Introduction

In November 2013 the European Commission issued the proposed EU Trade Secrets Directive. The directive aims to harmonise the protection of trade secrets in the European Union, and thus foster competitiveness and growth on the internal market. The third and final version of the directive was approved by the European Parliament on April 14 2016. Member states now have two years to implement the directive into national legislation.

The directive will impose changes on Finnish legislation and Finland will at least need to harmonise the different definitions of 'trade secret'. Further, the term 'trade secret holder', which is defined in the directive, will be defined in Finnish legislation for the first time.

Protection of trade secrets

In Finland, the protection of trade secrets is regulated under both criminal law – the Criminal Code – and civil law –the Unfair Business Practice Act and the Employment Contracts Act. This has lead to the fragmented protection of trade secrets in Finland. At present, the criminal law affords the strongest protection against trade secret infringement, which is a clear contrast compared to other European countries.

The term 'trade secret' and the definition of a 'trade secret' have nuanced differences under each law. Whereas the Unfair Business Practice Act uses the term 'trade secret', the term 'business secret' is used in the Criminal Code, and the term 'trade and professional secrets' is used in the Employment Contracts Act. Based on these three laws, from a Finnish perspective a trade secret can be defined as information consisting of:

  • information or knowledge regarding commercial activity;
  • the intention of confidentiality or secrecy;
  • an interest in confidentiality or secrecy; and
  • an actual secret.

Hence, the Finnish trade secret requirements correlate with the definition of a 'trade secret' set out in Article 39 in the Agreement on Trade-Related Aspects of IP Rights. However, it is paradoxical that whereas the legislature's intention was to create a broader protection of trade secrets, the use of three different terms has caused a gap in terms of the type of information that is really protected.

Impact of directive

The Trade Secrets Directive has been both embraced and criticised in Finland. The extent of the changes which the directive will impose on Finnish legislation is not yet clear. Finland will need to harmonise the different definitions of 'trade secret' so they are in accordance with the definition in the directive. Further, the term 'trade secret holder' will be defined in Finnish legislation for the first time.

The directive also defines the relevant forms of misappropriation and clarifies the meaning of reverse engineering. Thus, there will be a need to adopt new regulations into the Finnish legislation to conform to the regulations in the directive concerning the unlawful acquisition, use and disclosure of a trade secret under Finnish law.

The directive also establishes regulations concerning whistleblowing and the rights of whistleblowers. Thus, the measures, procedures and remedies provided in the directive are not intended to restrict any whistleblowing activity. This part of the directive has been much debated and it remains to be seen how it will actually be enforced.

Consequently, without establishing criminal penalties, a trade secret holder will be able to seek the following protection against a party that infringes its trade secret:

  • stopping the unlawful use and further disclosure of misappropriated trade secrets;
  • the removal from the market of goods that have been manufactured on the basis of a trade secret which has been illegally acquired; and
  • the right to compensation for damage caused by the unlawful use or disclosure of the misappropriated trade secret.

The possibility for a trade secret holder to seek protection will result in a positive change in Finnish legislation, as the existing legislation enables information to be given back to the company from which it was retrieved. Since the authorities do not have the right to destroy seized evidence, there is a possibility that the infringer will continue to have access to the material which contains trade secrets. This can be problematic in cases concerning trade secret misappropriation.

Compared to existing Finnish legislation, the directive will also make it easier to claim damages in cases of trade secret misappropriation, and thus affords rights holders stronger protection.

However, the implementation of the directive will also cause problems from a Finnish perspective. How can the legislature ensure that the implementation of the directive's procedural rules will not weaken the existing trade secret protection set out in the Criminal Code?

Comment

As the Trade Secrets Directive enters into force, it will require that the Finnish legislation is harmonised with the requirements set out in the directive. However, it is still unclear how Finland will implement the directive into national legislation; will it follow the example of its neighbour Sweden and enact a separate law regarding trade secrets, or will existing laws be amended? At present, the consensus is that the first step should be to amend the Finnish legislation regulating the protection of trade secrets; the enactment of a separate law will likely be left for the future.

A separate trade secret law could give broader protection to trade secrets in Finland. Whereas this law would be easier to interpret, from an academic point of view it would be criticised, as the existing legislation is thought to be sufficient. Therefore, it is questionable whether a separate law would bring something new or whether it is adequate to amend the existing legislation in accordance with the directive. Nevertheless, it remains to be seen what effect the Trade Secrets Directive will have and how it will be adopted into and interpreted under Finnish legislation.

For further information on this topic please contact Wilma Yläjärvi by telephone (+358 9 681700) or email (wilma.ylajarvi@dittmar.fi). The Dittmar & Indrenius website can be accessed at www.dittmar.fi.

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