EU Trade Secret Protection

Overview

An EU directive and the Irish regulations made under it have provided statutory-based firmer legal protection for the types of trade secrets and confidential information that are protected at common law. It is nowhere near strong or useful as patent protection. It applies to trade secrets which are more than confidential information which is also protectable.

Under the preexisting case law on confidential information, there is a category of trade secret that is more automatically protected and a category of confidential information that is less automatically protected but can be protected by a nondisclosure agreement or employment agreement.

A significant benefit of the regulations is that an application may be made to the District Court or Circuit Court for the amount of damages within the level of jurisdictions of those courts. Costs would generally be much less significant. The District Court level is €15,000. The Circuit Court level is generally €75,000.

Definition of Trade Secret

The trade secrets directive is an EU law designed to enhance the protection of undisclosed know-how and business information (trade secrets) against unlawful acquisition use and disclosure. It provides that companies and businesses shall be able to prevent information lawfully within their control from being disclosed to acquired and used by others without their consent in a manner that is contrary to honest commercial practice so long as such information is

• secret in the sense that it is not as a body or in the precise configuration and assembly of the components generally known among ore already 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 under the circumstances by the person lawfully in control to keep it secret.

Unlike the patent legislation, there is no mechanism to register the trade secret so like copyright and common-law trade secrets and confidential information, it is only definitively shown when it is enforced in a court action. However, there is nothing like the exclusions from patentability for business processes.

Lawful Acquisition

The acquisition of a trade secret is lawful when it is obtained by

• independent discovery or creation;
• observation, study, disassembly or testing of a product or object that has been made available to the public or is lawfully in the possession of the acquirer of the information who is free from any legally valid duty to limit the acquisition of the trade secret;
• exercise of the right of workers or workers’ representatives to information and consultation in accordance with European Union law and the law, and practices, of the State;
• any other practice which, under the circumstances, is in conformity with honest commercial practices.

It seems that reverse engineering provided that it is not surreptitious and based on a dishonest acquisition of the underlying papers, for example, may be lawful.

Protections Offered

The key protection is that the holder of the trade secret is entitled to apply for measures,  procedures and remedies in order to obtain redress for the unlawful acquisition, use or disclosure of a trade secret.

The acquisition of a trade secret without the consent of the trade secret holder shall be considered unlawful whenever carried out by:

• unauthorised access to, appropriation of, or copying of any documents, objects, materials, substances or electronic files, lawfully under the control of the trade secret holder, containing the trade secret or from which the trade secret can be deduced;
• any other conduct which, under the circumstances, is considered contrary to honest commercial practices.

Unlawful Use

The use or disclosure of a trade secret shall be considered unlawful whenever carried out, without the consent of the trade secret holder, by a person who is found to meet any of the following conditions:

• having acquired the trade secret unlawfully;
• being in breach of a confidentiality agreement or any other duty not to disclose the trade secret;
• being in breach of a contractual or any other duty to limit the use of the trade secret.

The directive largely reinforces the existing common law position. It is effectively setting a minimum bar of rights throughout Europe for the enforcement of intellectual property.

Enforcement Orders

It is possible to apply to the court for an order declaring that there has been a breach of the trade secret concerned.

In legal proceedings relating to the unlawful acquisition, use or disclosure of a trade secret, an appropriate court may, in response to a duly reasoned application by an interested party, make an order directing that one or more relevant persons shall not be permitted to use or disclose any trade secret or alleged trade secret—

• which the appropriate court has, in response to that duly reasoned application, identified as confidential and
• of which any relevant person has become aware as a result of participating in the legal proceedings relating to the unlawful acquisition, use or disclosure of a trade secret or who has access to documents that form part of those legal proceedings.

The court may, on its own motion, make an order directing that one or more relevant persons shall not be permitted to use or disclose any trade secret or alleged trade secret that the appropriate court, on its own motion, has identified as confidential, and of which any relevant person has become aware as a result of participating in the legal proceedings relating to the unlawful acquisition, use or disclosure of a trade secret or who has access to documents which form part of those legal proceedings.

Initial & Final Orders

This is effectively a temporary application at the outset of legal proceedings restraining the use of confidential information until the matter is decided in the proceedings. Sometimes these types of applications are made in employer-employee cases.

An injunction can be applied for at the outset of legal proceedings, which sometimes determines the matter. Often no further steps are taken by either party which could force the matter to a conclusion. If an injunction is granted and is later found not to be valid in a full hearing, the person who received it must compensate the person who is subject to the injunction.

In  considering an application, the court will take into account a range of circumstances, including the value and investment in the  trade secret, measures taken to protect it against unlawful use and disclosure and the legitimate interest of the parties and third parties’ public interest et cetera

In a final hearing of the matter, damages which are defined as including unfair profits, effectively similar to an account of profits, can be ordered to be paid. Some breaches of the legislation are criminal offences.