On 11 July 2023 the National Security Act 2023 (the Act) received royal assent and became law. The Act addresses trade secret misappropriation in the context of industrial espionage by a foreign government, making the unauthorised conduct of obtaining, copying, recording or retaining a trade secret, or disclosing or providing access to a trade secret, under certain circumstances, a criminal offence. The maximum penalty is 14 years imprisonment and/or a fine (section 2 of the Act).
The trade secrets provision is part of a broader regime introduced by the UK government to address national security threats such as espionage, sabotage and foreign interference.
One of the conditions that has to be met in relation to the person’s conduct is the “foreign power condition”. The foreign power condition is defined in section 31(1) of the Act as:
(a)the conduct in question, or a course of conduct of which it forms part, is carried out for or on behalf of a foreign power, and
(b)the person knows, or having regard to other matters known to them ought reasonably to know, that to be the case.
In order for section 31(1) to be triggered it is for example sufficient if the conduct is under direction or control of the foreign power or even just carried out with the financial or otherwise assistance provided by a foreign power for that purpose.
It will be interesting to see how the foreign power condition will be applied in practice, in particular where governments have extensive control and ownership over corporations.
A new definition of “trade secret”?
What is striking is that the definition of “trade secret” is different to the definition used in the fairly recently enacted Trade Secrets (Enforcement, etc.) Regulations 2018 (the Regulations), implemented in response to the EU Trade Secrets Directive. A comparison of the two definitions is set out below:
|A “trade secret” means any information, document or other article which—
|“trade secret” means information which—
|is not generally known by, or available to, persons with knowledge of or expertise in the field to which it relates,
|is secret in the sense that it is not, as a body or in the precise configuration and assembly of its components, generally known among, or readily accessible to, persons within the circles that normally deal with the kind of information in question,
|has actual or potential industrial, economic or commercial value which would be, or could reasonably be expected to be, adversely affected if it became generally known by, or available to, such persons, and
|has commercial value because it is secret, and
|could reasonably be expected to be subject to measures to prevent it becoming generally known by, or available to, such persons (whether or not it is actually subject to such measures).
|has been subject to reasonable steps under the circumstances, by the person lawfully in control of the information, to keep it secret.
Overall, the definition in the Act seems broader than the definition in the Regulations, especially in relation to the “reasonable steps” requirement to keep the information secret. Reasonable steps (“measures” in the Act) need not actually have been taken and it is sufficient that it could be reasonably expected that the information is subject to measures to prevent it becoming generally known.
Final thoughts The Act provides businesses with another weapon to protect their trade secrets by hopefully leading to a sufficient deterrent to prevent misappropriation. However, trade secrets cases in other jurisdictions where criminal recourse is already available have shown that some offenders will still try their luck.