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EU Proposes New Rules on Trade Secret Protection

Monday, December 09, 2013
Sandler, Travis & Rosenberg Trade Report

The European Commission has proposed new rules to protect trade secrets (undisclosed know-how and business information) from unlawful acquisition, use and disclosure. An EC press release states that the draft directive would make it easier for national courts to deal with the misappropriation of confidential business information, for trade secret infringing products to be removed from the market and for victims to receive damages for illegal actions. According to the press release, recent studies show that 20% of European companies have suffered at least one attempt to steal their trade secrets in the last ten years and that 25% of companies reported theft of information in 2013, up from 18% in 2012.

The Commission points out that there is currently no EU framework on trade secret protection and that instead there is only a patchwork of national rules that are often outdated and opaque and have substantial differences, with a quarter of EU members having no specific laws on this issue at all. As a result, businesses find it difficult to understand and access the systems of other member states and can be reluctant to bring civil court proceedings when they become victims of misappropriation because they are not sure the confidentiality of their trade secrets will be upheld by the courts. The Commission asserts that this 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 press release states that the new proposal aims to address these problems by harmonizing the national civil laws of EU member states around three main elements: (1) a definition of trade secrets and misappropriation, (2) a set of civil remedies that trade secret holders can seek whenever they suffer from misappropriation, and (3) a set of measures that courts may use to avoid leakage or disclosure of trade secrets that have been submitted in the course of civil litigation on misappropriation. The “sound, balanced and harmonized system” of trade secret protection envisioned in this proposal would give businesses and researchers “a safer environment in which they can create, share and license valuable know-how and technology across the borders of the single market,” the Commission states.” It would also “facilitate the engagement of companies and researchers from different EU countries in common and collaborative projects for innovation and research.”

The Commission's proposal will next be transmitted to the Council of Ministers and the European Parliament for adoption under the ordinary legislative procedure.

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