A “trade secret” is a somewhat straightforward concept at law: it concerns information which is considered to provide a commercial value in view of the information being kept secret. Probably, the Coca-Cola recipe is the most well-known trade secret.
Direct recognition of trade secrets under Maltese Law is a recent development having materialized only in 2018 as a result of the transposition into Maltese Law of the EU’s Trade Secrets Directive 2016/943/EU on the protection of undisclosed know-how and business information against their unlawful acquisition, use and disclosure. As such, the Maltese Law in this sphere, namely the Trade Secrets Act (Cap 589 of the Laws of Malta), is close to identical to the Trade Secrets Directive.
Requisites for Protection
For information to be considered a trade secret in terms of the Trade Secrets Act, and in turn be conferred trade secret protection, it must meet three cumulative criteria, namely:
Whilst the first two requisites of trade secret protection are somewhat self-evident, it must be highlighted that the third requirement demands that positive action is taken by the holder of a trade secret to keep the information a secret. Thus, the steps and actions taken to protect the secrecy of the information form an integral part of whether the information is considered a trade secret in the first place. However, it should be noted that the reasonable steps that are required to be taken to keep information a secret have not yet been developed on a local level in the sense that to date there is no local precedent which sheds light on this point.
The protection conferred by a trade secret is a protection against the unlawful acquisition, use or disclosure of the information deemed to constitute a trade secret.
Unlawful acquisition of a trade secret occurs in instances where the trade secret is acquired without the consent of the trade secret holder by:
On the other hand, unlawful use or disclosure of a trade secret is considered to arise in instances where a person, without the consent of the trade secret holder, is found to have met any of the following conditions:
It should also be noted that the acquisition, use or disclosure of a trade secret is also considered unlawful when a person knew or ought to have known that, under the circumstances, the trade secret had been obtained directly or indirectly from another person who was using or disclosing the trade secret unlawfully. Similarly, the production, offering or placing on the market of infringing goods, or the importation, export or storage of infringing goods for those purposes, is also considered an unlawful use of a trade secret where the person carrying out the activity knows or ought to have known that the trade secret was used unlawfully.
Crucially, trade secret protection only arises against internal personnel, such as employees or contractors, who were exposed to the trade secret. Acquisition of the same information considered to be a trade secret would be lawful in instances of:
Thus, no rights against other third parties not exposed to the secret are granted via a trade secret protection and in fact, a trade secret can be considered to be in conceptual terms the opposite of a patent. Whilst a patent is granted against disclosure of the invention in a manner which is sufficient for the invention to be replicated by a person skilled in the art and in return for such disclosure protection against third parties is granted, in a trade secret, the information is kept secret but no protection against third parties who were not exposed to the trade secret arises.
It should also be noted that the acquisition, use or disclosure of a trade secret can however be considered to be lawful to the extent that it is required or allowed by law.
Notwithstanding the above, it should be noted that are a number of instances in which the acquisition, use or disclosure of a trade secret is considered to be exempt from infringement, namely:
This article forms part of GTG Advocates’ series “Basics of Maltese Intellectual Property Law”, authored by Dr Terence Cassar and Dr Bernice Saliba.
For more information on Intellectual Property Law and related areas please contact Dr Ian Gauci on email@example.com, Dr Terence Cassar on firstname.lastname@example.org, and Dr Bernice Saliba on email@example.com.
Disclaimer: This series is not intended to impart legal advice and readers are asked to seek verification of statements made before acting on them.