New Act on trade secrets is about to take place in Finland

02-2018

On 18 October 2017, the working group set up by the Finnish Ministry of Economic Affairs and Employment published a report on the proposed amendments to the national implementation of the Trade Secrets Directive ((EU) 2016/943, "Directive"). The working group proposes that a separate Act on trade secrets, the "Trade Secrets Act" (FI: liikesalaisuuslaki, "Act"), shall be enacted. The national implementation of the Directive is well underway – a proposal is about to proceed to the Finnish Parliament in early 2018 and is expected to take effect no later than by 9 June 2018 (as required by the Directive).

The current framework and what is about to happen

In Finland, the current framework concerning trade secrets is quite fragmented as there is no separate act on the protection and enforcement of trade secrets. Currently, the relevant legal protections are scattered across different laws with inconsistent terminology concerning the definition of a "trade secret". The proposed Act would contain a common definition of a trade secret in accordance with the Directive.

The proposed Act introduces more detailed regulations addressing issues such as the unlawful use and disclosure of trade secrets and the methods of an unlawful acquisition (or attempt to acquire). For example, persons who gain information concerning trade secrets due to their position, such as company board members or managing directors, would be expressly prohibited from using and disclosing trade secrets unlawfully. Parties to a confidential business relationship would have a general confidentiality obligation concerning trade secrets and the proposed Act also prohibits persons bound by confidentiality clauses or agreements on non-disclosure from using or disclosing trade secrets unlawfully.

The proposed Act also includes a provision stating that where trade secrets are received by someone whilst in the service of another, they may not unlawfully use or disclose such secrets during the period of service. This would improve the level of protection in civil legislation as it applies not only to the trade secrets of employers but also to the trade secrets of their customers and business partners. It should be noted, however, that under the Finnish Criminal Code, it is a crime to unlawfully disclose or utilise a business secret (for example, the business secret of a business partner) for two years following the period of that person's service.

The proposed Act also includes a specific clause allowing employees to disclose trade secrets to their representatives under certain circumstances. This does not extend the current rights of employees.

The Employment Contracts Act would include a reference to the proposed Act. Employees’ use of trade secrets would therefore be governed by the relevant provisions of both the Employment Contracts Act and the proposed Act. The working group has not proposed any amendments or restrictions relating to the right to conclude non-disclosure agreements or to include confidentiality clauses in employment agreements. Such arrangements would remain extremely important when protecting companies' most valuable assets, their trade secrets.

What is the conclusion?

Despite the discussions over the recent months, the proposed Act will not have a significant effect on the current legislation and the effects on the employment relationships will be quite limited, as employers will continue to have the right to protect their trade secrets. The main benefit of the proposed Act is that it will clarify the fragmented framework of trade secrets.

Sweden

In light of the Directive, proposed legal amendments are expected to take place in Sweden. Unlike Finland, Sweden has an existing Act on the protection of trade secrets (the "Swedish Trade Secrets Act") implemented on 31 May 1990. According to the preparatory work relating to the Swedish legal proposal ("Preparatory Work"), the current protection offered under the Swedish Trade Secrets Act is, to a large extent, compliant with the requirements under the Directive. However, the Preparatory Work indicates that the Directive provides fora wider definition of what constitutes a trade secret than the current legislation. We expect that this will provide increased protection to employers. A new law on trade secrets and amendments to a number of other statutes are suggested.

Denmark

In Denmark, the Directive will lead to legal amendments. Currently, trade secrets are protected by section 23 of the Danish (Fair) Marketing Practice Act although this regulation does not contain a specific definition of trade secrets. Although the current legislation is generally considered to offer protection that complies with the requirements of the Directive, the implementation will be made by a completely new act on trade secrets. The bill for this act was presented in October 2017. In addition to defining trade secrets, the act in its present formenables the courts to consider the size of an unlawful gain obtained by a misuse of trade secrets when assessing the damages to be awarded to the offended party. In addition, the act will introduce a special procedure for injunctions relating to the misuse of trade secrets. The act also includes a (non-exhaustive) list of examples of misuse to be used as guidelines for the courts in future disputes.

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