EUIPO report on trade secrets litigation trends shows Italy and Belgium to be the most trade secret owner friendly

The AmeriKat loves a good EU report  -
excellent summer nap time fodder 

Another week, another trade secrets update.  This time from one of the Kat's Swedish friends, Hans Eriksson (Westerburg & Partners) on the EUIPO's report on Trade Secrets Trends in the EU published at the end of June based on a data set of 700 trade secrets related decisions.   

Over to Hans for his summary:

"In 2016, Directive (EU) 2016/943 on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure otherwise known as the Trade Secrets Directive, ushered in the era of harmonized trade secrets protection in the EU (which at the time also included the UK).

Trade secrets had previously enjoyed materially different protections in different EU member states. In some countries, trade secrets were protected as an IP right under specific legislation, in others protection stemmed solely from case-law and in yet others such information was protected under competition law.

“Not anymore!” cried the EU legislator and since the Directive’s implementation in 2018, a trade secret in Spain is a trade secret in Finland is a trade secret in Belgium…or is it? To answer this and related questions, the Directive instructed the EUIPO to periodically produce reports on the effects of the harmonization effort.

The EUIPO published The Baseline of Trade Secrets Litigation in the EU Member States in 2018. The report described the different national legislations on trade secrets protection and provided an overview of the sprawling field of national trade secrets litigation procedures, as well as insights into the practical challenges faced by trade secret holders in litigation during the pre-Directive period.

On 28 June 2023, the EUPIO published the follow-up report, Trade Secret Litigation Trends In The EU, focusing on trends in trade secrets litigation since the implementation of the Directive.

The report presented a quantitative analysis of trends in EU trade secrets litigation based on a data set of roughly 700 national judgements during 2017-2022.

Some take-aways:

• Trade secret misappropriation claims were successful in 27 percent of the cases, but that relatively low number would be viewed with envy by claimants in Poland (14 percent success rate) and Bulgaria (with an astoundingly low 7 percent success rate) and with scorn by claimants in Belgium (30 percent success rate) or Italy (40 percent success rate).
• Trade secret cases had a 46 percent appeal rate, with some significant outliers such as Italy (11 percent appeal rate) and Sweden (87 percent appeal rate).
• Trade secrets litigation remains highly localized. In 86 percent of cases, all parties were based in the same EU member state and there are only a few instances in the data set of trade secret litigation with truly cross-border dimensions. This finding is noteworthy and a field where we are likely to see developments during years to come.
• The report identified a number of underperforming countries that should have seen more litigation in the field of trade secrets (based on a formula taking into account national GDP and patents) like Germany and France, and a number of overperforming countries like Italy and Bulgaria. 
• The data set showed that virtually all sectors of the economy can be involved in trade secret litigation, but the manufacturing sector broadly speaking is the most common. And although the economic literature tends to focus on the role trade secrets play in technical innovation, the report noted that trade secrets litigation tends to concern litigation over commercial information rather than technical information (read: customer lists that former employees take with them with a Ctrl X and a Ctrl V when jumping ship).  
• Disputes over trade secrets tend to be concentrated between employers and (former) employees.
• Claims for misappropriation of trade secrets are often coupled with other IP infringements (notably copyright) as well as breach of contract and unfair competition
• The most common “type” of trade secret misappropriation claim was a claim based on breach of confidentiality agreements, followed by use based on unauthorized acquisition and breach of contract. The most common defence raised was that the allegedly trade secret information was in fact generally known, followed by that the claimant had failed to take reasonable steps to keep the information from being disclosed.
• The most common relief sought in trade secret litigation was - quite unsurprisingly - cessation of use of trade secret information, followed by the similarly unsurprising claim for damages. As for quantum, the highest award granted in the dataset was roughly 8 million Euro and the lowest amounted to what one hopes was a symbolic 1000 Euro.

The report also included a highly interesting and neatly presented qualitative analysis of EU trade secret litigation based on the data set. This analysis identified four themes common to the thrust and parry of trade secret litigation in recent years:

• The definition of “trade secrets” in Article 2.1.
• The meaning of “unlawful acquisition, use and disclosure of trade secrets” in Article 4
• The provisional and precautionary measures in Article 10 as well as the injunctive and corrective measures in Article 12
• Proportionality

All in all, the EUIPO’s report Trade Secret Litigation Trends In The EU is a great back to summertime read for trade secret enthusiasts and novices alike. (This Katfriend notes that the report is particularly well-suited for a long plane ride, coupled with fully charged iPads to keep the kats from misappropriating the drinks cart).

The report paints a picture of a harmonized but not yet quite harmonious EU trade secret landscape, where litigation trends are clearly visible but the practical differences between Member States still exist.

Under these circumstances, it is particularly interesting to note that as of today, four years after the implementation of the Trade Secrets Directive, the CJEU has yet to be asked to weigh in on substantial provisions of the Directive in a single case. Hopefully that is a development the EUIPO can report on in its next report."