knowledge | 22 January 2016 |
Trade Secrets Directive Provisionally Agreed
The text of a Directive ‘on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure’ (the Trade Secrets Directive) was provisionally agreed in December 2015. Two interesting changes to the proposed Directive since the last publication relate to employees and whistle-blowers.
The Directive is to be submitted for formal consideration and approval and is expected to be adopted shortly. Once adopted and published, European Member States will have a maximum of two years to transpose its provisions into domestic law. The intention of the Directive is to establish a harmonised approach to the protection of trade secrets and confidential business information against misuse. The provisionally agreed test envisages that Member States will have a degree of autonomy in the implementation of the Directive, including in relation to the remedies and compensation available to trade secret holders and safeguards to be put in place to prevent unlawful acquisition and disclosure of trade secrets.
The Directive explicitly will not apply so as to limit an employee’s “use of information not constituting a trade secret”, or of the “experience and skills honestly acquired in the normal course of their employment”. However, where an employee illegitimately uses, or acquires and discloses, information which amounts to a trade secret, that employee will not be able to rely on the defence that such information formed part their experience and skills. The degree of sensitivity of the information is to be taken into account when determining whether an employee could reasonably be said to have acquired the information or whether it is likely that the information was memorised, or otherwise acquired illegitimately. These provisions are broadly consistent with principles that apply in Ireland as a matter of common law.
The Directive requires Member States to ensure that appropriate exemptions are in place for those who reveal a misconduct, wrongdoing or illegal activity (ie whistle-blowers) and, in the course of doing so, misuse a trade secret. This is subject to the important proviso that the relevant person acted for the purpose of protecting the general public interest. This is also consistent with a defence to an action for breach of confidence that already exists under Irish common law and facilitates existing or planned whistleblowing legislation, such as the Protected Disclosures Act 2014 in Ireland.
As outlined in our earlier briefing on this Directive, since Irish law already has a well developed action for breach of confidence, it is unlikely to bring about radical changes to the protection of trade secrets in Ireland. The most recent changes bring it even closer to existing Irish law. The Directive will, however, represent a welcome addition to jurisdictions that do not provide such protection and will ensure greater consistency and clarity regarding trade secret protection for businesses operating in multiple EU Member States.
Also contributed by Emma Doyle.
This briefing is for general guidance only and should not be regarded as a substitute for professional advice. Such advice should always be taken before acting on any of the matters discussed.