The European Commission today adopted a proposal for a new directive on "The protection of trade secrets and confidential business information from misappropriation and misuse by third parties." The directive is in response to the pressing need for adequate protection of trade secrets in the EU. The US has a strong tradition of protecting trade secrets, with the Uniform Trade Secrets Act (1979) and more recently the America Invents Act (2011). The EU is trying to catch up by introducing this new proposal. 

Summary  

  • The proposed directive will protect trade secrets and confidential business information. It aims to ensure that effective redress is available across the EU in cases of unlawful acquisition, use or disclosure of a trade secret.  
  • The proposal incorporates the TRIPS standard, which draws heavily on U. legislation. The proposal includes a general and broad definition of "trade secrets" and specifies when this information is acquired, used or disclosed lawfully or unlawfully.  
  • Various forms of redress will be introduced, ranging from interim and precautionary measures to injunctions and corrective measures.  

Background  

Need for legislation

Trade secrets and confidential business information are at the core of competitiveness of any European company. Much of the information involved does not meet the requirements for patent protection, leaving aside the fact that this always involves disclosure of the information. Companies will have to rely on national laws for protection, which differ from country to country. Very often general tort law and contract law provisions are invoked to protect trade secrets, even though those provisions offer even less legal certainty (on whether injunctions or damages are available). Therefore, adequate legal remedies need to be available under a uniform set of rules throughout the EU against the misappropriation and misuse of confidential business information.

Highlights

Definitions

  • Trade secrets are defined – in accordance with TRIPS – as information that  
    • is secret in the sense that it is not generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question  
    • has commercial value because it is secret  
    • has been subject to reasonable steps to keep it secret.
  • Acquisition, use and disclosure of trade secrets will be considered unlawful when the information is obtain through means that are contrary to honest commercial practices (including breach or inducement to breach of confidentiality agreements).  

Remedies  

  • A limitation period is applicable. Applicants need to seek redress within two years after they became aware of the fact that gave rise to their claim.  
  • Interim measures will be available, including prohibition on using or disclosing trade secrets and seizure or delivery of suspected infringing goods.  
  • Awarding injunctions, corrective measures and damages following a decision of the merits of the case are provided for in the proposal.  
  • Safeguards to preserve confidentiality of trade secrets if remedies are used are also provided for. These include restricted access to documents and hearings and the publication of non-confidential versions of any judicial decision involving trade secrets.  

Practical relevance

This proposal will first need to be adopted by the European Parliament and the Council of the EU before it becomes a directive. While the text is therefore subject to change during this process, the proposal does indicate what could be expected. It is worth considering what this directive could mean for your company's long-term strategy in relation to the protection of trade secrets.