Intangible assets have a predominant place in economic sectors and business plans (trademarks, Internet domain names, projects, algorithms, the works of the research and development departments, improved recipes…). Intangible assets may be protected by Intellectual Property rights, such as is the case with musical works, or may not benefit from such protection which is the case of trade secrets.

In a few words, trade secrets are valuable pieces of information which are treated as confidential and which give the enterprise a competitive advantage. Indeed, information, knowledge, inventiveness and creativity are significant elements in today’s economy.

Directive n°2016/943 of the European Parliament and of the Council of June 8th, 2016 on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure will soon be coming into force on June 9th, 2018. It is also known as the Trade Secrets Directive and aims at protecting trade secrets.

Why is this Directive so important?

The Trade Secrets Directive harmonises the definition of trade secrets with existing internationally binding standards. Thus, enterprises will benefit from a common legal framework throughout the Internal Market which will secure and help develop their businesses.

Furthermore, the Directive defines the relevant forms of misappropriation and harmonises the civil means through which victims of trade secret misappropriation can seek protection. Companies, researches, inventors and so forth will know how to best protect their trade secrets, the legally prohibited actions and the remedies they can seek. The Trade Secrets Directive benefits all actors throughout the Internal Market.

How does the Directive aim at protecting trade secrets?

Under Article 2 of the Trade Secrets Directive “trade secrets” means information meeting all of the following requirements:

  • It is secret in the sense that it is not, as a body or in the precise configuration and assembly of its components, generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question;
  • It has commercial value because it is secret;
  • It has been subjects to reasonable steps under the circumstances, by the person lawfully in control of the information, to keep it secret.

According to this definition, the enterprise can determine what it considers as secret and implement the means to keep it as such.

The Trade Secrets Directive aims at protecting trade secrets by defining both lawful and unlawful acquisition, use and disclosure of trade secrets. For example, will be considered lawful a trade secret obtained by independent discovery or creation (Article 3 of the Trade Secrets Directive) whereas the disclosure of a trade secret in breach of a confidentiality agreement or of any other duty not to disclose the trade secret will be considered unlawful (Article 4 of the Trade Secrets Directive).

Finally, by providing for the civil remedies available to victims of unlawful acquisition, use or disclosure of a trade secret, the Directives aim at deterring such behaviour. Amongst the protective measures and/or remedies defined are the prohibition of the production, offering, placing on the market or use of infringing goods or the importation, export or storage of infringing goods for those purposes (Article 10 of the Trade Secrets Directive), damages and recurring penalty payments (Articles 14 and 16 of the Trade Secrets Directive).

How can enterprises prepare for the Directive?

As of today, enterprises may start preparing for the Trade Secrets Directive and protect valuable pieces of information. A first step to take is to identify and map any information susceptible to be a trade secret. The enterprise should also alert the relevant departments and persons on the importance of trade secrets and the measures to be taken to keep such information confidential.

Regarding feasible technical measures, the enterprise can mark the information susceptible to fall under the definition of trade secrets as defined in the Directive and implement technical management and traceability of such information.

Enterprises should also review their existing contracts and draft or incorporate non-disclosure agreements. They should also reinforce confidentiality clauses covering trade secrets.

Mathias Avocats remains at your disposal for any further questions.