Top Tips for Protecting Confidential Information and Trade Secrets in Motorsport

This article considers how the law of confidence can protect competitive advantage in the motorsports industry and provides top tips on how those involved in the motorsport industry can best protect such information. It will also set out tips for senior individuals working within motorsport, particularly those in executive or highly technical roles, to ensure that they do not breach implied or contractual duties of confidentiality. This remains a crucial issue, particularly in Formula 1, where there has been a trend of individuals moving between teams in recent years1.

For businesses, protecting confidential information is of the utmost importance. This is even more so for businesses in the motorsports industry, where marginal gains are the difference between winning and losing. Therefore, it is vital that those working within the motorsport industry do not breach the duty of confidentiality owed to their employer. The pace of technological development places a premium on the skills of those who are able to harness innovation for a competitive advantage. Misappropriation of confidential information by employees, workers or contractors cannot just adversely affect performance; it can have wider reputational harm and regulatory consequences. One only has to consider the Spygate2 controversy in the noughties, which is still discussed today, involving alleged misappropriation and misuse of confidential information between the McLaren, Ferrari, and Renault F1 teams and the more recent case of Force India Formula One Team Limited v 1 Malaysia Racing Team SDN BHD3, concerning a claim by Force India against Lotus for misuse of confidential information and copyright infringement to do with specialist aerodynamic designs, to appreciate the consequences of not properly protecting confidential information.

There can also be regulatory consequences where confidential information is leaked. In December 2023, the FIA announced that its compliance department was investigating a report that a Formula 1 team principal received confidential information from a member of Formula One Management4. Article 4 of the FIA's Code of Ethics states, “The FIA Parties and Third Parties shall also treat as confidential or secret any information, which is not public, communicated to them in the exercise of their duties”5. In that case, the FIA decided to discontinue its investigation and revealed that it was satisfied nothing untoward had happened; however, it shows that the regulator is alive to any potential breaches of confidential information.

This article is part of our series dealing with intellectual property in motorsport. The article dealing with patents can be found here and the article dealing with trade marks can be found here.

Outline:

• What are trade secrets and confidential information?
  • Top Tips
  • Security
  • Incentivising employees to remain
  • Garden Leave
  • Long notice period in the contract of employment
  • Enforcement
• Top tips for employers and senior individuals in motorsport