JONES DAY PRESENTS®: Harmonizing Global Protections: The EU Trade Secret Directive
A 2018 European Union Directive provided additional protections to trade secrets and harmonized laws between EU member states. Jones Day Madrid Partner-in-Charge Marta Delgado Echevarría and London Partner Rebecca Swindells discuss implementation of the Directive and recent cases and new penalties which include an order of publicity of a judgment.
A full transcript appears below.
Marta Delgado Echevarría:
A trade secret at the end of the day is an asset, it's the intellectual capital of a company. By stealing or getting authorized access to a trade secret, what individuals do or companies do is they're taking away their asset, their intellectual capital. And they're doing that in order to compete in the market. They're not just putting it inside of a box just to keep it in there. What they're doing is they want to use it as a relevant tool in order to compete in the market. And so, on top of the protection of the trade secrets, what the unfair competition statutes provide is a protection in addition to that to make sure that the competition in the market is a competition that's fair. In that regard, a trade secret is very similar to a patent or is similar to copyright or to software. And so, this additional protection that the unfair competition laws give, the trade secret is key for the companies to make sure that they are well protected 360 degrees.
There is no such thing as a harmonized protection globally, nor at EU level. There has been a directive that has been transposed in the different EU member states, but each member state has done it their own way. And there are states that are more protective of fair competition in the market, and therefore, prosecute more harshly those attacks to the competition, not on the merits, but through the stealing of trade secrets.
For instance, Spain is a jurisdiction that's highly protective, but also, France, Germany. The European Commission, for instance, has no jurisdiction over that. It's the local courts, the national courts that deal with it.
Rebecca Swindells:
It was implemented in the UK before Brexit. So even though The Directive is an EU directive, it has already been implemented into UK law. So regulations in the UK, which are brought in 2018, which basically implement The Directive. And it gives finally a definition of trade secrets, which is very helpful, and gives some guidelines as to the procedure of litigating trade secrets in the courts and harmonizes the law. So we've had a few years now of the UK courts looking at The Directive and implementing it.
Of course, before The Directive was implemented in the UK, the UK already had its own law of confidence, which still exists. So you have this regime now where you have the legislation, but you also have the common law, which is goes back hundreds of years of the law of confidence. And actually, they compliment each other. They don't conflict with each other. So you are seeing these decisions now coming through the UK courts, applying both The Directive and also continuing principles of common law in relation to the law of confidence.
One of the key ones, which came out just about a year ago was the first time that a UK court has granted an order of publicity under the trade secrets regulations. Regulation 18 allows a trade secret owner to apply to the court to request that there be an order for publication of a judgment against an infringer. The judge needs to be very careful that the publication of the judgment maintains the confidentiality of the trade secrets. So that's one key factor. But when considering whether to grant such an order, the court will take into account such factors as how valuable the trade secrets are, the conduct of the defendant, if they've been really blatant in their infringement, whether they're likely to continue to infringe, not withstanding a judgment against them, and also whether the publication of the judgment and providing information on the defendant will identify any particular individual at the defendant, and if so, whether that's justifiable in the circumstances.
And in this particular case, the judge said the court has a wide discretion on these issues. The judge then applied the factors which have laid down in Regulation 18 of The Directive, and he found the defendant had blatantly infringed the trade secrets in this case. The trade secrets were very valuable, and the infringement had had a significant negative impact on the claimant. So the judge ordered that the defendant display a statement on its website regarding their liability, and that they also link through to the judgment on the website. In granting that order, the judge pointed the deterrent effect of these orders.
