On 26 May 2014, the Council of the European Union agreed on a revised version of the Trade Secrets Directive, which improves the version issued by the Commission on 28 November 2013. 

The proposal follows the provisions in Article 39 of the TRIPS Agreement. The draft directive seeks to align national legislation and introduces a common definition of trade secrets as information that:

  • is secret, in that it is not generally known among or readily accessible to relevant persons in the field;
  • has commercial value because it is secret; and
  • has been subject to reasonable steps to keep it secret.

Infringement of a trade secret is any unlawful acquisition, use or disclosure of the trade secret. The key factor in making those acts unlawful is the absence of consent of the trade secret holder. Initially there was a requirement of intent or gross negligence, which has now been removed. However, the knowledge requirement for passive receivers is not part of the full harmonization of the Directive. Member states remain free to incorporate this requirement into their national law. 

Equally, the Directive sets out a number of situations in which acquisition will be lawful. Some of these are relatively familiar, such as independent development or reverse engineering. The Directive also contains a number of general exemptions and permits the acquisition, use or disclosure of a trade secret:

  • if the disclosure is due to a requirement under national or EU law, such as disclosure to a regulator;
  • for making legitimate use of the right to freedom of expression and information;
  • where necessary to reveal misconduct, wrongdoing or illegal activity;
  • to fulfil a non-contractual obligation; or
  • for the “purpose of protecting a legitimate interest”.

The major advantage of the proposed directive is that it provides a comprehensive set of rules protecting trade secrets. In addition, the provisions regarding the calculation of damages will bring more clarity and less room for debate.

The Council’s revised proposals will now be forwarded to the Parliament for consideration. If the proposals are adopted, Member States will have two years to incorporate the Directive into national law1.