The French government has recently renewed its attempts to establish an effective arsenal of legal provisions to protect companies' trade secrets and confidential business information (a concept known as 'secret des affaires'). Although the bill initially received widespread support from various stakeholders, the government announced its withdrawal on January 30 2015 and pulled the bill on February 13 2015.
At present, there is no definition of 'trade secrets' under French law, which creates a certain level of legal uncertainty. This shortcoming is all the more surprising as trade secrets are frequently mentioned in French statutes – there are no fewer than 151 provisions dealing with trade secrets throughout the various codes. For this reason, for more than 10 years there has been growing demand for the creation of a specific legal regime to protect trade secrets. This would involve answering three major questions:
- Which trade secrets need to be protected?
- How should they be protected?
- How should such protection be balanced with other interests such as freedom of the press and freedom of speech?
This thought process has been ongoing since the 2003 publication of a report by Bernard Carayon, then a member of the National Assembly, which was eventually turned into a draft bill in 2012. The bill envisaged only criminal law as a means of protecting trade secrets. It proposed criminalising the disclosure of trade secrets, punishable by a maximum of three years' imprisonment and a €375,000 fine. Although the National Assembly adopted the text in January 2012, it was never voted on by the Senate.
Despite such failures, trade secret protection has both wide political backing and support from the business community. Thus, it was no real surprise in 2014 when the government announced its intent to present new legislation on trade secrets.
In July 2014 the protection of trade secrets was introduced through an independent bill,(1) but this was soon after integrated, as an amendment, into the ambitious Macron Bill for Growth, Activity and Equal Opportunities. The amendment was adopted by a special parliamentary commission following limited consultation or discussion with businesses and civil society.
The main features of the amendment are as follows:
- A broad definition of 'protected information' based on three cumulative criteria:
- any information which is not public;
- which represents the scientific or technical potential, strategic position, commercial or financial interests or competitive capacity of its possessor, and consequently an economical value; and
- which is subject to reasonable measures of protection to maintain its confidential nature.
- Criminal and civil protection regimes:
- Criminal protection regime – a new offence is created for the mere disclosure of protected information, punishable by up to three years' imprisonment and a €375,000 fine (similar to the 2012 proposal). If the offence is committed against a state interest, the penalties increase to seven years' imprisonment and a €750,000 fine. The mere fact of becoming aware of such protected information without authorisation may result in criminal liability.
- Civil protection regime – the owner of the protected information may:
- apply for emergency measures to prevent disclosure (without a requirement that the opposing party be notified or be present); and
- seek damages in case of disclosure. Again, the mere holding of information may lead to civil liability.
The draft bill contains three sets of exceptions to which the trade secrets protection regime does not apply:
- when a law requires or permits the disclosure of a secret;
- when infringement of trade secrets protection appears necessary for the "safeguard of a higher interest, such as the legitimate exercise of freedom of speech or information, or the disclosure of an illegal act"; and
- for competent jurisdictional and administration authorities in the conduct of their missions.
The second exception was designed to "guarantee freedom of the press, freedom of information and freedom of inquiry"(2) of whistleblowers and journalists. The amendment was revised on several occasions to address concerns over this specific aspect.
Despite such precautions, the amendment has not avoided criticism. According to its opponents, the amendment would muzzle investigative work for various reasons, including that:
- whistleblowers, non-governmental organisations and journalists, among others, could face severe penalties and even prison sentences;
- the possibility of obtaining emergency measures in the context of summary proceedings, without an opportunity for the other party to present its case, could considerably affect business activities; and
- the vagueness of the wording, especially the terms 'higher interest' and 'legitimate exercise', would increase the risk of infringement of freedoms of speech and the press.
A draft EU directive is underway to harmonise member states' legislation on trade secrets. Primarily based on Article 32 of the World Trade Organisation Agreement on Trade-Related Aspects of Intellectual Property Rights, the draft directive provides for a civil liability regime only and explicitly refers to the "legitimate usage of the right to freedom of expression and information" as an exception. If adopted, France would be required to pass complying legislation.
For further information on this topic please contact Philippe Blaquier-Cirelli or Sârra-Tilila Bounfour at DLA Piper by telephone (+33 01 40 15 24 84) or email (firstname.lastname@example.org or email@example.com). The DLA Piper website can be accessed at www.dlapiper.com.
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