Author: Birute Dauderiene, Senior Patent Consultant and Patent Attorney at METIDA
Trade secrets are something companies make secure from their competitors under nine locks and which, in principle, are protected by the employees’ word of honour or commercial contracts. Nevertheless, once the trade secrets are made publicly available, the proprietor of the secrets has no protection and rights to such secret.
The trade secret may also include a formula, method of production, business plan, development of a new product, production of a prototype, a list of customers, various information in relation to know-how, commercial relations and market surveys and strategy. A part of the afore-mentioned objects may be protected by patents, but the description of a patentable invention is publicly available and a formula may be publicly accessible and copied; thus, it would be rather difficult to prove an infringement.
For example, the long-term protection of the formulas of the drinks Coca Cola and Pepsi Cola guaranteed by commercial contracts suggests that trade secrets are one of well-functioning means of protection of intellectual property.
The first version of the Directive on trade secrets was published in November 2013 and a debate on the means of protection of trade secrets not restricting the human rights and freedoms and not causing harm to the public interest lasted nearly for two and a half years.
On 14 April 2016, the European Parliament adopted the Directive on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure. For the first time the Directive provides a harmonised definition of the trade secret and the means aimed at protection of confidential business information which is available to dishonest employees having an objective to misappropriate trade secrets by means of a theft, unauthorised copying, economic espionage or the breach of confidentiality requirements.
The Directive is aimed at harmonising the protection of trade secrets throughout the European Union and the following three main criteria have been distinguished:
- definition of a trade secret and the means of protection thereof;
- providing for the means that could be assumed by the proprietor of a trade secret in case of unlawful misappropriation of his trade secret or bad intentions with respect to his trade secret;
- providing for the means that could be assumed by the court to ensure non-disclosure of trade secrets during judicial proceedings.
The definition of the trade secret does not indicate what particular information is considered as a trade secret; thus, it may include everything, i.e. technical and commercial information meeting the three afore-mentioned criteria.
The Directive defines the trade secret as information that is secret, has commercial value because it is secret and it has been subject to reasonable steps to keep it secret.
The Directive also defines the criterion of the breach of a trade secret. The breach of a trade secret shall mean any acquisition of the commercial contract as a result of unauthorised access or any other behaviour which is in conflict with the honest commercial activities.
Use of a trade secret by a person who has unlawfully acquired the trade secret is also deemed to be a breach.
Although the Directive sets out the means of protection of confidential information, it also provides the means not restricting journalistic investigations and ensures protection of the sources of journalistic investigations.
The Directive also distinguishes the whistle-blowers who protect the public interest and who must be granted the respective protection. Protection of trade secrets is not applicable in cases where it is aimed at disclosing an infringement, crime or unlawful activities if the defendant acts with a view to protecting the common public interest.
The Directive also obliges the EU Member States to provide measures and procedures ensuring indemnification of damage sustained as a result of illegal misappropriation, public disclosure and use of trade secrets.
The Member States are obliged to implement the provisions of the Directive in their national law and ensure application of adequate civil procedures and measures within the period of two years. In some countries this would imply greater or smaller changes in the legal framework; but in other countries (for example, Lithuania), a substantially new legal basis of trade secrets will have to be created.