EUIPO publishes 436 page survey on pre-Directive EU trade secrets protection

The AmeriKat has been noticeably whiskers down in her day job over the past few months.  But now, with the frenzy of a new Court term still several weeks away, she has taken the relatively quiet opportunity to review the much awaited publication of the EU IPO's report entitled "The Baseline of Trade Secrets Litigation in the EU".  This report was commissioned by the EU IPO in order to prepare the future report that will assess what impact the EU Trade Secrets Directive has had (see previous Kat posts here).  That report is to be published before 9 June 2021 (just think, 2021...what might be in store for us then?).

The AmeriKat's whiskers now alert to the
EUIPO's Baseline Trade Secrets Study

The 436-page report covers all 28 Member States and addresses how each jurisdiction deals with definitional issues, scope of protection, sources of law, enforcement (contractual, tortious, criminal, equitable, etc) and cross border issues relating to trade secrets (confidential information) law.  Contributors to the report included AIPPI (including the UK National Group - see here), ministries of justice, the Association of Spanish Patent Attorneys, ministries of economic affairs, the Swedish Patent and Registration Office and more.  

The report highlights the following areas of trade secrets protection across the EU that require more harmonization:

• Lack of codified definition for "trade secrets" in legislation:  Many Member States have developed principles as to what information may benefit from trade secret protection through case law (Denmark, Belgium, Germany, Ireland, Spain, France, Cyprus, Luxembourg, UK and Greece).  Sweden is the only Member State with a sui generis law on trade secrets which sets out a definition.  Only Italy and Portugal have a definition of a "trade secret" in their IP legislation, while other countries have definitions embodied in different legislative acts (i.e. under competition, data protection and criminal laws). 

• Inconsistent application of the IP Enforcement Directive:  Are trade secrets (and confidential information) intellectual property?  That debate, such as it is, raises questions as to whether the IP Enforcement Directive should apply to confidential information as an "IP right" (or industrial right).  In Italy, Portugal and Finland the remedies under the IP Enforcement Directive are available, where in other countries the particular treatment of trade secrets (i.e whether by competition, contract or tortious law) guides what remedies are available.

• Weak cross-border protection:  The study flagged that due to the divergence in how trade secrets are treated (in particular as to sources of law and scope of protection), rights holders perceive that the ability to effectively enforce trade secrets cross-border is weak.  Tied to this, only 6 Member States trade secrets regimes were considered to be adequate by those contributing (including Italy, UK and Sweden), but that the other 22 Member States considered that trade secrets protection has, to date, not been adequate.  

• Inconsistent procedural tools:  Reluctance in starting litigation to protect trade secrets was attributed to the following reasons:  

• burden of proof to demonstrate that the misused information qualifies as a trade secret;

• protection scattered among different sources of law with unclear or insufficient regulation;

• difficulty to secure evidence and high costs related thereto;

• absence of appropriate procedural measures to guarantee confidentiality during litigation proceedings;

• difficulties related to the quantification of damages;

• absence, in certain MSs, of specialized courts to handle trade secrets cases.

The EU Trade Secrets Directive is aimed at providing a minimum level of harmonization across the EU.  So although, for example, a common definition of "trade secrets" and tools for enforcement (much of which mirrors the IP Enforcement Directive) are now provided by the Directive which should assist in promoting harmonization across EU Member States, the contributors also expressed a concern.  That concern being that:

"...the implementation of the Directive into national legislation may give rise to dissimilarities among MSs in the transposition of the protection rules. In fact, although the Directive will go some way to harmonise the legislation of trade secrets in Europe, national implementing legislations might lead to different interpretations of the Directive that will ultimately have to be clarified by the European Court of Justice."

To that issue, work is currently being undertaken by the AIPPI Standing Committee on Trade Secrets who are analyzing the various national implementing legislative acts to assess the potential areas of divergence (and convergence) that may result from the implementation of the EU Trade Secrets Directive.

The AmeriKat welcomes this comprehensive report.  Trade secrets/confidential information has been much neglected in European IP law.  This Report  - which represents countless of hours of work and analysis - is great step towards improving trade secrets awareness and protection across Europe.