Standardised Trade Secrets Laws coming into force in June 2018 in the EU


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The factors that define a trade secret amount to three fundamental principles. The trade secret must be secret, if the information within the trade secret is common knowledge or easily found it is not a trade secret.

However, should the same trade secret and the information it contains, evolve in two separate organisations operating in the same field it will still be each organisationís trade secret, so the same information can perfectly legally be a trade secret of more than one company.

Another requirement is that the secret nature of the trade secret must have financial value to a business
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arising from the secret and any public disclosure would weaken the companyís competitive position and have a financial impact on the business, regardless of whether the business has or has not already exploited the secret for financial gain. It is sufficient that a financial benefit could arise should the company do so. The act can also protect such information that is in the possession of third parties if that trade secret is of financial value to the business.

A third, and most important obligation is that the possessor of the trade secret must actively seek to keep the information secret. A secret ceases to be a secret if it is easily available to all. Robust security plays an important part in ensuring that the secret cannot easily be breached. The owner of a trade secret has a responsibility to protect their secret and they cannot complain or seek legal redress if they have failed to carry out this duty in an adequate manner.

All the requirements outlined above must be met for any information to be regarded and protected as a trade secret in all the various forms. In practice, trade secrets can consist of very different types of information, such as pricing information, customer registers, market analyses, technical information about products or test results.

The Directive adopted by the European Parliament and Council aimed at standardising across all EU countries the laws relating to the protection trade secrets comes into force in June 2018. The new laws clarify, define and harmonises the existing laws in accordance with existing international standards. Without establishing criminal sanctions, the proposal harmonises the civil means through which victims of trade secret misappropriation can seek protection, such as:

-- stopping the unlawful use and further disclosure of misappropriated trade secrets;
-- the removal from the market of goods that have been manufactured on the basis of a trade secret that has been illegally acquired;
-- the right to compensation for the damages caused by the unlawful use or disclosure of the misappropriated trade secret.

These measures should prevent a person or organisation from profiting from the theft of a trade secret and also cause them sufficient detriment in the shape of the payment of damages to act as a deterrent to any individual planning to steal a trade secret. EU countries must bring into force the laws and administrative provisions necessary to comply with the Directive by 9 June 2018.

Italian law has its own measures in place to address the theft of trade secrets which are protected by the Italian Industrial Property Code which has been in force since 2005.

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AUTHOR: Anne Gadd

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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.

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