On 8 June 2016, the EU Trade Secrets Directive (the Directive) was adopted. The main purpose of the Directive was to harmonise and enhance the protection of trade secrets EU-wide and to thus create an innovation-friendly environment for businesses. The EU Member States had to implement this Directive by 9 June 2018. Belgium missed the deadline, but did publish its draft Trade Secrets Act (NL / FR) on 12 June 2018.
The Dutch legislative proposal for the Dutch Trade Secrets Act (Wet bescherming bedrijfsgeheimen) implementing the Directive, has been approved by the House of Representatives on 17 April 2018 and is currently pending before the Senate.
What is a “trade secret”?
The Directive defines a “trade secret” as any type of information that meets all of the following requirements:
- it is not generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question;
- it has commercial value because it is secret; and
- the person lawfully in control of the information has taken reasonable steps to keep it secret.
Importance of trade secrets for the life sciences sector
Most companies in the life sciences sector knowingly or unknowingly own more than one “trade secret”. This type of information can include manufacturing processes, R&D or clinical trial results, formulae, and compilations of significant data, such as price and customer lists.
Contractual confidentiality arrangements are often the most effective way to protect such valuable technical or commercial information, especially if you do not want to disclose your R&D results to the world by filing a patent application.
Key elements of the Belgian draft Trade Secrets Act
At the moment, the Belgian legal provisions relating to trade secrets are scattered in different pieces of legislation, including the Employment Contracts Act, the Criminal Code and civil rules on tort law. The implementation of the Trade Secrets Directive should permit a coordination of those provisions.
In Belgium, the choice has been made to not adopt a fully autonomous Trade Secrets Act, but rather to amend the Code of Economic Law, the Judicial Code and the Employment Contracts Act.
In short, the key elements of the draft Trade Secrets Act are the following:
- The commercial courts have jurisdiction to deal with actions regarding the unlawful acquisition, use or disclosure of trade secrets.
- A statute of limitation of five years applies to bringing a trade secrets action to court.
- The trade secret holder can request the court to adopt provisional measures, but must timely start a procedure on the merits.
Generally speaking, the civil remedies available to the trade secret holder are very similar to the ones available to the owners of intellectual property rights (despite the fact that trade secrets are not intellectual property rights per se).
Next steps and transitional provisions
The draft Trade Secrets Act is now pending with the Belgian Parliament. Once adopted and published, the Trade Secrets Act will apply to infringements occurring after its entry into force and to infringements that occurred prior to that date that are on-going. The new provisions will however not apply to legal proceedings already pending at the moment of the entry into force of the Trade Secrets Act.
The entry into force of the Trade Secrets Act is a good moment for life sciences companies to re-think their strategy in relation to trade secrets.