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EU trade secrets rules finalised

New EU laws that aim to protect businesses against the unlawful acquisition, use and disclosure of their trade secrets have been finalised.01 Jun 2016

The Trade Secrets Directive was approved by the Council of Ministers late last week, The Directive is designed to deter illegal disclosure of trade secrets "without undermining fundamental rights and freedoms, or the public interest, including public safety, consumer protection, public health, environmental protection and mobility of workers", the Council said.

The Council of Ministers is a body made up of representatives from the governments of the 28 countries that make up the EU. Political agreement on the reforms was reached by the European Parliament and Council late last year, and the Parliament voted to approve the Directive in April.

Under the Directive (47-page / 389 KB PDF) a trade secret is considered to be information that is secret, has commercial value because it is secret and has been subject to reasonable steps under the circumstances, by the person lawfully in control of the information, to keep it secret.

Information is only considered secret if it is "not … generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question".

It would be unlawful for anyone to acquire a trade secret without permission of the trade secret holder through a variety of means specified in the Directive.

Unlawful acquisition of trade secrets could occur through appropriation of, or copying of any documents, objects, materials, substances or electronic files, lawfully under the control of the trade secret holder, containing the trade secret or from which the trade secret can be deduced, or through any other conduct that could be considered contrary to honest commercial practices.

The unauthorised use or disclosure of trade secrets will be prohibited if that activity occurs where the trade secret was unlawfully acquired, if it breaches a confidentiality agreement or other duty not to disclose the trade secret or breaches a contractual or other duty limiting the use of the information.

The Directive also protects companies against the second-hand sharing of trade secrets. It will be considered unlawful for businesses to acquire, use or disclose a trade secret if they knew or ought to have known at that time that the trade secret had been obtained directly or indirectly from someone else who was using or disclosing the trade secret unlawfully.

Despite the Directive, national law will continue to apply to workers' employment contracts to prevent any limits to employees' use of experience and skills "honestly acquired in the normal course of their employment".

No new limitations are imposed on investigative journalism by the Directive, andwhistleblowers who reveal secrets to protect the "general public interest" will also have "adequate protection", the Council said.

EU countries will have to put measures in place to protect companies against the illegal acquisition, use and disclosure of their trade secrets. These will have to be "fair, effective and dissuasive", not unnecessarily complicated or costly, or involving "unreasonable time-limits or unwarranted delays", the Council said.

Each EU country implementing the Directive will be able to set the limitation period within which claims relating to the unlawful acquisition, use or disclosure of trade secrets would need to be lodged before the courts.

National law makers will also be able to determine when the limitation period would be considered to start and the circumstances under which the limitation period would be considered to be interrupted or suspended. Limitation periods will not be allowed to exceed six years, according to the Directive.

Where necessary, the confidentiality of trade secrets will be preserved during and after the legal proceedings, the Council said.

The finalised text of the directive will now be published in the Official Journal of the EU and EU countries will have a maximum of two years to incorporate the new provisions into domestic law, the Council said.