The European Council was yesterday due to adopt the directive on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure ("Trade Secrets Directive"), following a vote by the European Parliament on 15 April 2016.This was following a long legislative process which began with a draft directive in 2013.
The Trade Secrets Directive seeks to harmonise the protection of trade secrets across the EU laying down the rules on the protection against the unlawful acquisition, disclosure and use of trade secrets. It focuses on three main areas:
- the definition of "trade secret" which must contain the following three elements;
- the information must be confidential
- it should have commercial value because of its confidentiality
- the trade secret holder should have made reasonable efforts to keep it confidential
- the remedies available in the event of a misuse of misappropriation of their trade secrets (including injunctive relief, seizure of goods and/or damages); and
- the measures a court can use to prevent the disclosure of trade secrets during legal proceedings.
So what does constitute a trade secret? The Coca-Cola recipe is of course the most famous example of a trade secret.They can be anything from a recipe, formula or design to a device, a piece of software, general know-how, or a list of clients and prototypes.
The Trade Secrets Directive provides an objective test for the infringement of a trade secret. Any acquisition of a trade secret carried out by unauthorised access, copying or appropriation, or any other conduct considered contrary to honest commercial practices will constitute infringement of a trade secret. Use or disclosure of a trade secret by a person who unlawfully acquired that trade secret will also constitute infringement.
Once adopted, Member States will have two years in which to implement the provisions of the Directive into national law.