The European Commission (the Commission) has adopted a proposal for a directive on the protection of trade secrets, which is designed to harmonise the civil law on trade secrets and how it is enforced across the EU (the draft directive).
Recent studies on trade secrets by the Commission, the latest of which was published in April 2013, have highlighted the fragmented and diversified nature of the existing protection for trade secrets in EU member states and concluded that harmonisation of trade secret law in the EU would improve conditions for businesses to develop, exchange and use innovative knowledge (http://ec.europa.eu/internal_market/iprenforcement/docs/trade-secrets/130711_final-study_en.pdf).
Differences in trade secret protection can hinder cross-border research and development within the EU, and place companies in the EU at a possible competitive disadvantage.
The draft directive introduces a common definition of “trade secret”; that is, information meeting all of the following requirements:
Secret in the sense that it is not, as a body or in the precise configuration and assembly of its components, 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.
Has been subject to reasonable steps by the person lawfully in control of the information to keep it secret.
The draft directive also sets out the circumstances when the acquisition, disclosure and use of a trade secret is unlawful, and establishes the measures, procedures and remedies that should be made available for civil enforcement, including interim injunctions and precautionary seizure of infringing goods. Rules on the preservation of trade secrets during litigation are also included.
The draft directive provides for a two-year limitation period in which to bring claims. The draft directive is relatively short and a number of its provisions will be familiar to member states either from the provisions of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) or from the Intellectual Property Enforcement Directive (2004/48/EC).
The draft directive will now be transmitted to the Council of Ministers and the European Parliament for adoption. If approved, it could enter into force by the end of 2014.
Only a few member states specifically address trade secrets in their civil laws: most rely on general unfair competition or tort law. Harmonisation is therefore a much needed and ambitious step, even without criminal sanctions, which have not been included at this stage.
Another notable omission is the failure to propose rules to facilitate the gathering of evidence of unlawful acquisitions, uses or disclosures of trade secrets in court proceedings, such as search and seizure orders or orders for the preservation of evidence. In practice, the evidential difficulty of proving an alleged misappropriation of trade secrets in court, which often prevents companies from enforcing their claims (particularly in cross-border litigation), is likely to continue, even if the draft directive is implemented.
The proposed two year limitation period for claims is likely to be problematical for many jurisdictions which currently allow a much longer time to bring proceedings to protect trade secrets, including, for example, the UK which has a 6 year limitation period.
Source: European Commission, Proposal for a Directive on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure, COM(2013) 813, 28 November 2013
First published in the January/February 2014 issue of PLC Magazine and reproduced with the kind permission of the publishers. Subscription enquiries 020 7202 1200.