On November 28, 2013, the European Commission (EC) issued a proposal for a directive "on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use, and disclosure." This proposal represents a response to the increasing global importance of trade secrets and concerns regarding their protection.
Businesses are constantly developing and advancing confidential know-how in order to remain competitive, and the theft of this confidential know-how remains a serious threat to business investment and to intellectual property rights. Recent EC assessments have revealed that existing protection against trade secret misappropriation varies considerably across European Union Member States (member states). This uneven level of protection discourages businesses from developing and exchanging knowledge across borders because the lack of uniformity makes businesses wary about sharing information, specifically in the areas of research and development. These proposed rules seek to establish a uniform set of adequate legal remedies against the misappropriation and misuse of confidential know-how to incentivize businesses to engage in innovative activities across member states.
To qualify for protection as a trade secret under the directive, (1) the information must be confidential; (2) it must have commercial value because of its confidentiality; and (3) the holder of such information must have taken reasonable steps to keep it confidential. This definition is consistent with the definition of "undisclosed information" in the Agreement on Trade Related Aspects of Intellectual Property Rights, known as the TRIPS Agreement. The directive asserts that the key element making acquisition, use, and disclosure of a trade secret unlawful is the absence of consent from the trade secret holder.
The directive also establishes measures, procedures, and remedies available to the trade secret holder. Such measures include providing judicial authorities with mechanisms for preserving confidentiality of trade secrets in court proceedings, as well as preliminary injunctions and precautionary seizure of infringing goods. Additional corrective measures include prohibition of use or disclosure of a trade secret and destruction or delivery of the information subject to protection. When adopting these injunctions and corrective measures, judicial authorities take into account, among other things, the value of the trade secret, measures taken to keep it secret, conduct of the infringer, the impact of unlawful disclosure, and the legitimate interests of the parties, third parties, and the public. Remedies for these unlawful acts also include potential damages awards to the trade secret holder.
The EC hopes that harmonizing trade secret protection across the European Union will help companies, large and small, and across all sectors, to continue developing, innovating, and collaborating. The EC's proposal will next be presented to and considered by the Council of Ministers and the European Parliament for evaluation before it can be adopted as a directive.
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