The EU Commission published its draft trade secrets directive in November last year. The directive aims to harmonise the patchwork of EU laws that protect commercial confidential information, like customer lists and business plans. The EU Council has now published its proposed changes to that draft.
Most of the Council’s changes are good news for businesses that rely on trade secrets
- The Council proposes a six–year limitation period on suing over trade secrets. The Commission had proposed two years.
- The Council’s version clarifies that national laws may provide greater protection for trade secrets than that set out in the directive.
- The Commission’s draft required a trade secret holder to show that an alleged infringer had acted ‘intentionally’ or with ‘gross negligence’. The Council has removed this requirement. It should therefore be easier to prove infringement.
But businesses may be less happy about changes to proposed protections for information disclosed during trade secret litigation
The Commission’s draft said that those who learn about another’s secret information during litigation could not use it after the trial. It also said that the court could restrict who had access to secret information during the trial. This was probably the most important advance in the original proposal, when compared with existing national regimes. The protections proposed would hugely benefit businesses that want to sue to protect their secrets but worry about information being revealed in court. The Council’s version contains carve-outs from those protections. It says:
- a trade secret owner must submit a ‘duly reasoned application’ to the court, showing that its information is secret and should not be used after trial; and
- at least one person from each party must have full access to the confidential information during the trial.
Negotiations will continue throughout 2014; you can still influence the debate
We expect the EU Parliament to start discussing the directive in September; the Council and the Parliament will then try to reach an agreement on the text. Businesses that want to affect the outcome of those discussions should consider approaching MEPs and member states’ governments this year. We can help with that.