The Trade Secrets Regulations and Faccenda Class 2 Information

November 20th, 2020

I understand that Travel Counsellors is appealing the finding in HHJ Hacon’s judgment in Trailfinders v Travel Counsellors & Ors [2020] EWHC 591 (IPEC) that it was liable for breach of confidence because it received customer information from the Trailfinders’ employees it recruited which it ought to have known was fairly and reasonably to be regarded as confidential to Trailfinders.

It seems likely that the appeal may involve the Court of Appeal in a reconsideration of its famous but unloved judgment in Faccenda Chicken v Fowler [1987] Ch 117 in light of the recent statutory definition of trade secrets in the Trade Secrets Directive (EU) 2016/943, as implemented by the Trade Secrets (Enforcement, etc.) Regulations 2018/597.

In Trailfinders the information at stake was client information which Trailfinders itself classified as Faccenda class 2 information. The Judge found (at [14]) that the statutory definition of trade secrets in the Directive covered not only Faccenda class 3 information but also Faccenda class 2 information. Travel Counsellors was found liable (at [118]) under Art.4(4) of the Directive for unlawfully acquiring trade secrets.

The finding that Faccenda class 2 information amounts to trade secrets under the Directive is, at first glance, surprising.

The Government’s explanatory note to the Regulations stated that they did not include any change in the law and it was:  “to be assumed that the substantive principles governing the protection of confidential information under English law, including that afforded by terms implied into contracts of employment and by equitable obligations of confidence, are unaffected by the Directive”.

The whole rationale for a Faccenda class 2 is that it is information capable of becoming part of the employee’s experience and skill and if it were classed as trade secrets protected by confidentiality after the end of employment, trade would be restrained by unreasonably limiting employee mobility.

The Directive acknowledges this. Art.3 states:

“3. Nothing in this Directive shall be understood to offer any ground for restricting the mobility of employees. In particular, in relation to the exercise of such mobility, this Directive shall not offer any ground for:

(a) limiting employees’ use of information that does not constitute a trade secret as defined in point (1) of Article 2; 

(b) limiting employees’ use of experience and skills honestly acquired in the normal course of employment;

(c) imposing any additional restrictions on employees in their employment contracts other than restrictions imposed in accordance with Union or national law.”

This means that honestly acquired Faccenda class 2 information is not a trade secret for the purposes of the Directive and that the law is still that post-employment such information is not confidential and may lawfully be deployed. But, in excluding honestly acquired Faccenda class 2 information, was the Directive implicitly intended to cover unlawfully acquired Faccenda class 2 information? Is that the basis of the Judge’s finding?

Has the statutory definition of trade secrets now displaced the unloved and overly complicated Faccenda test?  Is the Faccenda Chicken “oven ready” for its final roasting by the CA?

Comments are closed.