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European Union: Draft Directive on the Protection of Trade Secrets

(June 12, 2014) On May 26, 2014, the Competitiveness Council of the European Union adopted a common position on a draft directive concerning the protection of trade secrets, which was initially proposed by the European Commission in November 2013. (Proposal for a Directive of the European Parliament and of the Council on the Protection of Undisclosed Know-How and Business Information (Trade Secrets) Against Their Unlawful Acquisition, Use and Disclosure (Nov. 28, 2013) [hereinafter Proposal], COM(2013) 813 final – 2013/0402 (COD), EURLEX.)

In legal terminology, “trade secrets” is the umbrella term used to denote any information that is confidential in order to retain a competitive advantage in business. Other terms used include “undisclosed information,” “secret know-how,” and “proprietary technology.” (Id.) Pursuant to the Proposal, the term “trade secret” is modeled after the definition of “undisclosed information” in the Trade-Related Intellectual Property Rights (TRIPS) Agreement, and must consist of three elements: (a) information must be confidential; (b) the trade secret must be of commercial value; and (c) the holder of the trade secret must have taken reasonable steps to keep it confidential. (TRIPS, art. 39, World Trade Organization website (last visited June 6, 2014).)

The Proposal defines “infringer” as any natural or legal person who has unlawfully acquired, used, or disclosed trade secrets and “infringing goods,” which are those “goods whose design, quality, manufacturing process or marketing significantly benefits from trade secrets unlawfully acquired, used or disclosed.” (Proposal, art. 2.)

Currently, the existing rules on misappropriation of trade secrets are disparate in the EU Member States. Thus, the Proposal’s main objective is to harmonize the means of redress in case of trade secret misappropriation, in order to ensure the smooth functioning of the internal market pertaining to information and know-how. The Proposal applies to unlawful acquisition, disclosure, and use of trade secrets and establishes the measures, procedures, and available remedies for redress in civil courts. (Id.)

Under the Proposal, acquisition of a trade secret without the consent of its holder is unlawful when carried out either intentionally or by gross negligence, through unauthorized access to or copy of any documents, objects, materials, substances, or electronic files about the trade secret; or through theft, bribery, deception, or breach of a confidentiality agreement or any other duty to maintain secrecy. (Id. art. 3.)

The EU Member States have broad discretion as to the measures, procedures, and remedies they may apply to ensure the availability of civil redress against unlawful acquisition, use, and disclosure of trade secrets. The Proposal simply provides the general principles that the measures must meet; they must be fair and equitable, not be unnecessarily complicated or costly, not entail unreasonable time-limits or unwarranted delays, and be effective and dissuasive. (Id. art. 5.)

Provisional and precautionary measures, such as injunctions against or seizures of infringing goods, are also envisioned in the Proposal. Finally, the Proposal ensures the preservation of confidentiality of trade secrets during legal proceedings. (Id.)