Trade Secrets in the EU: Definition

Trade secrets are valuable proprietary pieces of information for a company which information is treated as confidential and gives the business a competitive advantage over other similar businesses. Many times, these are developed through painstaking and costly research, years of experience, or sudden bursts of innovation. Enterprises regularly develop material intended to achieve better performance at a faster or lower cost. Such knowledge can include formulae, early stage inventions, algorithms, new manufacturing processes, enhanced recipes, or information on suppliers and customers. 

Trade secrets laws in the EU were not harmonized until 2016. As a solution to patchy trade secret protection between the different EU Member States, the adoption of Directive (EU) 2016/943 of the European Parliament and of the Council of 8 June 2016 on the Protection of Undisclosed Know-How and Business Information (trade secrets) against their Unlawful Acquisition, Use and Disclosure (the “Trade Secrets Directive” or “the Directive”) was published.

Trade Secrets in the EU: Directive (EU) 2016/943

The aim of the Directive was to align different national rules that were often sporadic and outdated as well as to harmonise the definition of trade secrets; define the various forms of legal and illegal acquisition, use and disclosure of trade secrets; and propose remedies for those affected by such misappropriation.

The Directive dealing with trade secrets in the EU harmonizes national laws by:

• guaranteeing a comparable level of protection of trade secrets in the EU;

• launching a standardized definition of the term "trade secret";

• offering common measures against the unlawful acquisition, use, and disclosure of trade secrets.

A set of common legal principles, procedures, and protection measures was introduced through this pan-European regime, with the result that European companies are incentivized to research and innovate with confidence. Moreover, the Directive covers the issue of infringing goods, by establishing the unlawful character of the production, offering, placing on the market, importing, exporting or storing any goods whose design, quality, manufacturing process or marketing significantly benefits from unlawful acquisition, disclosure or use of trade secrets.

Simultaneously, the Directive presents several exceptions to the protection of trade secrets, e.g. to the advantage of those who reveal misconducts, wrongdoing, or illegal activity if a disclosure of a trade secret serves the public interest. The Directive will help to make trade secret protection rules within the EU more even and interoperable, reducing unnecessary costs and barriers to cross-border innovation activities and know-how transfer.

Trade Secrets in the EU: Protection

The fact that a creator or inventor has a trade secret does not necessarily mean that he/she has exclusive rights over that information. If another party manages to prove that he/she developed such information or method as well, that person is not precluded from using it. However, the benefits that trade secrets protection in the EU presents cover mostly protection against dishonest behavior in general including unauthorized access to documents related to proprietary secret information, making copies, whether for personal use or third-party use. A breach of a non-disclosure agreement and the making of any information public is also covered.