On 28 November 2013, the European Commission (the “Commission”) published proposals for a Directive on Trade Secrets (the “Directive”). The Directive aims to protect trade secrets from unlawful acquisition, use and disclosure. It also seeks to harmonise the national laws of Member States by establishing common definitions, procedures and sanctions.
The Directive is currently progressing through the European legislative process and in May 2014, the Council of Ministers recommended a number of amendments. The Directive is scheduled for negotiation between the European Parliament and the Council in early 2015. If adopted, Member States will have a further two years to implement the proposals. It is expected that the final Directive will be published by summer 2015.
This Briefing Note discusses some of the key aspects of the Directive and its likely effect on the broad scope of commercial operations who create, use or disclose trade secrets, whether proprietary or third party. The essential role of trade secrets to the success of business is unquestionable.
Protection of Trade Secrets in the EU
It is uncontentious to suggest that businesses should take reasonable steps to protect their trade secrets. As the Directive intends to sit alongside existing and new corporate confidentiality agreements, it is recommended that businesses continue to negotiate these contracts when entering a transaction. Such contacts will allow for the imposition of more stringent trade secret protections if required.
The Directive is intended to contribute to the protection of trade secrets in the EU by creating a standard framework of minimum standards. Moreover, it seeks to strike an appropriate balance, by protecting against the unlawful acquisition, use or disclosure of trade secrets, as well as recognising commercial realities by creating exceptions to foster innovation, research and development. Whether the stated mechanisms are completely appropriate has been questioned.
There are undoubted wrinkles in the drafting from the common law perspective, which if not resolved in the final Directive, will fall to be dealt with, where possible, at a national level. It is hoped that the Directive will contribute to investment and innovation in Europe. However, its overall impact will be most accurately assessed when it is implemented and utilised in practice.