Business secrets are an essential asset of companies. Yet, the protection of these secrets is currently impeded by the inability of French law to adapt to recent technological evolutions that give rise to the rapid dematerialisation of data and information held by companies. French companies are increasingly facing attempts of theft or appropriation of their business secrets through various means, in particular, judicial means. Thus, the determination of an appropriate protection of these secrets has become essential. It is all the more essential as foreign laws, including in particular US law, have already implemented a protective legal arsenal.
The French Government thus initiated a few years ago a policy of economic intelligence including, in particular, the implementation of the protection of business secrets. On 23 January 2012, the French Assemblée Nationale adopted, on its first reading, a bill aiming at sanctioning violations of business secrets, which is greatly inspired from the recommendations of the Interministerial Working Group on business secrets presided by Mr Claude Mathon, Advocate General before the French Supreme Court, in a report filed on 17 April 2009.
The bill arose from a mere observation: French law, whether criminal or civil law, does not enable to efficiently punish violations of business secrets.
Economically sensitive information of companies are criminally protected using disparate incriminations that do not form a coherent whole. Thus, while breach of trust, punished by Article 314-1 of the French Criminal Code, enables to punish certain violations of business secrets (with respect to the misappropriation of intangible property; see, in this edition, Customer poaching can now be punished by Criminal Courts on the ground of breach of trust by Christophe Garin), this incrimination, however, requires the prior transfer of a good, which often occurs in a contractual context and thus has an excessively restrictive scope of application. Another example is the disclosure of a trade secret, punished by Article L. 621-1 of the French Code of Intellectual Property, which only enables to punish the managers and employees of a company and excludes from its scope of application, pursuant to case law, the disclosure of trade or management processes.
From a civil standpoint, companies that are victims of a violation of their business secrets are entitled to initiate an action for unfair competition and subsequently obtain that their competitors be ordered to pay damages. However, civil actions only punish violations of business secrets a posteriori and are thus not necessarily dissuasive. The sustained loss is in fact difficult to assess as it often corresponds to a loss of chance or the loss of a competitive advantage.
One of the reasons of the inefficiency of French law also relates to the absence of any formal definition of "business secrets", even though this expression is found in a dozen recent legal provisions and is frequently used by case law, whether of Criminal and Civil Courts or of Administrative Courts.
The bill thus provides the following definition of the information subject to protection as business secrets: "regardless of the medium, the processes, objects, documents, data or files of a commercial, industrial, financial, scientific, technical or strategic nature that are not public and which unauthorised disclosure may seriously endanger the interests of the company by damaging its scientific and technical potential, its strategic positions, its commercial or financial interests or its competitive capacity and which have consequently been subject to specific protection measures aiming at informing of their confidential nature and ensuring such". The bill adds, in a second paragraph, that the specific protection measures shall be determined by a Decree adopted after having heard the Council of State.
Such a definition at least has the merit of covering all types of information, regardless of the medium. Yet, it is extremely broad and the decision to protect information as a business secret will first of all be taken by the company itself depending on the requirements that will be laid down by decree. However, the Criminal Court will, in the end, decide the extent to which information held by a company can be deemed as information subject to protection as business secrets within the meaning of this text, which may give rise to characterisation issues that will not reassure companies.
With respect to the incrimination, the bill provides that only the people holding the protected information or anyone having obtained knowledge of such information and related measures, if they disclose the information to a person not entitled to receive it, may be considered as the authors of the offence and incur as such a prison sentence of a maximum of 3 years and a fine of 375,000 Euros. The bill does, therefore, not punish the undue possession, the attempt to use or the use on one's own behalf, of the secret information or documents, which may be regretful. The incrimination is dismissed in several cases, notably when "the court orders or authorises the production of an exhibit subject to protection as business secrets in view of a party's exercise of its rights, unless another party brings forward a legitimate ground against such production".
Even though it is not complete, the bill enables, through a single incrimination, to better fight against attempts to inveigle documents or information held by companies representing a competitive advantage. The coming implementation of the criminal protection of business secrets shall thus represent an improvement of the French legal tools.