Over the last 10 years, one in five EU companies has been the victim of at least one attempt to breach its strategic information, according to the European Commission. In the meantime, less than half of all EU companies that have reported diversions or attempted diversions have taken legal action over the attempt, mostly because of the associated risks of disclosure of confidential information in court proceedings.

This situation was clearly the result of a lack of protection for trade secrets within the European Union. Each Member State had its own way of protecting companies’ strategic information, with varying effectiveness. In France, for instance, more than 306 legal sources implicitly referred to ‘trade secrets’, but this concept had never been clearly defined or protected by specific regulation. As a matter of fact, in the case of trade secrets disclosure, companies had to initiate legal action based on unfair competition, although in practice it was often difficult to prove that the violation of trade secrets constitutes an unfair act.

The implementation of Directive 2016/943 of 8 June 2016 on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure constitutes, in this respect, a landmark measure. France implemented the directive on 30 July 2018.

This new legal framework introduces a set of specific remedies in case of trade secrets disclosure. This includes provisional and precautionary measures, such as seizures and injunctions, but also corrective measures, such as the destruction of materials containing confidential information, compensation for loss of profits and unfair profits made by the infringer, and publication of the court decision. If the means are now clarified, the question as to when they can be used is not so easy to answer.

Oct-Dec 2018 Issue

Reed Smith LLP