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19 April 2021
As the United Arab Emirates is a signatory to the Agreement on Trade-Related Aspects of Intellectual Property Rights, trade secrets are protected in several ways. While there is no statutory definition of 'trade secrets', various federal laws protect confidential information – both in general and in the context of employment.
The Federal Law concerning the Penal Code provides that an individual commits a criminal offence where:
by virtue of his profession, craft, position or art [he] is entrusted with a secret and divulges it in cases other than those allowed by law or if used for his own personal interest or for the interest of another person, unless authorized by the confiding person to disclose or use it.
In the context of employment, the federal law which promulgates the Civil Transactions Law requires employees to "safeguard the industrial or commercial secrets of their work, even after the expiration of the contract, as required by the agreement or customarily practiced". It also states that employees' "[a]ctions in relation to the disclosure of trade secrets" are not subject to limitation periods.
Various free zones operate within the United Arab Emirates, each of which may implement their own laws and regulations. One such free zone in Dubai is the Dubai International Financial Centre (DIFC), which has its own courts. Local UAE authorities can enforce DIFC court judgments 'onshore' (ie, outside the free zone) if their subject is situated outside the DIFC.
The DIFC recently enacted the DIFC IP Law, which deals with intellectual property and trade secrets. Under the DIFC IP Law, a 'trade secret' is defined as:
all forms and types of financial, business, scientific, technical, economic or engineering information, including patterns, plans, compilations, programs, devices, formulas, designs, prototypes, methods, techniques, processes, procedures, or codes, whether tangible or intangible, and whether or how stores, compiled, or memorialised physically, electronically, graphically, photographically, or in writing.
This definition closely mirrors parts of the definition of 'trade secrets' under Section 1839(3) of the US Code. However, trade secrets must meet the below criteria to be protected under the DIFC IP Law:
Under the DIFC IP Law, the acquisition of a trade secret by 'improper means' constitutes misappropriation, including by way of "fraud, forgery, theft, bribery, misrepresentation, breach or inducement of a breach of a legal or contractual duty to maintain secrecy, or espionage through electronic or other means". Therefore, an individual may uncover a trade secret legitimately (eg, via publicly accessible information, independent discovery or reverse engineering).
In the United Arab Emirates, parties often protect trade secrets by contractual means (eg, through a non-disclosure agreement) to prevent the recipient from using or disclosing the information. Further, parties will often ensure that the disclosure of trade secrets is conducted in strict confidence.
Employers may impose trade secret protection obligations on their employees in employment contracts or through internal policies. Employers often request that employees sign a non-disclosure agreement at the start of their employment, which may include either several or mutual obligations, warranties and indemnities.
The Federal Law on the Regulation of Labour Relations enables employers to dismiss employees without prior notice or the payment of an end-of-service gratuity where an employee "divulges any of the secrets of the establishment where [that employee] works". These provisions apply to individuals who misuse confidential information but not where a company (eg, an individual's new employer) receives confidential information from a third party.
The Civil Transactions Law provides that the time limit of one year for filing a claim relating to the violation of an employment contract does not apply to "actions in relation [to] the disclosure of trade secrets".
In the United Arab Emirates, local courts do not grant injunctions (except in the DIFC, which is a common law jurisdiction). Local courts may grant stop orders, but these do not prevent parties from performing infringing actions in the future, as is the case for permanent injunctions granted in common law countries. The relief granted by local courts is often limited to the confiscation of any materials relating to the violation or the imposition of a fine.
The Civil Transactions Law states that where a trade secret owner seeks damages, they must file a separate civil case against the infringer.
Further, parties may make an official complaint to the Ministry of Economy, which may coordinate with police to carry out a raid to investigate the alleged infringement. This may result in the criminal prosecution of the infringer. If so, the infringer may be subject to a minimum of one year's imprisonment or a minimum fine of Dh20,000 under the Penal Code. The UAE courts usually consider whether the infringer's actions had criminal intent.
Where infringement occurs within the DIFC and the owner brings a claim before the DIFC courts, other types of relief (eg, injunctions and pecuniary damages) may be available. The DIFC IP Law requires the DIFC courts to consider:
the loss, including future loss that is established with a reasonable degree of certainty; the value of the subject right infringed and the loss of an opportunity in proportion to the probability of its occurrence.
For further information on this topic please contact Melissa Murray or Eddie Chiu at Bird & Bird by telephone (+971 26108 100) or email (firstname.lastname@example.org or email@example.com). The Bird & Bird website can be accessed at www.twobirds.com.
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