EU moves to protect trade secrets
Commission to propose a minimum level of protection for confidential information.
The European Commission will next week propose legislation to combat industrial espionage and cyber-crime by increasing protection for trade secrets.
Michel Barnier, the European commissioner for the single market and services, is to unveil a draft law proposing a minimum level of protection across the European Union for companies’ confidential information.
The proposal will be welcomed by companies whose commercial advantage relies on keeping secret information about their processes and products. They include large-scale chemical manufacturers as well as small businesses – among them tyre-manufacturers and makers of fragrances. For them, patent protection – which involves making public the detail of innovations – is not an option.
The Commission will propose to define what know-how can be protected as a trade secret and set out specific legal remedies that must be made available, such as injunctions and damages, when that secrecy is breached.
At present, definitions of trade secrets vary across the European Union’s member states.
According to Sarah Turner, a specialist in the law of intellectual property at Hogan Lovells, a law firm, in some member states of the EU, the law on trade secrets is “almost non-existent”.
In some member states, problems arise because taking a digital copy of trade secrets does not fall within the legal definition of theft.
In 2012, a French fragrance company, IPRA France, accused two ex-employees of photocopying recipes for perfumes and lists of clients, but its claims were rejected because the original documents had not been stolen.
In Belgium, it is difficult for a company to litigate over a trade secret without making its content public.
The tyre-maker Michelin was left without a legal remedy when an employee in France went to the UK and tried to sell information on suppliers and production plans to competitors.
The UK is considered to offer a high-level of protection for trade secrets, partly because claimants find it relatively easy there to obtain search warrants, which are helpful when a company is seeking to establish its case.
Pierre Sivac, president of the International Fragrance Association, which has been urging the Commission to propose legislation, said: “The enforcement of the protection of know-how is exceedingly difficult because of inconsistent regimes across EU member states. He said that a bold proposal from the Commission would “go a long way to ensuring that innovative European industries, such as the fragrance industry, remain competitive”.
The association has long argue that patent protection and copyright are not enough. Not all trade secrets would qualify for patent protection. Others are not patented because of the cost involved or because they are too valuable to a company’s business model to be made public.
The association argues that companies feel better protected in the US and Japan, than in Europe, because those countries have stronger rules on protecting trade secrets.
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BusinessEurope, the European federation of employers’ organisations, last month sent a letter to Karel De Gucht, the European commissioner for trade, and to Michael Froman, the US trade representative, calling for them to use negotiations on a free-trade agreement to co-ordinate their approaches to protecting trade secrets.