Trade secrets: proposed European harmonization – an update

Following a study on trade secrets and confidential information in the internal market ...

which was produced for the European Commission in April 2013 (and reported on by RPC here), the European Commission has now adopted a proposal for a directive on the protection of "undisclosed know-how and business information (trade secrets)".

Key proposals include introducing a common definition of trade secrets (currently the term is not defined in many countries' legislation).  The suggested mandatory elements of a trade secret are outlined in Chapter I of the proposed directive.  The information must be confidential; of commercial value because of its confidentiality; and the trade secret holder must have made reasonable efforts to keep it confidential.

Chapter II of the proposed directive sets out the situations in which it would be unlawful to acquire, use and/or disclose confidential business information.  The crucial element of the proposed unlawful acts is the absence of consent from the proprietor of the trade secret.

Other areas covered by the proposed directive include introducing a common set of remedies to redress a misuse, including interim and permanent injunctions; procedures to maintain and protect the confidentiality of trade secrets during misuse proceedings; and the introduction of a harmonized damages regime.  Further, the proposed directive also introduces a two year limitation period during which a claim should be brought, starting from the date on which the claimant became aware (or should have been aware) of the last fact giving rise to the action.  This limitation period is significantly shorter than the 6 year limitation period which usually applies to claims in the UK.

The full text of the proposal can be found here.  It will now enter the usual legislative process through the European Parliament in advance of adoption.