Background

On 31 August 2017, the District Court of Pirkanmaa rendered its judgment in one of the largest trade secret cases in Finland to date. The action was based on alleged violations of criminal law and involved the companies Nokian Tyres Plc ("Nokian Tyres") and Black Donuts Engineering Oy ("Black Donuts"). The case had commenced with a request for investigation by Nokian Tyres already in late 2011.

Ten of Nokian Tyres Plc's former employees and employees of Black Donuts were accused of violating and misusing Nokian Tyres' trade secrets. The defendants had resigned from Nokian Tyres during 2010 and 2011, and many of them decided to move to work with tyre manufacturing technology at Black Donuts. The defendants were accused of taking thousands of Nokian Tyres' manufacturing technology and product development documents and files containing trade secrets and utilizing them in a competing business.

Sentences

The CEO of Black Donuts was sentenced to one year of conditional imprisonment for trade secret misuse and for attempted trade secret violation. The CEO, as well as two other executives, were sentenced to 3-5 years of business prohibitions. In addition to the CEO, seven other defendants were sentenced to varying terms of conditional imprisonment, the longest being one year and six months, with two defendants being sentenced to a fine as well.

The prosecutor had claimed for Black Donuts to forfeit the proceeds of crime to the State in the total amount of EUR 20 million and to pay a corporate fine. Black Donuts was ordered to pay EUR 537,500 to the state as forfeiture of the proceeds of crime as well as a corporate fine of EUR 300,000. Thus, the sentenced amount to be forfeited as the proceeds of crime was significantly lower than the claimed amount.

Damages and legal costs

Nokian Tyres had also put forth a claim for damages amounting to EUR 6 million. The claim was rejected by the District Court since the company could not prove the amount of damage that the defendants had caused to Nokian Tyres, nor was it able to prove any individual actions of the defendants that would have constituted grounds for the claim. Referring to the Code of Judicial Procedure, the District Court stated that, if credible evidence regarding the amount of a claim under civil law is not available, the District Court shall assess the amount. Nevertheless, the District Court pointed out that it does not have the power to estimate the grounds for damages, but only the amount. The District Court also held that the amount of damage cannot be equated to mean the potential profit of the party causing the damage. In this case, since it was not possible to evaluate the actual effects of the defendants' actions and the possible damage caused to Nokian Tyres, the District Court rejected the claim for damages.

The District Court ordered the convicted defendants to pay Nokian Tyres more than EUR 600,000 in legal costs. As the claim for damages was rejected, the amount did not cover all the legal costs.

Grounds

The defendants were convicted as the District Court considered that the prerequisites for trade secret misuse and violation were fulfilled. Pursuant to Chapter 30, Section 11 of the Criminal Code, a trade secret refers to a trade or professional secret and to other corresponding trade information that an entrepreneur keeps secret and the disclosure of which would be conductive to causing financial loss to him or her or to another entrepreneur who has entrusted him or her with the information. In its ruling, the District Court held that it is vital to define the term "information" in this case, and assess whether it should be considered as individual pieces, such as a picture, or a document, or whether it could also mean a greater ensemble of information.

According to the District Court, information should in this context not be defined by dividing it into parts, which may even be so small that they may individually considered as public information, nor should it be understood to mean substantial and wide-reaching concepts, such as common knowledge on how tyres are manufactured. The District Court further stated that individual parts of the information should not be assessed separately when evaluating whether the information is a trade secret under the Criminal Code. Consequently, the District Court held that the information referred to in the above mentioned provision may be defined as a combination of individual information, where even certain parts of the whole, such as a single document, can be public knowledge.

The District Court held that the ensemble of information in the defendants' possession covered the whole tyre manufacturing process of Nokian Tyres from start to finish and contained enough specific details for it to be considered a trade secret and not public knowledge. Therefore, the District Court held that the relevant information fulfilled the definition of a trade secret.

Additionally, the definition of a trade secret also requires that the information holder has both the will and a reason to keep the information undisclosed and that information is also factually kept secret. The defendant accused of trade secret violation and misuse must also have used this information for the essential elements of an offence in accordance with the Criminal Code to apply. The District Court considered that these requirements were also met.

The District Court also considered the defendants' claim that the information constituted "professional expertise" rather than trade secrets. As a starting point, the District Court held that knowledge transferred in a worker's memory or expertise that is commonly known in the industry are forms of "professional expertise". However, the amount of information in the case was so extensive that, according to the District Court, no single person's "professional expertise" could cover all of it. To the contrary, the evidence showed that the defendants' only had knowledge of their own special area of expertise. Therefore, the District Court did not consider the relevant information to be "professional expertise" in this case.

It is important to note that the judgement of the District Court is not final and can be appealed by the parties. Appeals are highly likely, since all of the parties have notified their discontent in the judgment to the District Court.