The European Commission has proposed new rules aimed at protecting sensitive know-how and trade secrets against misappropriation and unlawful use and disclosure.
The proposed Directive would iron out inconsistencies across EU Member States, giving businesses greater comfort and certainty that their valuable trade secrets will be have the same high level of protection across the EU. Some countries have no specific laws protecting trade secrets, and there is no common definition of what a “trade secret” is, or what constitutes unlawful use or disclosure. The proposed new law would make it easier for national courts to deal with cases of infringement of trade secrets, to remove infringing products from the market, and to provide claimants with remedies in the form of damages.
This Directive will provide timely comfort to technology and intellectual property based companies reliant on innovation and continuous development of unique know-how. A recent Global Fraud Report revealed that in 2013, 25% of companies reported information theft- a figure that is increasing yearly.
Impact of the Directive
Businesses in the EU, especially smaller, less established firms who wish to tap into pan-European markets, will welcome moves to harmonise definitions and remedies for trade secret theft. SME’s and start-ups will be particularly affected as they often do not have the resources to obtain comprehensive patent protection. The EC has cited the “current fragmented system” as a key obstacle to cross-border cooperation and economic growth.
The Directive would:
i) introduce a common definition of “trade secret”;
ii) define unlawful use and disclosure of a trade secret;
iii) harmonise civil law remedies for misappropriation of trade secrets; and
iv) introduce rules protecting confidentiality of trade secrets during and after legal proceedings.
The immediate impact of the Directive should be that owners of trade secrets will find it easier to enforce their trade secret rights across the EU. Higher and uniform standards of protection and rights and remedies should incentivise businesses to engage in cross-border R&D with greater confidence of their position, and of their ability to protect their strategic assets.