European Parliament Votes in Favour of Trade Secrets Directive
Posted in | May 06, 2016
The EU Parliament recently voted in favour of the new EU Trade Secrets Directive. This Directive is intended to introduce an EU wide definition of a trade secret, defined as information which meets all of the following requirements:
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; and
Has been subject to reasonable steps under the circumstances […] to keep it secret.
The directive will oblige EU member states to ensure that victims of the misuse of information which meets all three requirements are able to defend their rights in court, including seeking compensation.
The directive also sets out the limits of its effects on employee mobility, since there can be a risk of disclosure of trade secrets when employees move between companies. Specifically, the directive does not limit:
Employees’ use of information not constituting a trade secret; or
Employees’ use of experience or skills honestly acquired in the normal course of employment.
The implication therefore is that the use of information by an employee which constitutes a trade secret, but which does not form part of the employee’s experience or skills honestly acquired, is caught and it will be possible to prevent the use of such trade secrets by former employees.
The directive also includes exceptions to the unauthorised disclosure of trade secrets being actionable for the following cases:
For exercising the right to freedom of expression and information as set out in the Charter of Fundamental Rights of the European Union, including respect for freedom and pluralism of the media;
For revealing a misconduct, wrongdoing or illegal activity, provided that the respondent acted for the purpose of protecting the general public interest;
The trade secret was disclosed by workers to their representatives as part of the legitimate exercise of their representative functions in accordance with Union or national law, provided that such disclosure was necessary for that exercise; or
For the purpose of protecting a legitimate interest recognised by Union or national law.
These exceptions are intended to protect investigative journalists and whistle-blowers from prosecution. The relevant provisions in the directive mean it is arguable that any disclosure of trade secrets made for the purpose of revealing wrongdoing will be protected.
For the directive to be formally adopted it must be endorsed by the Council of the European Union, which is likely to occur at the council’s next sitting on 17 May 2016. Once the directive is adopted, EU member states will have two years to bring their national legislation into line with the directive.
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