On 28 November 2013, the European Commission released a "Proposal for a Directive on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure".

The proposal was adopted following a study by the European Commission. The results of this study showed that the protection of trade secrets is highly fragmented across the EU Member States (in terms of scope of protection and available remedies), whereas effective protection is needed in order to preserve and further stimulate R&D activity in the EU.

The proposal aims to harmonise the definition of "trade secrets" and the circumstances under which trade secrets will be considered to have been unlawfully acquired, disclosed or used. One of the most noteworthy features of the proposal is the establishment of a common framework for measures, procedures and remedies against the unlawful acquisition, disclosure or use of trade secrets.

Background

The proposal builds on the WTO-administered Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS), to which all EU Member States have adhered. Article 39 TRIPS provides for the protection of trade secrets. However, this provision is rarely relied on before the national courts in the EU, most likely due to legal uncertainty as to whether it can be directly raised by applicants.

Definition of a trade secret

The definition of a trade secret is identical to the concept of "undisclosed information" within the meaning of Article 39 TRIPS. A trade secret is information that:

  • is secret in the sense that it is not generally known amongst or readily accessible to persons in the circles that normally deal with the kind of information in question;
  • has commercial value because it is secret; and
  • has been subject to reasonable steps by the person lawfully in control of the information to keep it secret.

Unlawful acquisition, use and disclosure of trade secrets

The proposal contains a non-exhaustive list of circumstances under which the acquisition, use and/or disclosure of trade secrets will be deemed unlawful, if done "intentionally or with gross negligence" through:

  • the unauthorised access or copying of documents, objects, materials, substances or electronic files lawfully under the control of a trade secret holder;
  • theft, bribery or deception;
  • (inducement to) breach a confidentiality agreement or any other duty of secrecy;
  • any other conduct which is considered contrary to honest commercial practices.

The use or disclosure of trade secrets is also unlawful when the person concerned:

  • intentionally or with gross negligence breaches a duty to maintain the secrecy of the trade secret or to limit its use; or
  • knew or should have known that the trade secret was obtained from another person who was using or disclosing the trade secret unlawfully.

Measures, procedures and remedies

The proposal aims to harmonise the procedural rules governing trade secret litigation, in particular:

  • the introduction of a safeguard against potential abuse of trade secret litigation;
  • the introduction of a limitation period of at least 1 year and at most 2 years from the time the applicant first became aware or should have become aware of the infringement of the trade secret;
  • the preservation of confidentiality of trade secrets in the course of legal proceedings;
  • the availability of interim measures and measures on the merits to (i) stop the use or disclosure of trade secrets, (ii) stop the production, marketing or use of infringing goods, and (iii) seize and confiscate suspected infringing goods (interim measure) or destroy all infringing goods and other materials containing the trade secret (measure on the merits);
  • the availability of effective procedures to claim damages for the infringement of trade secrets.

Practical implications from a Benelux perspective

The proposal comes at a time when the protection of trade secrets is high on the agenda of the national courts. It may benefit innovative companies, whose legal position has recently already improved significantly this year, after the Dutch Supreme Court ruled that the evidence seizure procedures provided for by Directive 2004/48/EC on the enforcement of intellectual property rights can also be used in trade secret cases. 

The proposal further bolsters the position of applicants in Belgium and Luxembourg, for example as regards the preservation of the confidentiality of trade secrets in legal proceedings.