On 28 November, the European Commission published proposals to reform trade secrets law across Europe. These reforms should make it easier for trade secrets holders to protect their trade secrets and enforce their rights.
The reforms are set out in a new EU Directive – full title the Directive on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure. The Directive will harmonise the law on trade secrets, and how it is enforced, across the EU.
The Directive follows a comprehensive study by the Commission into how each Member State of the EU currently protects trade secrets. It found a patchwork of laws across Europe. In many Member States, the laws and enforcement procedures were inadequate.
The Directive aims to bring clarity to the law by creating a minimum level of protection for trade secrets across Europe, encouraging innovation and investment in European businesses and putting them on an equal competitive footing with businesses outside Europe.
The new law will prohibit the ‘unlawful acquisition, disclosure and use of trade secrets’. The key changes introduced by the Directive are:
- ‘Trade secret’ is defined (it is currently unclear in many Member States what can be protected as a trade secret);
- A two year limitation period for claims (much shorter than the current limitation period in most Member States);
- A common set of remedies where there has been unlawful acquisition, disclosure and use of trade secrets. These include interim and permanent injunctions, seizure and destruction of goods which result from the misuse of trade secrets and damages to compensate the trade secrets holder for losses suffered;
- Procedures to ensure the confidentiality of the trade secrets during legal proceedings.
However, there are no new procedures to make it easier for trade secrets holders to obtain evidence of misuse (such as a right to compel a defendant to produce documents, for example).
The Directive must be approved by the European Parliament and Council before it can come into force. It will then need to be implemented by each Member State. So, we are perhaps a year or two away from this being law.
This Directive is good news for businesses. The new minimum level of protection for trade secrets across the EU will give them greater certainty that their trade secrets will be protected and facilitate cross-border operations. It will also prevent mobile employees from misusing confidential information from a jurisdiction where trade secrets are not generally protected.
Further updates will follow.