EU & Trade Secrets

Table of Contents

Protecting Undisclosed Trade Secrets

An EU directive protects undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure

Acquiring a trade secret is considered lawful if 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 that is lawfully in the possession of the acquirer of the information who is not legally required to restrict the acquisition of the trade secret;
the exercise of the right of workers or workers’ representatives for information and consultation under EU law and national laws and practices;
any other practice that, under the circumstances, conforms with honest business practices.

Acquisition, use or disclosure of a trade secret is also lawful when it is required or allowed by EU or national law.

Unlawful Disclosure

Acquiring a trade secret without the consent of the trade secret owner is unlawful if it is acquired by:

unauthorised access, stealing or copying of documents, objects, materials, substances or electronic files which are lawfully under the control of the trade secret holder;
any other conduct which, under the circumstances, is considered contrary to honest business practices.

Use or disclosure of the trade secret without the owner’s consent is unlawful if a person:

acquires the trade secret unlawfully;
is in breach of a confidentiality agreement or other requirement not to disclose the trade secret;
is in breach of a contractual or other duty to limit the use of the trade secret.

The acquisition, use or disclosure will also be unlawful if the person concerned knew or ought to have known that the trade secret had been obtained directly or indirectly from another person who was using or disclosing the trade secret unlawfully.

Some Defences

The directive requires that where a person alleged to have acquired, used or disclosed a trade secret did so for one of the following reasons, any application for measures, procedures or remedies must be dismissed:

exercising the right to freedom of expression and information as set out in the Charter of Fundamental Rights, including respect for the freedom and pluralism of the media;
revealing misconduct, wrongdoing or illegal activity, provided that it was for the purpose of protecting the general public interest;
disclosure by workers to their representatives provided that such disclosure was necessary for those representatives to carry out their function;
protecting a legitimate interest recognised by EU or national law.

Measures, procedures, and remedies

EU countries must provide measures, procedures, and remedies that ensure that civil law redress* is available to victims of the illegal acquisition, use and disclosure of trade secrets.

The directive requires that measures, procedures, and remedies are:

fair, effective and dissuasive;
not unnecessarily complicated or costly, or involve unreasonable time limits or unwarranted delays.

The limitation period for claims will not exceed 6 years.

Trade secret holders can apply for civil law remedies in the case of the unlawful acquisition, use or disclosure of the said trade secret, including:

the award of damages;
injunctions prohibiting the defendant from using or disclosing the trade secret; and
the recall of infringing goods from the market.

EU rules on protecting trade secrets

Directive (EU) 2016/943 — protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure

It sets out European Union (EU) rules harmonising national laws on the protection against the unlawful acquisition, use and disclosure of trade secrets.
It is intended to have a deterrent effect against the illegal acquisition, use and disclosure of trade secrets, without undermining fundamental rights and freedoms.

Lawful acquisition

Acquiring a trade secret is considered lawful if 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 that is lawfully in the possession of the acquirer of the information who is not legally required to restrict the acquisition of the trade secret;
exercise of the right of workers or workers’ representatives to information and consultation under EU law and national laws and practices;
any other practice which, under the circumstances, conforms with honest business practices.

Acquisition, use or disclosure of a trade secret is also lawful when it is required or allowed by EU or national law.

Unlawful acquisition, use or disclosure

Acquiring a trade secret without the consent of the trade secret owner is unlawful if it is acquired by:

unauthorised access, stealing or copying of documents, objects, materials, substances or electronic files which are lawfully under the control of the trade secret holder;
any other conduct which, under the circumstances, is considered contrary to honest business practices.

Use or disclosure of the trade secret without the owner’s consent is unlawful if a person:

acquires the trade secret unlawfully;
is in breach of a confidentiality agreement or other requirement not to disclose the trade secret;
is in breach of a contractual or other duty to limit the use of the trade secret.

Exceptions

exercising the right to freedom of expression and information as set out in the Charter of Fundamental Rights, including respect for the freedom and pluralism of the media;
revealing misconduct, wrongdoing or illegal activity, provided that it was for the purpose of protecting the general public interest;
disclosure by workers to their representatives, provided that such disclosure was necessary for those representatives to carry out their function;
protecting a legitimate interest recognised by EU or national law.

Measures, procedures and remedies

EU countries must provide measures, procedures and remedies that ensure that civil law redress* is available to victims of the illegal acquisition, use and disclosure of trade secrets.

The directive requires that measures, procedures and remedies are:

fair, effective and dissuasive;
not unnecessarily complicated or costly, or involve unreasonable time limits or unwarranted delays.

The limitation period for claims will not exceed 6 years.

Trade secret holders can apply for civil law remedies* in the case of the unlawful acquisition, use or disclosure of the said trade secret, including:

the award of damages;
injunctions prohibiting the defendant from using or disclosing the trade secret; and
the recall of infringing goods from the market.

Application & Background

It has applied since 5 July 2016. EU countries have to incorporate it into national law by 9 June 2018.

Directive (EU) 2016/943 of the European Parliament and of the Council of 8 June 2016 on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure (OJ L 157, 15.6.2016, pp. 1–18)