The EU Trade Secrets Directive
Posted in | Mar 09, 2017
The EU Trade Secrets Directive was adopted on 8th June 2016 and each member state must incorporate this minimum level of protection into their national law before the 9 June 2018.
What is the EU Trade Secrets Directive?
The EU Trade Secrets Directive relates to ‘the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure’.
A trade secret is a piece of confidential information that belongs to a company (or an individual) and that gives the company a competitive advantage.
Why has it been introduced?
One of the main drawbacks associated with protecting information by keeping such information secret is that there is no consistent approach to the protection and remedies available for misuse of that information; the approach varies widely from country to country. This new directive aims to provide a minimum level of protection for trade secrets in the individual member states of the EU.
Whilst the member states of the EU must apply a minimum standard of protection, the individual states may apply stricter criteria if they so wish. Therefore there will still be an inconsistent approach, but at least there will be a minimum level of protection available across the EU. In this respect the UK already meets and exceeds the required minimum level of protection for trade secrets. For example, the UK enables confidentiality to be preserved during legal proceedings, which is not possible in all member states of the EU.
The scope of the Directive
In order for information to fall within the scope of the Trade Secrets Directive, the trade secret must be information which is not known to the public, is not readily available and has commercial value to the trade secrets holder. The directive only deals with unlawful conduct wherein a third party obtains or discloses, without authorisation and through illicit means, information that has a commercial value and that companies treat as confidential in order to maintain a competitive advantage over their competitors. A trade secret can encompass manufacturing and commercial secrets. However, for the information to remain a trade secret the holder must take reasonable steps to keep the information secret, for example ensuring that the information regarding the trade secret is restricted to those who need to know the secret and that they are bound by confidentiality.
When trade secrets have been unlawfully acquired, used or disclosed then the following remedies apply: injunctions, seizure or delivery up of infringing goods, destruction of material embodying the trade secret and damages.
However the new Trade Secrets Directive will not cover the disclosure of a trade secret in an individual country, i.e. if the local law requires the disclosure of a trade secret for reasons of public interest.
The Trade Secrets Directive does not impact on existing national employment law. It also does not introduce a criminal offence for the theft of trade secrets. There is also a significant grey area between an employer’s trade secret, and an employee’s acquired skills and know-how from their employment which they honestly acquired and that they can transfer to a new job.
Patents or Trade Secrets?
Trade secrets are useful for protecting information which does not readily find protection via other forms of intellectual property. If a new product or process is potentially patentable, the trade secret holder must consider whether the product or process could remain secret for a minimum of 20 years, the life of a patent; if not they should consider applying for patent protection. Also, a trade secret cannot be used to prevent a third party independently deriving the same information and obtaining patent protection, nor does it prevent someone from reverse engineering that product to determine its innovative essence. It should also be remembered that trade secret protection is weak in many countries, and that the protection offered can vary quite significantly. Patent protection usually provides stronger protection than trade secrets and is easier to enforce.
If you have any questions about protecting your technical innovations, please get in touch with one of our attorneys.