New Trade Secrets Directive now in force across Central and Eastern Europe

June 16, 2018 | Insight

As we were all busy preparing for Europe’s new GDPR system, we seem to have lost sight of the new EU Trade Secrets Directive that should have been transposed into EU national laws by June 9th of this year. The new directive is an important piece of legislation that deals with “privacy”, unfair competition and IP, establishing a modern and for the first time EU-wide regime for the protection of trade secrets.

THE NEW DIRECTIVE

Confidential know-how and business information are amongst the most important assets of many companies. The EU has now recognised that IP protection in Member States is inconsistent and often insufficient.

The Trade Secrets Directive (EU) 2016/943 contains a definition of trade secrets (which is new in many countries) and determines the scope of protection of the owner, who may prevent any unlawful acquisition, use or disclosure of a trade secret. Under certain conditions, the production, offering or placing on the market of infringing goods, including import, export or storage, will be considered unlawful and thus may be prevented. The Directive not only requires Member States to provide a wide range of claims in case of infringements, but also to ensure that trade secrets are protected during court proceedings, which is an important but difficult task.

The harmonised legal definition of protectable “trade secrets” is one of the core elements of the Directive. According to this definition, the information shall not only be secret (meaning that it is not generally known or readily accessible) and of commercial value, but must also have been subject to reasonable protection measures. Companies are thus well advised to identify their valuable know-how and business information and to implement a protection/compliance system. Obviously, it would make sense to combine the implementation of such a system with the internal reviews and measures taken in relation to the GDPR, since information security and data protection are also compliance issues and have much in common.

THE TRANSPOSITION INTO DOMESTIC REGIMES

The June 9th date is important for it is the day on which Member States should adopt the new EU wide regulatory regime.

Courts henceforth will have to interpret their national laws in accordance with the Directive. As far as these laws contain broad general clauses, the courts will have plenty of room to do so even if the Directive has not yet been transposed. However, Member States should also beware, as they may be held liable if an important trade secret is lost or cannot be enforced because the Directive was not (sufficiently) transposed. In this regard procedural rules also seem to be highly important.

STATUS OR IMPLEMENTATION

Here is an overview of the implementation status across Central and Eastern Europe:

Croatia

The Directive has been implemented into Croatian law through the new Act on Protection of Undisclosed Information with Commercial Value, which came into force in early April 2018.

Czech Republic

The Directive will not be implemented by topic-specific independent legislation, but merely through a single amending act, amending the existing Trademark Act and the Act on the Enforcement of IP Rights.

The changes to the trade secret protection regime introduced by this amending act (in respect of the protection of trade secrets) will be only minor, as it is generally perceived that 90 % of the Directive’s provisions are already embedded in the existing legislation, namely the Civil Code and Code of Civil Procedure (although we doubt that this perception is correct).

It is not yet foreseeable when the bill will be approved – probably in September or October 2018, unless any amendments are submitted during the legislative process.

Hungary

Hungary is adopting a new, separate act on trade secrets and know-how protection.

Currently, this is regulated as part of the personality rights in the Hungarian Civil Code. The new act will depart from this concept and will ensure protection similar to intellectual property rights, especially in case of infringement.

The bill was already at the Parliament for discussion, however, due to the elections in Hungary it was not accepted. According to the latest information minor amendments in the wording of the new act are planned and then the bill will be refiled to the Parliament.

Poland

Poland will implement the Directive through the amendment of the Act on Combating Unfair Competition. The government project of amending the act was directed to the Parliament of Poland on 11 May 2018. A week later the draft was directed to the first reading in the Parliament session.

Romania

The Directive has not yet been implemented in Romania. According to publicly available information, a draft law should be issued by the Competition Council. However, no further information on this draft and its status is available as of now.

Slovakia

The Directive has already been implemented into Slovak law by way of an amendment of the Slovak Commercial Code with effect as of 1 January 2018.

Slovenia

Slovenia has not implemented the Directive yet. However, a respective act – namely the Trade Secrets Act – is in preparation (as evident from the website of the Government Office for Legislation, reference no. 2017-2130-0032).

It seems that the Slovenian government is still working on the proposal of the act, which will then be considered by the country’s parliament. In practice this means that the act is unlikely to be adopted in the very near future.