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Hitherto, there was no specific and coordinated EU legislation regulating the protection of secret business and technical information from dishonest practices intended for misappropriation, copy, espionage, breach of confidentiality requirements, etc. We refer to those undisclosed high value technical or business knowledge which has not been protected by means of intellectual property registration, but which is aimed at being kept confidential.

The TRIPS Agreement made in the framework of the WTO addressed the problem, with provisions for the protection of trade secrets against illegal acquisition, use or disclosure by third parties. The EU approved the Agreement by Council Decision 94/800/EC. Notwithstanding that, there are differences among EU State Members’ legislation regarding the concept of “trade secret”, its “unlawful acquisition” as well as legislative inconsistencies with regards to the civil law remedies available in the event of unlawful acquisition, use or disclosure of trade secrets.

In order to provide for a uniform protection framework for trade secrets within the UE, on the 8th of June 2016 the European Parliament and Council adopted Directive 2016/943, which entered into force on the 5th of July 2016.

What is a Trade Secret?

The Directive defines such concept as information – whether technical or commercial- which meets all of the following requirements:

(a)   It is secret, meaning that it is not generally known among or readily accessible to persons within the circles normally dealing with that kind of information.

(b)   It has a commercial value because it is secret.

(c)   It has been subject to reasonable steps to keep it secret by the legal holder of such information.

It is worth mentioning that the Directive sets out a minimum protection level, thus the State Members may implement it providing higher and broader levels of protection, whenever the right to lawful acquisition, use and disclosure of trade secrets as provided in the Directive is respected.

As a matter of fact, the Directive does not totally prohibit the acquisition, use and disclosure of trade secrets by third parties, but subordinates such conduct to the way in which it is carried out. Thus, the acquisition of a trade secret shall be deemed lawful whenever:

(1)   Obtained by observation, study, disassembly or testing of a product or object made available to the public or that is lawfully in the possession of the acquirer of the information free from any restriction.

(2)   Obtained by exercise of the right of workers (or their representatives) to information in accordance with EU law and national laws and practices of the State Member at issue.

(3)   Obtained by other practice, in accordance with honest commercial practices.

That said, the Directive leaves the door open for potentially big discrepancies in the legislation of EU Member States when it states that the acquisition, use or disclosure of a trade secret shall be considered lawful to the extent that it is required or allowed by Union or national law.

Otherwise, the trade secret is declared as unlawfully acquired whenever,

(1)   There is an unauthorized access or appropriation of documents or correspondence containing said secret or from which the trade secret can be deduced.

(2)   The access or appropriation is carried out by means contrary to honest commercial practices.

 

Likewise, the use or disclosure of a trade secret shall be deemed unlawful when it is carried out by a person who is found to meet any of the following conditions:

(1)   Unlawful acquisition of the trade secret.

(2)   Breach of a confidentiality agreement or any other duty not to disclose the trade secret.

(3)   Breach of a contractual or any other duty to limit the use of the trade secret.

 

The acquisition, use or disclosure of a trade secret shall also be regarded unlawful whenever the acquiring person knew or ought to have known that the trade secret had been obtained directly or indirectly from another person who was using or disclosing it unlawfully.

Finally, the production, offering or placing on the market of infringing goods, as well as the importation, export or storage of infringing goods, shall be deemed an unlawful use of the trade secret whenever the person carrying out such actions knew or ought to have known that the trade secret had been used unlawfully.

Protection measures and procedures.

Member States shall provide for measures, procedures and remedies necessary to ensure the availability of civil redress against the breach of trade secret rights. Notwithstanding that, the Directive is quite imprecise, and is limited to setting forth a number of general principles, which due to their logical nature can very well go without mentioning. Said measures, procedures and remedies shall, inter alia

  • Be fair, non complicated and deterrent.
  • Be proportionate and shall avoid creating commerce barriers within the EU.
  • Foresee measures against the abusive use of such measures. Member States shall ensure that they put in place measures for awarding damages to the defendant in such cases, as well as the duty to impose sanctions upon the plaintiff or ordering the dissemination of information concerning the decision.

 

Provisional and precautionary measures.

Member States shall ensure that their courts may, at the request of the trade secret holder, grant any of the following measures, against the alleged perpetrator:

(a)   The cessation of or the prohibition of the use or disclosure of the trade secret on a provisional basis.

(b)   The prohibition of the production, offering, placing on the market or use of infringing goods, or the importation, export or storage of infringing goods for those purposes.

(c)   The seizure or delivery of the suspected infringing goods in order to prevent their entry into, or circulation on, the market.

 

The Directive does not impose the need for the plaintiff to place a bond in order to request and obtain such measures, this matter is left to the decision of the Member States.

However, Member States shall ensure that the judicial authorities of the Member States may, as an alternative to the said measures, make the continuation of the alleged unlawful use of a trade secret subject to the lodging of guarantees intended to ensure the compensation of the trade secret holder. In any event, the disclosure of a trade secret in return for the lodging of guarantees shall not be allowed.

 

Limitation period

Under no circumstances shall the limitations set forth by the Member States be less than 6 years.

 

Damages

When setting the applicable damages arising from the unlawful acquisition, use or disclosure of trade secrets, the competent judicial authorities of the Member States shall take into account a number of factors, namely

  • The economic damage, including loss of earnings.
  • The unfair profits made by the infringer.
  • Other factors which are not strictly economic, such as moral damages, even though the Directive does not provide a definition of such concept, and thus one shall have to address the law, case law and doctrine of each Member State.

Implementation of the Directive

The Directive shall be implemented by the Member States no later than the 9th of June 2018.

 

For more information, kindly contact:

Eduardo Vilá

va@vila.es

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