Protecting trade secrets
As companies seek to gain an advantage that will place them ahead of their competitors, those in the business sector have realized the importance of investing in research and innovation to ensure the viability of their projects, improve products or increase efficiency in the product chain. Through this innovative work, aside from patents or copyright registered by their authors, a company accumulates a volume of technical know-how and business information acquired during the research process which it applies directly to its own activities, thus obtaining the aforementioned competitive advantage.
This type of knowledge is known as “trade secrets” and it is not simply confined to the technical data resulting from research, as it also includes commercial information, such as, for example, commercial strategies implemented by a company as a result of its experience and know-how of the sector. Considering that this is essential for the company and something which sets is apart from its competitors, it is crucial to keep this material confidential and to refrain from disclosing it to third parties.
Up until now, there were no regulatory instruments available at a European level to protect the unlawful acquisition, use, and disclosure of trade secrets by third parties. In this context, on 8 June 2016 the European Parliament and the Council approved Directive (EU) 2016 943 on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure, regulating different protective measures for trade secrets. The directive content, aside from the definition of trade secrets which in future will preclude any discrepancies regarding their scope, includes other pertinent measures such as the fact that:
(I) it enables the competent judicial authorities to take rapid and effective provisional measures which will immediately put an end to unlawful use of trade secrets by third parties (to mitigate the disastrous consequences for the legitimate owner of the trade secrets)
(II) It establishes indemnification for damages granted to the injured party (which will take into account loss of profits, unjust enrichment of the infringer and the moral damage suffered by the holder of the trade secret, along with the research costs incurred)
(III) It establishes a maximum term of 6 years for prescription of these unlawful actions. Given that the directive must be transposed to national law by 9 June 2018, our legislative system is committed within that time frame to regulating this extremely sensitive issue which is particularly relevant to business development.
Garrigues Corporate/Commercial Law Department