by Ana Margarida Pereira, Collaborating Member of CEDU
The differences in the Member States’ legislation regarding the protection of trade secrets against their unlawful acquisition, use or disclosure, the lack of consistency regarding the civil law remedies available and the differences regarding the treatment to give to a third party who has acquired the trade secret in good faith but subsequently learns that the acquisition derived from a previous unlawful acquisition by another party are some of the reasons that justified European action regarding the protection of undisclosed know-how and business information (trade secrets).
Such differences were, for many years, a reason for the fragmentation of the internal market and for the weakening of the overall deterrent effect of the relevant rules applicable. This legal framework lead to a decrease of innovation- related cross-border activity and, naturally, to a decrease of European Union’s intellectual production. In order to provide rules at Union level regarding the harmonization of the protection of know-how and trade secrets it was necessary to elaborate and publish Directive (EU) 2016/943.
The directive has four chapters, the first regards its subject matter and the scope of the directive, the second regards the acquisition, use and disclosure of trade-secrets, the third concerns measures, procedures and remedies, and the fourth and last chapter regards the sanctions and the final provisions.
On the second article the directive defines trade secret as being all information that it is kept secret, with commercial value and whose secrecy has been subject to reasonable protection by its holder. Member States are also provided with a list of situations where the acquisition, use and disclosure is whether lawful and unlawful. However, the European Parliament and the Council where also concerned with assuring that the directive, while being effective, would not interfere with the fundamental rights, such as freedom of speech and workers mobility, and with the dissemination of such trade secrets on the behalf of public interest and at European Union and national institutions request.
All Member States must provide measures, procedures and remedies to avoid the acquisition, use and disclosure of trade secrets, by adopting provisional and precautionary measures, as well as injunctions and corrective measures. The confidentiality of trade secrets in the course of legal proceedings must also be assured by the Member States.
The trade secret holder, when facing an illegal acquisition, use and disclosure of its trade secret, shall receive a compensation for the damages caused. When setting the amount to compensate these damages, Member States and its national authorities shall take into consideration the negative economic consequences, including lost profits, unfair profits made by the infringer and, when applicable, the moral prejudice caused to the trade secret holder. Alternatively, national authorities may set the damages as a lump sum, but in such cases the amount must incorporate the royalties or fees that would have been due of the infringer had requested authorization to use the trade secret.
We have already said that this directive intended to increase the harmonization level regarding the protection of trade secrets, in order to accomplish such objective, it was necessary to establish ways to increase its deterrent effect. That was achieved by imposing that all judicial decisions regarding the unlawful acquisition, use or disclosure of a trade secret were to be published, with the safeguard of all information concerning said trade secret.
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 will, as we see it, plays a fundamental role in the harmonization of national rules regarding the protection of trade secrets, as well as in innovation, investment and intellectual production increase and inevitably to a smooth-function internal market.
Picture credits: Top secret by Dalibor Levíček.