The European Commission has announced 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 measure will prove popular in the context of a recent survey in the “Study on Trade Secrets and Confidential Business Information in the Internal Market” (MARKT/2011/128/D), which found that one in five companies suffered at least one attempted trade secret theft in the past decade, and the number of companies reporting theft of information has increased from 18% in 2012 to 25% in 2013.

European Commission Vice President Antonio Tajani added, “The loss of a trade secret and disclosure of a key invention to competitors means a catastrophic drop in value and future performance for an SME…With this legislation the Commission will protect EU businesses’ livelihood and the trade secrets that form a vital part of it.”

The aim of the directive is to provide a unified level of protection across all member states to harmonise the fragmented patchwork of different national laws governing trade secrets, with some countries having no laws to protect against trade secret misappropriation whatsoever. In summary, the key provisions and commonly agreed definitions of the Directive to note are:

  • Trade secret – means any information which is secret to the extent it is not known or readily accessible, has commercial value because it is secret and has been subject to steps to keep it secret
  • Unlawful acquisition of a trade secret – means acquisition of a trade secret without the consent of the trade secret holder by unauthorised access to or copying of any documents, objects or electronic files lawfully under the control of a trade secret holder, or by theft, bribery, deception, or breach of a confidentiality agreement
  • Unlawful use or disclosure of a trade secret – means use or disclosure of a trade secret unlawfully acquired in breach of a confidentiality agreement or contractual duty without the consent of the trade secret holder
  • Lawful acquisition, use and disclosure – means information obtained through independent discovery, creation, observation, study, disassembly or test of a product or object that has been made available to the public or in conformity with honest commercial practices
  • The limitation period for claims under the Directive shall be not more than two years after the date when the applicant became aware of unlawful acquisition use or disclosure of a trade secret
  • Participants to legal proceedings in relation to the unlawful acquisition, use or disclosure or a trade secret shall not be permitted to disclose any trade secret to which they have become aware as a result of the proceedings
  • Remedies will include cessation, declaration of infringement, destruction of infringing goods or any document related to the trade secret, as well as pecuniary compensation and damages

Commissioner for Internal Market and Service Michel Barnier said, “Cybercrime and industrial espionage are unfortunately part of the reality that businesses in Europe face every day. We have to make sure our laws move with the times and that the strategic assets and the trade secrets of our companies are adequately protected against theft and misuse… This proposal aims to boost the confidence of businesses, creators, researchers and innovators … they will no longer be dissuaded from investing in new knowledge by the threat of having their trade secrets stolen..”

The proposed Directive will now be transmitted to the Council of Ministers and the European Parliament for adoption, and could come into force by the end of 2014.