New regime for protection of Trade Secrets across the EU
On 9 June 2018, the Trade Secrets Directive took effect, with the aim of harmonising trade secret protection across the EU, and increasing enforcement possibilities, thereby encouraging cross-border collaboration in research and development projects.
The UK has long been considered a favourable and robust jurisdiction to enforce trade secrets by way of breach of confidence actions under the common law. Indeed, many had thought the UK would decide not to introduce specific laws implementing the Directive. However, the government decided that there were certain aspects which did require specific legislation and so the Trade Secrets (Enforcement, etc) Regulations 2018 also came into force on 9 June.
Whilst it may not become clear for some time how precisely the Regulations will change (if at all) the UK Courts’ existing approach to trade secrets disputes, there are a number of aspects of the Regulations worth noting for businesses seeking to protect their trade secrets (potentially one of their most lucrative assets).
Developments in the ongoing fight against counterfeiting
Counterfeiting remains a challenge for rights holders, with the EUIPO and OECD reporting that trade in counterfeit and pirated products amounts annually to around €338 billion worldwide. In December 2018, the European Commission published its Counterfeit and Piracy Watch List which identifies websites and physical marketplaces outside the EU reported to be involved in substantial counterfeiting and piracy, aiming to encourage the operators of these marketplaces, local enforcement authorities and governments to take action. The list will be updated every two years.
The initiative is part of the Commission’s strategy announced in 2017 “A balanced intellectual property enforcement system responding to today’s societal challenges”. 2018 also saw agreement of a Memorandum of Understanding on online advertising and websites infringing IPRs, as part of the Commission’s ‘follow the money’ approach to IP enforcement. Signatories to the MoU represent all those involved in placing, buying, selling and/or facilitating advertising, as well as IP trade associations.
All eyes on IP enforcement in China
Brand owners often face an all too familiar dilemma in relation to IP protection and enforcement in China. Should they make a significant investment to protect their IP despite knowing that it can be difficult to enforce?
The Chinese government has been making a concerted effort to try to change the IP landscape for global brand owners. It has reformed the IP system including a structural reorganisation of the State Intellectual Property Office, now called the China National Intellectual Property Administration (CNIPA), and focused on more robust protection for IP rights. Whilst the situation may be improving and recent decisions indicate willingness on the part of the judiciary, brand owners continue to face significant issues in enforcing their rights in China. With China being a key market in a number of sectors, investors are increasingly looking to see that a business has devised a strategy to protect its IP rights in China from an early stage.
Meanwhile, on 1 January 2019, a new e-commerce law took effect in China which, amongst other things, implements tougher requirements for e-commerce platform operators to deal with IP rights infringements, such as the sale of counterfeit goods, on their websites. The new law requires e-commerce operators, such as AliBaba or WeChat, to “establish rules to protect intellectual property rights” and to take prompt action, when notified of an infringement, to remove infringing material (i.e., notice and takedown procedures). If they do not do so, they will be jointly liable with the primary wrongdoers for any infringement. Further, where a platform operator knows or should have known that the relevant goods or services infringe IP rights, but fails to take any measures to deal with this, it will be jointly and severally liable.
Failure to comply with the new law could also result in fines for e-commerce operators between 50,000 – 5,000,000 Chinese Yuan (approximately £5,500 - £55,500), with serious violations resulting in fines of up to 2 million Chinese Yuan (approximately £225,000).