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New Directive in EU Law on Trade Secrets and Know-how

Whilst the protection of Know-how and Trade Secrets is usually covered in local law there is often confusion as to how this will translate internationally and how will clauses covering this in a contract governed by one law be considered in another jurisdiction.

In an attempt to clarify some of the issues the European Union has issued a Directive on the Protection of undisclosed know-how and business information against their unlawful acquisition use and disclosure. This directive was adopted on 27th May this year and will come into effect two years after its publication in the Official Journal. Between its publication and that time EU Governments


will have to take steps to incorporate it’s provisions into the local law. The aim of the Directive is to have common measures throughout the common market against the unlawful acquisition, use and disclosure of Trade Secrets. It is also intended to have deterrent effect against illegal disclosure. Although it is intended to prevent unlawful disclosure the Directive does include measures relating to investigative journalists including protecting journalistic sources. Whistle blowers receive particular attention where they are acting in good faith for the purpose of protecting the general public. An employer will not be able to plead a Trade Secret where the intention is to reveal misconduct, wrong doing or and illegal activity where the whistle blower is protecting the public interest. The Council addressed concerns that the provisions which would impact free speech, whistle-blowers or mobility of employees. The measures provided by the Directive “fully ensure that investigative journalism can be exercised without any limitations including with regard to the protection of journalistic sources”. In particular Recital 19 of the Directive provides that: “While this Directive provides for measures and remedies which can consist of preventing the disclosure of information in order to protect the confidentiality of trade secrets, it is essential that the exercise of the right to freedom of expression and information which encompasses media freedom and pluralism as reflected in the Charter of Fundamental Rights of the European Union, (‘the Charter’) not be restricted, in particular with regard to investigative journalism and the protection of journalistic sources.” As to whistle-blowers, the EU Council commented that in line with Recital 11: “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 adequate protection. It will be up to national competent judicial authorities to judge whether the disclosure of a commercial secret was necessary to denounce a misconduct, wrongdoing or illegal activity.” Article 5 provides that Member States will dismiss applications for measures, procedures and remedies under the Directive where the alleged misuse or disclosure of a trade secret was carried out: “(a) for exercising the right to freedom of expression and information as set out in the Charter, including respect for the freedom and pluralism of the media; (b) for revealing misconduct, wrongdoing or illegal activity, provided that the respondent acted for the purpose of protecting the general public interest; (c) disclosure by workers to their representatives as part of the legitimate exercise by those representatives of their functions in accordance with Union or national law, provided that such disclosure was necessary for that exercise; (d) for the purpose of protecting a legitimate interest recognised by Union or national law.” It should be noted that any current restrictions in any employment contracts will continue to apply and it is intended that local law will always apply in this regard. There will however be no limitation on the use by employees of knowledge and know-how legally acquired by them in the course of their employment. In accordance with the Directive, EU member states will have to provide for the measures, procedures and remedies necessary to ensure the availability of civil redress against the illegal acquisition, use and disclosure of trade secrets. These will have to be fair. They must not be complicated or costly, nor may they entail unreasonable time limits or unwarranted delays. The limitation period for claims must not exceed six years. The owner of the Trade secret will be entitled to apply for remedies in case of damages following cases of unlawful disclosure and use of Trade Secrets. Where necessary, confidentiality of trade secrets will also be preserved during the course of and after the legal proceedings. As to how and when this Directive when published will be incorporated into Romanian law we cannot yet assess. As there are elections for a new Parliament scheduled for the end of 2016 it is clear that nothing will happen until after the elections. ABOUT THE AUTHOR: Nicholas S Hammond Nicholas is a highly experienced English speaking commercial lawyer based in Romania having practised both in the City of London and Romania. He was the first English solicitor to come to Romania in 1990. His practise covers all aspects of corporate and commercial law including company formations and corporate restructuring, joint ventures and inward investment. Copyright Hammond, Minciu and Associates More information about Hammond, Minciu and Associates Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.

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