EU TRADE SECRETS DIRECTIVE

Although one company out of five is the victim of theft of secret business information each year, not all European countries provide the same level of protection for trade secrets; a newly approved European Union directive will fix that, enabling enterprises to defend their rights in court and seek compensation in all EU member states. Italy already has legislation in place to protect trade secrets.

On 14 April 2016 the European Parliament finalised the approval of a new directive on the protection of undisclosed know-how and business information against their unlawful acquisition, use and disclosure (the trade secrets directive).

The new directive aims to create a harmonised legal environment enabling enterprises across the European Union to fight the theft of trade secrets and seek immediate compensation.

Not all European Union countries provide protection for undisclosed business information, and differences exist between the national provisions of the countries, such as Italy, that already have legislation in place.

The trade secrets directive
The directive defines both trade secrets and which acts are to be considered unlawful acquisition thereof.

According to the approved text, ‘trade secret’ means information which meets 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 subject to reasonable steps, under the circumstances, to keep it secret.

The acquisition of a trade secret, including so-called know how, is unlawful if it occurs without the authorisation of the enterprise by accessing, appropriating or copying documents, objects, materials, substances or electronic files, or by any other conduct contrary to honest commercial practices.

Use or disclosure of a trade secret is unlawful whenever carried out by someone who
a) has acquired the trade secret unlawfully;
b) has breached a confidentiality agreement or any other duty not to disclose the trade secret;
c) has breached a contractual or any other duty to limit the use of the trade secret;
d) knew or ought to have known that the trade secret was obtained unlawfully by a third party.

The production, importation, exportation and marketing of infringing goods are also unlawful.

The directive also sets forth the measures, procedures and remedies necessary to ensure the availability of civil redress against the unlawful acquisition, use and disclosure of trade secrets.

The confidentiality of trade secrets must be preserved in the course of legal proceedings, and each European Union member state will have to make available measures that allow enterprises to obtain quick remedies, also during proceedings, against the damages caused by the theft of business information (provisional and precautionary measures, injunctions and corrective measures).

Regarding compensation for the damage caused by the unlawful acquisition, use or disclosure of business information, the directive sets forth that it must be calculated not merely on the base of economic consequences (such as profits lost by the trade secret holder and profits made by the author of the violation) but also taking into account elements other than economic factors, such as the moral prejudice caused to the trade secret holder.

Trade secrets under Italian law
Trade secrets are protected by the Italian Industrial Property Code in force since 2005.

The code’s Section VII, titled “Secret information”, provides that it is unlawful to reveal, acquire or use business information and technical and industrial experiences, including commercial experiences, that are under the legitimate control of the holder, providing that the information is:

a) secret, in the sense that it is not, as a body or in the precise configuration and combination of its components, generally known or easily accessible to experts and operators in the relevant sector;
b) has an economic value because it is secret;
c) is subjected by the persons who lawfully control it to measures that can reasonably be considered adequate to keep it secret.

The code also protects data concerning tests or other secret data whose processing involves a certain effort and that must be presented to obtain marketing authorisation for chemical, pharmaceutical or agricultural products.

The disclosure of secret business information is also sanctioned by Italian Criminal Code provisions on unfair competition.

Why protecting trade secrets is important
Any enterprise develops knowledge and information that helps it to increase productivity, reduce costs and make the enterprise more competitive, including for instance new production processes, or data concerning suppliers and clients. Information, know-how, creativity are the life blood of enterprises of all sizes, but often get stolen.

According to the European Commission, 20% of enterprises are the victim of theft of secret business information.

This is why trade secrets that are not eligible for protection under laws on patents, models, trademarks and copyright should be protected by specific provisions, and the new trade secrets directive aims to ensure that this principle is applied uniformly across the European Union.

European Union  member states will have two years from the date of publication of the directive to implement its provisions into national law.

Further information
Download the directive’s approved text (non yet published in the Official Journal)

2 May 2016