In November last year, the European Commission published its draft trade secrets directive establishing new rules on the protections for confidential business know-how (trade secrets) against their unlawful acquisition, use and disclosure.
The European Council has recently published its opinion on the directive which generally agrees with the approach adopted by the European Commission. However, the European Council have also proposed amendments to the directive which are significant for businesses that rely on trade secrets.
The European Commission’s draft directive introduces a common definition of trade secrets, as well as means through which victims of trade secret misappropriation can obtain redress. It will make it easier for national courts to deal with the misappropriation of confidential business information, to remove trade secret infringing products from the market and make it easier for victims to receive compensation for illegal actions.
The European Council’s main changes to the draft directive are as follows:
- a limitation period of six years for any claims or actions (the European Commission proposed two years);
- EU member states may provide greater protection for trade secrets than that set out in the Directive;
- removal of the requirement for a trade secret holder to show that an alleged infringer had acted ‘intentionally’ or with ‘gross negligence’ which may make it easier for trade secret holders to prove infringement;
- measures, procedures and remedies to be made available to ensure civil redress against the disclosure of trade secrets;
- a new regime for employees which restricts their liability for damages towards employers when disclosing trade secrets if acting without intent; and
- retaining confidentiality in the course of legal proceedings, whilst ensuring the rights of the parties involved in a trade secret litigation case are not undermined.
The European Council and the European Parliament are the two law making bodies that must agree on the final wording of the draft directive before it can take effect. This means negotiations are expected to continue over the next few months until agreement on the final text can be reached.