Europe is currently debating and redrafting its Directive on “the protection of undisclosed knowhow and business information (trade secrets) against their unlawful acquisition, use and disclosure”.

This Directive (The Trade Secrets Directive) is important in Europe because businesses and non-commercial research institutions invest in acquiring, developing and applying know-how and information which is the currency of the knowledge economy and gives a competitive advantage.

Amendments to the Trade Secrets Directive highlights the focus on not only big business but also small and medium sized enterprises (SMEs) who value and rely on trade secrets more than big business because of the cost of other intellectual property rights as well as the lack of relevant knowledge within SMEs around the protection of intellectual property.

In order to protect trade secrets, The Trade Secrets Directive highlights the requirement for harmonised laws and enforcement powers across the European Union as well as the need to educate businesses about the threats from criminals, hackers and employees who target trade secrets for their value.

A recent amendment to The Trade Secrets Directive includes wording in relation to trade secrets that says:

“...such information and know-how should furthermore have commercial value, whether actual or potential. Such information or know-how should be considered to have commercial value especially where its unauthorised acquisition, use or disclosure is likely to harm the interests of the person lawfully controlling it, or where it undermines his or her scientific and technical potential, business or financial interests, strategic positions or ability to complete.”

The Trade Secrets Directive cross references rights and obligations under other EU laws such as data protection, human rights, whistleblowing and freedom of expression. Furthermore the control of trade secrets should not adversely impact experience and skills honestly acquired by employees in the normal course of their employment.

The Trade Secrets Directive means that businesses will need to put in place policies, procedures and practices to better manage the protection of their trade secrets as well as technical measures to prevent unauthorised access to trade secrets. In implementing these measures employers will also need to balance the rights of their employees under employment law as well as data protection law. Businesses will also need to understand when a trade secret may be better protected by a registered intellectual property right and budget accordingly.