The Draft EU Trade Secrets Directive

The European Commission has set out its aim to harmonise laws relating to confidential business information across the EU in a draft EU Trade Secrets Directive. The draft directive define a trade secret as information which:

  • is secret (i.e. not generally known or readily accessible)
  • has commercial value because it is secret and
  • has been subject to reasonable steps being taken to keep it secret.

This is at odds with English common law, where the nature of the information and the actions of the parties are largely indicative as to whether information is confidential.

The directive in its current form aims to prevent unlawful acquisition, use and disclosure. Unlawfulness in this context covers the following:

  • unauthorised access or copying
  • theft
  • bribery
  • deception
  • breach or inducement to breach a confidentiality agreement or other duty to maintain secrecy or
  • any other conduct which, under the circumstances, is considered contrary to honest commercial practice.

The last point in particular is widely seen as being aimed to encompass any underhand behaviour which otherwise doesn’t meet the other five points. However, there is also concern amongst legal practitioners and commentators that the application of this point may be interpreted in a variety of ways across the EU’s member states and may, in a worst case scenario, lead to inconsistent decisions.

The acquisition, use or disclosure of confidential information will be regarded as lawful in the following circumstances:

  • legitimate use of the right to freedom of information and expression exercised in good faith
  • revealing misconduct, wrongdoing or illegal activity if in the public interest
  • the disclosure of information to representatives, such as trade unions
  • fulfilling a non-contractual obligation and
  • protecting a legitimate interest.

Many of these points have been the subject of some debate, particularly the last two points, given that the extent of a non-contractual obligation is not defined and nor is legitimacy in the case of a legitimate interest.

The main remedies for breaching a trade secret’s owner’s rights will be injunctive relief and damages. Injunctive relief may only be appropriate where the disclosure has not entered into the public domain and where the dissemination of the information is still within the control of the parties. Otherwise, a claimant will need to rely on a claim for damages to enforce their rights. It is worth noting that the draft directive has not been finalised and it will be interesting to discover whether the points raised above are tackled head-on in the coming months.

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