The European Commission has been working on a proposal for a directive to protect trade secrets across the EU since 2013. It is now nearing completion with the European Parliament set to consider the proposal on 14 April 2016.
Many studies have found that the protection of trade secrets in the EU varies between member states. The draft directive seeks to harmonise the protection of trade secrets across the EU on a consistent basis. For some member states this will mean a significant change to local laws but for others robust protection is already in place.
What is a trade secret?
The draft directive defines a trade secret by reference to three essential ingredients.
First, the information must be secret in the sense that it is not, as a body or in the precise configuration and assembly of its components, generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question.
2. Commercial Value
Second, the information must have commercial value because it is secret.
Third, the information must have subject to reasonable steps under the circumstances, by the trade secret owner, to keep it secret.
What is a trade secret protected against?
The draft directive sets outs a suite of measures, procedures and remedies to be implemented in national law in order to prevent, or obtain redress for, the unlawful acquisition, use or disclosure of a trade secret.
Unlawful acquisition of a trade secret includes where there is unauthorised access to or copying of any documents, materials or electronic files which contain the trade secret or from which the trade secret can be deduced. It also includes any other conduct which, under the circumstances, is considered contrary to honest commercial practices.
Unlawful Use or Disclosure
The use or disclosure of a trade secret will be considered unlawful includes where:
- the trade secret has been acquired unlawfully;
- it is in breach of a confidentiality agreement or other duty not to disclose (for example, the law of confidence in the UK and Ireland);
- it is breach of contractual or other duty to limit the use of the trade secret; or
- at the time of acquisition, use or disclosure, a person knows or, under the circumstances, should have known that the trade secret was obtained from another person who was using or disclosing the trade secret unlawfully.
There are some exceptions to protection against unlawful acquisition, use or disclose of trade secrets including where it is to protect a legitimate interest or it reveals misconduct, wrongdoing or illegal activity provided it was in the public interest. Freedom of expression and information is not intended to be affected by the draft directive nor the mobility of workers and their experience and skills.
A harmonised approach to trade secret protection in Europe is to be broadly welcomed. With the prospect that the final text of the draft directive may soon be clear it is time to consider what effects it may have on your business or practice.
Certainly one action for member states with or without trade secret protection by that name is to include references to “trade secrets” in definitions of confidential information in order to future proof contracts and non-disclosure agreements for when the draft directive becomes a reality.