The Law Commission's recently published proposals to make the taking of trade secrets a criminal offence deserves a warm welcome.
At present, taking trade secrets is not a criminal offence because mere information, however sensitive, can not constitute property for the purposes of s.1(1) of the Theft Act 1968. This frequently leads to the ludicrous situation where the only criminal remedy available to a company whose valuable trade secrets have been taken derives from the theft of the paper on which they are printed.
The point was highlighted this year when the Crown Prosecution Service (CPS) had to drop its high-profile action against Andrew Regan, who was accused of copying and distributing Co-operative Wholesale Society internal documents in his attempt to find funding for his takeover bid. The CPS discontinued the action once it appreciated that taking documents could not amount to theft.
It is, however, departing employees who are the most common perpetrators of the illicit dissemination of commercial trade secrets. In practice, a company whose con- fidential documents are copied by an employee has to rely on bringing a private civil action.
Such actions can cost hundreds of thousands of pounds to take to trial and the remedies available in terms of damages are often inadequate. Also, in many cases, the ex-employee is a man of straw and any order obtained against him for costs or damages is unlikely to be enforceable.
All this makes a cheap criminal remedy attractive. The threat of imprisonment and/or fines will make departing employees think more carefully about their obligations to their ex-employer. And, because such litigation will be funded by the public purse, even small employers will have a credible deterrent.
The Law Commission report does provide a whistle-blower/public interest defence so that those informing the public about their employer's unlawful activities could not be prosecuted. To prevent the offence being misused by ex-employers, the commission recommends that prosecutions need the consent of the Director of Public Prosecutions.
If implemented in law, the biggest effect of the proposals is that they would change the casual attitude many employees have to their employer's trade secrets.