On 9 June, the new law for the protection of trade secrets came into force (based on European Directive 2016/943/EU). On the basis of the law, it is possible to take action against the illegal acquisition, use and disclosure of trade secrets. If a trade secret is misused, the holder can bring various actions based on the law. Is the law really a good step forward for companies? Or are there still too few possibilities to prove that a trade secret has really been misused? Three parties involved give their impression of the new law and its consequences.
Finally there is clarity in the legislation. Previously a decision had to be taken on the basis of a patchwork of jurisprudence. Now there is one legal provision for all EU countries which a judge must take into account. I am pleased with the new law. But as a company, you do not only have to deal with the law. In addition to technical and contractual measures like a confidentiality clause in an employment contract, you also have to take organisational measures. And that begins with concretely recording what the trade secrets are in a register: how and when the secrets have been developed, who manages them and who has access to these details. Only in this way can you make clear to an employee during an exit interview which data may and may not be used. And then you have a strong position in an eventual legal case. I call it trade secret asset management: register and maintain your trade secrets in a structured way.
Attorney-at-Law Pauls Law
Existing business processes reviewed
In a global innovation-driven economy where the typical lifecycle of ideas and inventions is becoming ever shorter, the protection of trade secrets is becoming ever more topical. So is the interest of businesses to conduct R&D collaboratively and to license know-how across borders. Fragmentation of the legal landscape is a natural obstacle to such trends and interests and anathema to the idea of free movement of goods, labour and knowledge. Directive (EU) 2016/943 harmonizes the requirements for protection of trade secrets (mirroring Article 39 TRIPS), exemptions to protection (e.g. reverse engineering; whistleblowing), remedies and instruments to maintain the secrecy in judicial proceedings. It is a significant step forward, but much will depend on what Member States make out of this framework. Whatever the outcome, existing business processes will have to be reviewed and most likely updated.
Dr. Stefan Dittmer
Partner Dentons Europe LLP, Berlin
Innovation demonstrably protected
It is incorrect to think that trade secrets are automatically protected under the new law. It is important that companies – that want to make use of the protection and the tools offered by this regulation – are clear that this only works if they can demonstrate that 1) they took sufficient measures to really keep their information secret, and 2) the information was illegally acquired. On the basis of these two conditions, I expect that agreements in which confidentiality is regulated – such as non-disclosure agreements, but also for example employment agreements – will become more important. By means of such an agreement, a company can always show that it has actually protected its information, while the breach of a confidentiality obligation in such an agreement points to illegal use or disclosure of such a trade secret. All in all a good reason to review existing non-disclosure agreements and employment contracts.
Annelies de Bosch Kemper-de Hilster