June 6, 2016

The Council of the EU has formally adopted the Directive, which sets out rules for the protection of trade secrets and confidential information of EU companies.  This follows agreement reached with the European Parliament on 15 December 2015.

The Directive, which contains measures to combat the unlawful acquisition, use and disclosure of trade secrets, aims at ensuring the smooth functioning of the internal market.  It is also intended to act as a deterrent against the illegal disclosure of trade secrets, without undermining fundamental rights and freedoms or public interest matters, such as public safety, consumer protection, public health, environmental protection and mobility of workers.

The Council says that the new measures protect investigative journalism, including journalistic sources, and the Directive complies with the EU’s Charter of Fundamental Rights, which preserves freedom and pluralism of the media.

Further, the Directive does not impose any restrictions on workers and their employment contracts.  Therefore, there will be no limitation to employees’ use of experience and skills honestly acquired in the normal course of their employment.

As for “whistle blowers”, people who act in good faith and reveal trade secrets for the purpose of protecting the general public interest will enjoy adequate protection.  Trade secrets protection will not apply in cases in which the objective was to reveal misconduct, wrongdoing or illegal activity, provided that the respondent acted in order to protect the general public interest.

Member States will have to provide for measures, procedures and remedies necessary to ensure civil redress procedures against the illegal acquisition, use and disclosure of trade secrets.  These will have to be fair, effective and dissuasive.  They must not be unnecessarily complicated or costly, nor may they entail unreasonable time limits or unwarranted delays.  The limitation period for claims must not exceed six years.

Trade secret holders will be entitled to apply for damages in cases of illegal appropriation of documents, objects, materials, substances or electronic files containing a trade secret or from which a trade secret can be deduced.  Where necessary, the confidentiality of trade secrets will also be preserved during the course of and after legal proceedings.

Once the Directive is published in the Official Journal of the EU, Member States will have two years to incorporate the new provisions into domestic law.  To read the Council’s press release in full, click here.