Towards the end of 2013, the European Commission (EC) published proposals to reform trade secrets law across Europe, in order to make it easier for the holders of trade secrets holders to protect these and enforce their rights.
The reforms are set out in a new EU Directive (the Directive) which will harmonise the law on trade secrets, and how it is enforced, across the EU.
The Directive is the result of a study by the EC into how each member state currently protects trade secrets, which found inconsistencies in the enforcement of laws across the EU. The aim the Directive is to create a new minimum level of protection for trade secrets across the EU, and in particular to prohibit the “unlawful acquisition, disclosure and use of trade secrets”.
The Directive clarifies the definition of a trade secret, and in doing so, follows the definition of “undisclosed information” in the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS Agreement) – there are three necessary elements to a trade secret:
(i) the information must be confidential;
(ii) the information should have commercial value because of its confidentiality; and
(iii) the trade secret holder should have made reasonable efforts to keep it confidential.
The Directive also presents a common set of remedies where there has been unlawful acquisition, disclosure and use of trade secrets (these include interim and permanent injunctions; the seizure and destruction of goods which result from the misuse of trade secrets; and damages to compensate the trade secrets holder for losses suffered) as well as establishing procedures to ensure that trade secrets remain confidential during legal proceedings. This particular measure is intended to prevent the fear of trade secrets being released into the public domain during court action from acting as a barrier to many trade secrets holders enforcing their rights.
Any proceedings must be brought within 2 years of the trade secrets holder being aware that their secrets have been misused. Notably, there are no new procedures contained in the Directive to make it easier for trade secrets holders to obtain evidence of misuse, for example the right to compel a defendant to produce documents.
Before the Directive becomes law, it needs to be approved by the European Parliament and Council and then needs to be implemented by each member state so it is likely to be at least a year or two before it comes into force.
Many businesses will welcome the Directive, which provides a new minimum level of protection for trade secrets across the EU and will give comfort that trade secrets will be secure. It is also hoped that the Directive will encourage innovation and investment in European businesses, putting them on an equal competitive footing with businesses in the rest of the world.