On 28 November 2013, the European Commission (“Commission”) adopted a proposal for a directive on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure” (“Proposed Directive”). The Proposed Directive seeks to harmonise the national civil law of the member states in respect of trade secrets and how they can be protected and enforced across the EU.

What are trade secrets?

Trade secrets may otherwise be known as “undisclosed information”, “business confidential information” or “secret know-how”. Currently, the laws of EU Member States are disparate and whilst they provide varying levels of protection for business critical  information such as technical information (e.g. manufacturing processes, recipes, chemical compounds) and commercial information (e.g. lists of customers, results of marketing studies, product launch data) there is no common definition of trade secrets or framework for enforcement in the EU. 

What is the current law?

The protection of trade secrets is currently governed by national laws. There are major differences between the laws and some EU countries do not have specific legislation on trade secrets.

Why is change needed?

Trade secret theft is a growing problem – 1 in 4 European companies reported at least one case of information theft in 2013 (up from 18% in 2012). The varying levels of protection for trade secrets across EU member states is hindering cross-border trade, research and development (“R&D”) and the circulation of knowledge within the EU.

What is being proposed?

The Proposed Directive seeks to provide harmonised protection for EU member states by providing:

  1. a definition of trade secrets and misappropriation of trade secrets;
  2. a set of civil remedies that trade secret holders can seek if trade secrets are stolen or misused (including damages, interim injunctions and precautionary seizure of infringing goods); and
  3. a set of measures to preserve the confidentiality of trade secrets in the course of legal proceedings.

Who will benefit?

All companies will benefit from the proposals but start-ups and SMEs are likely to benefit in particular as their limited resources for creating and managing a portfolio of registered intellectual property means they tend to rely even more than large companies on confidentiality. Innovative firms and those specialising in knowledge-based capital (e.g. know-how, R&D, creative products) are also likely to welcome the certainty of harmonised protection that the Proposed Directive offers. 

Next steps

The Proposed Directive will be sent to the Council of Ministers and the European Parliament for adoption. If approved, it could enter into force as early as the end of 2014.

Europa press release: http://europa.eu/rapid/press-release_IP-13-1176_en.htm