IEEE Consumer Electronics Magazine - April 2017 - 105

IP Corner

The European Union
Trade-Secrets Directive:
To-Dos for Companies?
By Sascha Pres

rotecting trade secrets plays a key
role for companies of all sizes and
throughout all industries. Secret
"know-how" provides a crucial
edge over competitors, gives a time advantage, and may help in securing market shares. Questions of know-how
protection come into play every time a
company deliberately decides to keep
information secret rather than registering
its intellectual property (IP), e.g., as a
patent or a design. Furthermore, the secrecy of know-how may close gaps where
no IP rights exist, e.g., for pure commercial or nonpatentable knowledge.
Here the confidentiality shields the
know-how from unauthorized access
and exploitation by third parties.
Keeping this in mind, and against
the background of the existing patchwork of diverging know-how protection
regulations through the European Union
(EU), a new legal framework for the
protection of trade secrets was adopted beginning in July 2016 by the EU.
The new Trade Secrets Directive EU
2016/943 (TS Directive) harmonizes
most of the important aspects of legal
know-how protection and improves the
legal opportunities in infringement scenarios. Within the next two years, the
EU member states will implement the
new rules of the TS Directive into their
national laws.

Digital Object Identifier 10.1109/MCE.2016.2640618
Date of publication: 15 March 2017

PROTECTION OF TRADE SECRETS
UNDER THE TS DIRECTIVE
One of the core elements of the TS Directive is the definition of the term trade
secret. According to the TS Directive, a
trade secret must fulfill three aspects to
obtain protection:
1) the information must be secret (not
generally known among or readily
accessible to persons within the circles that normally deal with that
kind of information)
2) it must be valuable because of its
secrecy
3) the holder of the secret must have
taken reasonable action to protect it
from disclosure.
With respect to aspect 3, in future infringement litigations, the secret holder
will bear the burden of proof that the
secret was protected by steps regarded as
reasonable under the circumstances.
Consequently and from now on,
rights holders need to pay closer attention to the various forms of technical,
organizational, and legal measures to
protect information from being disclosed without authorization, otherwise
they must accept that the new claims
provided by the TS Directive do not
apply for this particular, therefore nonsecret, know-how.
Needless to say, the possible claims
provided by the TS Directive are quite
interesting from a rights holder's perspective. The TS Directive widens the
enforcement possibilities from common injunction and damage claims to

claims for the destruction of the products incorporating the trade secret without due authorization of the rights
holder. The latter may further claim
recall of the infringing goods from the
market or the depriving of the secret
information from the product, as long
as they are eligible.

PROTECTION DURING
ENFORCEMENT
The rights holders, by far in most of the
infringement cases, need to obtain a
court order to pursue and enforce their
claims pursuant to the know-how infringement. They typically had to decide to
disclose the secret information (once
again) in the court proceedings or otherwise refrain from approaching the infringement. Fortunately, the TS Directive
has taken up this issue, but it has not
solved it completely in favor of the rights
holders. According to Article 9 of the TS
Directive, the member states may allow
the courts to grant binding orders to the
participants of the proceedings to keep
the information secret, even after the proceedings have come to an end. However,
and justified with the fair trial argument,
at least one person from each of the parties (not only the lawyers) must have
access to a complete set of information
from the proceedings, including the
secret information. This of course weakens the rights holder's position and
makes court proceedings less attractive.
(continued on page 117)
april 2017

IEEE Consumer Electronics Magazine

105

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