ireland

In Ireland, the legal framework for trade secrets has been significantly strengthened by the European Union (Protection of Trade Secrets) Regulations 2018 (SI 188/2018), which transposed the EU Trade Secrets Directive (EU 2016/943) into Irish law.

Definition of trade secrets

Under article 2 of the EU Trade Secrets Directive, a trade secret is defined as information that is secret in the sense that it is not generally known or readily available to individuals within the circles that normally deal with such information; has commercial value because it is a secret; and has been subject to reasonable steps by the person lawfully in control of the information to keep it a secret.

Trade secrets broadly fall into two categories.

• Technical information – such as manufacturing processes, recipes or chemical compounds.
• Commercial information – such as lists of customers, product launch dates or results of marketing studies.

Lawful and unlawful acquisition, use and disclosure

Under the 2018 regulations, the acquisition of a trade secret is considered ‘lawful’ if it is obtained through independent discovery, creation, or observation of a publicly available product as well as situations where the information is obtained through legitimate means. Conversely, an acquisition or use is deemed ‘unlawful’ if it involves unauthorised access, appropriation, or copying of documents or materials containing the trade secret, breach of confidentiality agreements or other dishonest practices.

Remedies and enforcement

The 2018 regulations provide civil redress measures and remedies in the event that a trade secret is unlawfully acquired, used or disclosed.  

The most valuable remedy available in cases of trade secret misappropriation is an injunction. An injunction is a court order directed at the offending party, prohibiting further use or disclosure of the misappropriated trade secrets. This remedy is vital to prevent additional harm to the company whose trade secrets have been compromised. Other available, and equally valuable, remedies include damages and corrective measures, such as the destruction or delivery up of infringing goods. 

The appropriate court for such actions depends on the value of the damages or relief sought, with cases potentially being heard in the District Court, Circuit Court, or High Court. 

Consequences of failure to comply

Under section 18 of the 2018 regulations, if a person fails to comply with any court-ordered measure, they may face summary conviction resulting in a Class A fine - not exceeding €5,000 - and/or imprisonment for up to six months. On conviction on indictment, penalties include a fine of up to €50,000 and/or imprisonment for up to three years. 

Pre-existing protections

Before the introduction of the 2018 regulations, trade secrets in Ireland were primarily protected through contractual obligations and the law on breach of confidence. Under common law, ‘trade secrets’ includes any confidential information gained by an employee which cannot be considered to be part of the employee’s general acquired skill and knowledge. These trade secrets cannot be used by the employee when their employment is terminated. This differs to the Directive’s definition which requires the three elements identified above to be satisfied in order to establish a claim in relation to confidential information.  

The pre-existing common law protections continue to apply alongside the new statutory framework, offering businesses a robust mechanism to safeguard their confidential information even in the absence of a formal confidentiality agreement. 

Limitations

Enforcement of trade secrets through court litigation incurs significant costs. Additionally, those seeking to enforce a trade secret must demonstrate that the information was confidential and that a breach has occurred. This is more challenging to prove than other intellectual property breaches, such as patent infringement or infringement of a registered trade mark.  

There exists a conflict between protection of confidentiality and the right of ex-employees to practice their trade or profession. Irish courts have generally allowed ex-employees to compete, when possible, potentially exposing businesses to risk. However, it will depend on the nature of the information and how far it has become part of the ex-employee’s skill and knowledge. If the information is in the nature of a trade secret, rather than ‘business information’, a court is more likely to favour protecting the trade secret. However, businesses should in any event implement a comprehensive strategy to safeguard their trade secrets effectively. 

Confidentiality clubs

In litigation involving intellectual property, parties may assert that materials to be discovered include highly commercially sensitive information that constitutes trade secrets. Courts may then impose a ‘confidentiality club’ for certain documents. Confidentiality clubs allow the disclosing party to limit access to confidential information to a small number of individuals from the opposing party. The scope of the confidentiality club may restrict access to relevant materials to a party's legal representatives, or specific officers of the company. Moreover, access is typically granted under strict conditions regarding the storage, access and destruction of these materials. 

Although this solution is only used in exceptional circumstances, recent cases suggest that confidentiality clubs are becoming more prevalent in Ireland. In the High Court decision in Goode Concrete v CRH Plc, which involved a competition dispute, the judge reviewed Irish and English authorities and concluded that the court had inherent jurisdiction to direct disclosure within a limited confidentiality club.  

When deciding whether to agree to the establishment of a confidentiality club, the Irish courts will carefully balance the need to protect commercially sensitive information with the requirement to ensure fair and transparent legal proceedings. 

Advice for businesses

To effectively protect trade secrets, businesses should consider the following strategies: 

• Establish clear internal policies and procedures for handling confidential information. Ensure that all employees understand the importance of protecting trade secrets and the consequences of failing to do so. 
• Ensure all contracts with employees, agents, contractors, and business partners include confidentiality clauses or where necessary, require such parties to sign non-disclosure agreements. 
• Provide ongoing training to employees about the importance of trade secrets and the measures they should take to protect them. 
• Restrict access to trade secrets to only those employees, agents, contractors and business parties who need the information to perform their job duties or provide their services. 
• Regularly monitor and audit the use of their trade secrets to ensure compliance with internal policies and legal requirements. 
• Use physical security measures, such as locked cabinets and restricted areas, and digital security measures, such as encryption and secure passwords, to protect trade secrets. 

The 2018 regulations have enhanced the legal landscape for trade secrets in Ireland, providing clearer definitions and stronger protections. Businesses must however remain vigilant in implementing measures to protect their trade secrets.