CONTINENTAL SHIFT: EU Advances Legal Regime Protecting Trade Secrets

The European Union appears poised to enact a sweeping new legal regime that would harmonize trade secrets law across all member states.

It’s been a year since we wrote about a new EU proposal to regulate trade secret protection. Then, at the end of November 2013, the EU published its first draft proposal for a Directive on the protection of trade secrets.In May of this year, the Council of the European Union agreed on a revised draft Directive. (In contrast to European Regulations, European Directives do not apply directly as member states’ law, but only give objectives that the Member States must achieve within a specified time limit in order to harmonize their various national rules. This means that, in fact, trade secrets rules will not be “unified” but rather “similar” across the Continent.)

First and foremost, the draft Directive defines what information is a trade secret. Three criteria are required, and they will be familiar to trade secrets practitioners. The information must: (i) not be generally known among or readily accessible to persons who deal with the kind of information in question; (ii) have commercial value because of its secrecy; and (iii) have been subject to reasonable steps to keep it secret.

The draft Directive also provides examples of situations where the acquisition, use and disclosure of trade secrets are considered unlawful or lawful. Among the classic situations listed are unauthorized access or copy and theft of trade secret information.   The draft also mentions “any other conduct which, under the circumstances, is considered contrary to honest commercial practices.” The unlawful use of a trade secret is mainly defined as the conscious and deliberate marketing of appropriated goods. By contrast, under the earlier draft, lawful acquisition, use and disclosure occur when trade secrets are obtained in conformity with “honest commercial practices.”

The draft leaves it to member states to decide which measures, procedures and remedies should be implemented. It provides procedural guidelines as to statutes of limitations periods and the preservation of confidentiality of trade secrets in the course of legal proceedings. The draft also mentions the availability of injunctions and damages and urges the publication of judicial decisions.

The draft Directive is currently under review by the legal affairs committee of the European Parliament. Adoption of the final text could come by the end of the year. Once adopted, member states will have 24 months to enact the Directive’s objectives into law.