16 December 2013

Can EU Keep a (Trade) Secret?

In the UK there is currently no Parliamentary legislation that protects businesses from the unlawful use of their confidential know-how and other commercially valuable information, where such information is not capable of protection by patent or copyright law.  Instead businesses have to rely on judge-made common law that the Courts have developed over time to safeguard such interests.

This is in stark contrast to the majority of other EU countries which do have specific legislation in place, but even as between those countries there are significant differences between the level of protection that the law affords.

The European Commission has therefore published new proposals for harmonising the laws across the European Union, in the form of a Draft Directive on the Protection of Undisclosed Know-How and Business Information (Trade Secrets) against their Unlawful Acquisition, Use and Disclosure.

According to the accompanying press release:
"Businesses find it difficult to understand and access the systems of other Member States and, whenever they become victims of misappropriation of confidential know-how, they are reluctant to bring civil court proceedings as they are not sure the confidentiality of their trade secrets will be upheld by the courts. The current fragmented system has a negative effect on cross-border cooperation between business and research partners and is a key obstacle to using the EU single market as an enabler of innovation and economic growth."
The Draft Directive provides a common definition of exactly what constitutes a trade secret, including the requirement that it must have commercial value in the fact that it is secret.  It also provides for the uniform availability across the EU of remedies of damages, injunctions (both pending trial and afterwards), and widespread publication of judgments.  There are also safeguards to protect the confidentiality of information which of necessity has to be disclosed during a trial (a common problem).

Importantly, however, there is a narrow time period within which any claim under the proposed new rules can be brought: not more than two years after the date on which the applicant became aware, or had reason to become aware, of the last fact giving rise to the action.  This could be a much shorter timescale than the current 6-year limitation period under the laws of England and Wales.

If the text is adopted by the European Parliament, the Directive will still have to be implemented into national legislation by all EU Member States.  UK businesses are therefore unlikely to be able to use the new legislation until 2017 at the earliest, so before then they will continue to have to rely on the current judge-made law as the sole means of protecting their confidential information.

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