Concerns about trade secret theft have been increasing in both the United States and Europe in recent years. Traditionally, American law disfavored trade secret protection vis à vis patenting on the basis that publication of inventions was good for the economy. Trade secret protection was largely a matter for state law and, although not pre-empted by the federal patent law, was seen as generally providing weaker protection. However, changes in patent law effected by the America Invents Act in 2012 included provisions that reduced the commercial risks that a business would run by trying to keep inventions as trade secrets rather than patenting them. In Europe, there was little consideration of trade secret protection at the European (EU) level and national laws dealt with the question in many different ways until a “Report on Trade Secrets for the European Commission” was published in 2011.
This is about to change. The Defend Trade Secrets Act of 2016 was signed into law by President Obama on 11 May 2016. 16 days later, the European Council adopted a directive on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure, which will need to be implemented in all of the EU Member States by national legislation within the next two years.
The American Defend Trade Secrets Act has four main features:
The EU Directive sets out minimum standards for protection of trade secrets but, subject to certain requirements, member countries of the EU can provide for more far-reaching protection against the unlawful acquisition, use or disclosure of trade secrets than that required by the Directive. Principle features of the Directive include requirements that countries that are part of the EU:
Both the US and the EU are parties of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which provides minimum standards of protection for patents, copyrights, trademarks, and trade secrets. Although, the TRIPS Agreement does not use the words “trade secrets,” it does provide that in order to “ensure effective protection against unfair competition,” signatories to the Agreement must protect individuals and corporations, who own or control “undisclosed information” from unauthorized disclosure, acquisition, or use “without their consent in a manner contrary to honest commercial practices.”
Consistent with the wording of TRIPS, both the Defend Trade Secrets Act and the EU Directive include analogous “basic” provisions on trade secrets, including what constitutes a trade secret and how a violation occurs. On the other hand, the US and the EU law differ on some aspects of trade secrets protection, as will be discussed below.
The Defend Trade Secrets Act and the EU Directive provide a:
The Defend Trade Secrets Act and the EU Directive show some dissimilarities regarding the:
Although the main similarities and differences on trade secrets’ protection seem already delineated, an actual evaluation of the US and the EU protection of this field of intellectual property will be possible only when the EU Member States will have enacted their own laws to comply with the Directive. EU Member States may indeed implement higher standards of trade secrets protection, than those currently provided by the Directive. This may inevitably lead to some discrepancies in the law applicable in the different Member States, as well as in law provided at the EU and US level.
The original version of this article was first published in Offshore Investment Magazine.
The author wishes to thank Vera Collavo for her contributions to the research and editing of this article.