Protection of trade secrets. Finally a legal framework.

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The effective and efficient protection of trade secrets or know-how was quite challenging until recently, as there was no general legal framework for the protection of trade secrets in Belgian law. This will change with the approval on 19 July 2018 of the draft bill which transposes the Directive (EU) 2016/943 of the European Parliament and the Council of 8 June 2016 on the protection of trade secrets into national legislation. The new law will be included in the Code of Economic Law.

Scope

The draft bill (finally) provides a definition of what exactly is understood by a trade secret.

A 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, and;

c) it has been subject to reasonable steps, under the circumstances, by the person lawfully in control of the information, to keep it secret.

Examples of trade secrets include: a production process, client lists, margin figures, marketing concepts, algorithms, specific agreements with clients, financial documents...

Improved protection against the unlawful acquisition, use or disclosure of trade secrets

The draft bill introduces a number of provisions that specify precisely when both the acquisition and the use or disclosure of a trade secret are considered unlawful.

This includes, among other things:

  • the (increasingly common) situation in which your (ex-)employee copies or takes along client lists or (computer) files relating to your products or processes;

  • the situation in which someone is in breach of a confidentiality agreement;

  • the situation in which someone is in breach of a contractual or other duty to limit the use of the trade secret.

Extensive arsenal of legal measures

A number of legal measures are being introduced that the courts can impose at the request of the trade secret holder in case of unlawful acquisition, use or disclosure, possibly with monetary penalties, such as:

  • the cease of the use or disclosure of the trade secret;

  • the prohibition of the production of infringing goods;

  • the destruction, withdrawal from the market or recall of the infringing goods;

  • the destruction or the transfer to the trade secret holder of all or part of any document or object containing or embodying the trade secret.

The (very efficient) injunctive proceedings through a fast procedure by way of summary proceedings before the president of the commercial court thereby finally gets its own clear legal basis. It is even explicitly provided by law that the injunctive proceedings can be ordered for future or imminent breaches of trade secrets.

The similarities with existing measures that are available to holders of "true" intellectual property rights (e.g. copyright, patents, trademarks) are numerous and of course not accidental.

In addition, the harmed trade secret holder can also request compensation in the context of proceedings on the merits.

The trade secret holder may also request the publication of the court's decision.

However, the draft bill does not provide for evidentiary seizures (this is a unilateral procedure to gather evidence of possible infringements of intellectual property rights) in matters relating to trade secrets. The background being that the practical application of such seizures to trade secrets is difficult and could open the door to abuse (f.e. industrial espionage among competitors). This was also not foreseen in the European directive and the so-called ‘evidentiary seizure’ remains reserved for the so-called ‘true’ intellectual property rights.

Judicial centralization of the claims

Claims related to trade secrets can from now on only be filed before the commercial courts that are established in the seat of a court of appeal. This division of powers applies irrespective of the amount of the claim and even if the parties are not companies. Its rationale is a further specialization of the courts of commerce as well as the achievement of greater consistency in the decisions on the protection of trade secrets. This was already the case for other IP-related claims.

Specific rules regarding the confidentiality of procedures

A trade secret is by definition confidential and by conducting legal proceedings this confidential character risks being in danger, f.e. during a court hearing or by breach of confidentiality by judicial staff. For this reason, the draft bill introduces a specific confidentiality obligation of trade secrets in the course of legal proceedings. This obligation entails that the parties, the lawyers and all other parties involved in the proceedings may not use or disclose the trade secrets they may acquire. This obligation shall remain in force even after the legal proceedings have ended and is enforced by penalties of 500 to 25.000 euros.

The courts can take specific measures necessary to preserve the confidentiality of the trade secret, such as: the restriction of access to any document containing trade secrets to the lawyers and explicitly designated persons; the restriction of access to hearings and the making available a non-confidential version of the judicial decision, in which the passages containing trade secrets have been removed or redacted.

Conclusion

The draft bill on the protection of trade secrets, approved on 19 July 2018, finally gives a clear definition of trade secrets, provides an effective arsenal of legal proceedings as well as specific measures to safeguard confidentiality.