Protecting businesses’ trade secrets [Plenary podcast]

Written by Tambiama Madiega,

On 15 December 2015, Parliament and Council negotiators reached a provisional agreement on a new EU directive setting common rules for protecting trade secrets and confidential information in the EU. On 28 January 2016, the Legal Affairs Committee (rapporteur Constance Le Grip, EPP, France) endorsed the agreed text, which is now to be voted by Parliament as a whole.

Background

Researchers, companies and inventors often develop technical information (e.g. manufacturing processes) or commercial information (e.g. cost and price information) which is not covered by intellectual property rights but is nevertheless considered a valuable business asset, to be kept confidential. Trade secrets protection seeks to ensure that such information remains secret, and provides remedies against those who disclose it without authorisation. Studies have shown, however, that national laws on the protection of trade secrets differ substantially throughout the EU. The European Commission found this has a negative effect on cross-border cooperation between businesses and research partners, and is a key obstacle in the EU single market. The Commission therefore proposed a trade secrets directive to harmonise national laws and protect European businesses, especially small and medium-sized enterprises (SMEs), from industrial espionage.

Listen to podcast: Protecting businesses’ trade secrets [Plenary Podcast]

New rules to protect EU companies’ trade secrets

Scope of protection

The compromise text introduces an EU-wide definition of trade secrets (i.e. information which is secret, has commercial value because it is secret, and has been subject to reasonable steps to keep it secret), and requires Member States to offer trade-secrets holders strong civil-law protection against unlawful acquisition, use or disclosure of their confidential business information. A range of tools, including measures to preserve the confidentiality of trade secrets in the course of legal proceedings, and corrective measures (including damages) to redress misappropriation and misuse of trade secrets must be implemented by Member States in their national law. Victims of trade-secrets misuse will therefore gain additional means to defend their rights in courts if their trade secrets are stolen or misused.

EPRS Plenary Podcasts are available to download on iTunes.

Safeguarding freedom of expression and information

The new directive does not affect the exercise of the right to freedom of expression and information as guaranteed by the EU Charter of Fundamental Rights. In line with the amendments from the EP’s Legal Affairs Committee, the compromise text introduces safeguards to protect journalists and their sources, as well as whistle-blowers. Trade-secrets holders will not have the right to redress if their trade secrets are acquired, used or disclosed to exercise the right to freedom of expression and information as set out in the Charter, to reveal misconduct or other illegal activities in order to protect the general public interest (e.g. environmental protection), or for any other legitimate interest recognised by EU or national law.

Trade secrets and employee mobility

In line with the Legal Affairs Committee’s wishes, the text also clarifies that the new directive will not restrict employees’ rights to change jobs. In particular the new legislation on trade secrets does not protect against the use of the information which is part of the employees’ experience and skills, acquired honestly in the normal course of their employment.

The trade secrets directive sets a minimum standard of harmonisation for the protection of trade secrets across Europe. Some scholars call on Member States to provide for more far-reaching protection. The European Federation of Journalists welcomed the text as amended by the EP but warned that protection of whistle-blowers still needs to be strengthened in the EU.