The new EU Directive on trade secrets enhances whistleblowers protection

The new EU Directive on trade secrets enhances whistleblowers protection
  • 11/09/2017
  • Michalopoulou & Associates

The protection of undisclosed know-how and trade secrets has long troubled businesses which irrespective of their size, value trade secrets as much as patents and other forms of intellectual property right. For many, confidentiality can be used as a business competitiveness and research innovation management tool, which covers a diverse range of information that extends beyond technological knowledge to commercial data such as information on customers and suppliers, business plans, and market research and strategies. In this context, the EU Commission issued EU Directive ΕΕ/2016/943 on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure. The decision for this Directive follows an agreement reached with the European Parliament on 15 December 2015.

1) Which were the main concerns following the announcement regarding the Directive’s issue?

Following the announcement regarding the Directive’s issue many concerns were expressed in regards to the potential insufficient protection of whistleblowers as well as journalists in cases of sensitive information disclosure, even though such disclosure may also protect public interest. Many were, therefore, concerned that the high protection of sensitive information would lead to the end of business transparency as many whistleblowers or journalists would be left unprotected provided that any disclosure of sensitive information would involve them into long term and highly expensive court battles which they would not be able to support financially themselves. As a result, such group of people would naturally remain reluctant to disclose sensitive information regarding for instance corruption scandals, which would remain hidden forever.

2) What does the new Directive foresee in regards to the protection of trade secrets?

The new EU Directive lays down common measures against the unlawful acquisition, use and disclosure of trade secrets and aims at ensuring the smooth functioning of the internal market.  At the same time, the new Directive aims at harmonizing the legal context for the protection of trade secrets in all EU member-states. Furthermore, the Directive provides a definition for the term of “trade-secret”. Hence, according to the Directive ‘’trade secret’’ means information which meets all of the following requirements: a) it is secret in the sense that it is not, as a body or in the precise configuration and assembly of its components, generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question; b) it has commercial value because it is secret; c) it has been subject to reasonable steps under the circumstances, by the person lawfully in control of the information, to keep it secret. It must also be noted that the acquisition of a trade secret without the consent of the trade secret holder shall be considered unlawful, whenever carried out by: a) unauthorized access to, appropriation of, or copying of any documents, objects, materials, substances or electronic files, lawfully under the control of the trade secret holder, containing the trade secret or from which the trade secret can be deduced; b) any other conduct which, under the circumstances, is considered contrary to honest commercial practices. Moreover the use or disclosure of a trade secret shall be considered respectively unlawful whenever carried out, without the consent of the trade secret holder, by a person who has either acquired the trade secret unlawfully, or has breached a confidentiality agreement or any other duty not to disclose the trade secret or has breached a contractual or any other duty to limit the use of the trade secret.

 3) Does the Directive protect whistleblowers?

In reply to various concerns expressed earlier regarding the end of business transparency, the Directive excluded from the application of foreseen measures, procedures and remedies all whistleblowers, journalists and workers. In particular,  persons acting in good faith that reveal trade secrets for the purpose of protecting the general public interest (commonly known as whistle-blowers), will enjoy sufficient protection. According to article 5 of the EU Directive, Member States shall ensure that application for the measures, procedures and remedies provided for in the Directive shall be dismissed where the alleged acquisition, use or disclosure of the trade secret is carried out for revealing of misconduct, wrongdoing or illegal activity, provided that the respondent acted for the purpose of protecting the general public interest. It must be however noted that an automatic protection is not foreseen, meaning that a whistleblower may have to prove in court that his action of disclosing had as a purpose the revealing of an illegal activity, misconduct or wrongdoing in favor of the public interest, in order to remain unpunished according to the Directive.

 Our Law Firm’s comment:

In a time where business and corporate transparency has become more important than ever, it is understood that the protection of whistleblowers who significantly contribute to the enhancement of transparency and fight against corruption is imperative. The enhancement, moreover, of whistleblowers’ protection has become noticeable in Europe as well as at international level, something which has led to the promotion of transparency within the business environment. It remains now to be seen how the new Directive will be implemented and respectively applied within each Μember-State.

 

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