LIMITS TO TRADE-SECRET PROTECTION

Articles 5 to 8 establish reasonable limits to avoid “excessive” protection of know-how.

For example, the Court protection cannot be granted, against freedom of speech or in case the disclosure’s objective is to obtain information or against a “legitimate interest”. This last exception may help, in cases when the directive is used, to hamper competing businesses.

This section includes a general limit to the measures to be applied. They should be fair … reasonable … effective. They should be proportional to the case and avoid the creation of barriers to trade within the EU.

MINIMUM LEGAL REMEDIES. EU COUNTRIES MAY HAVE STRICTER RULES

To protect trade-secrets, the Directive (Articles 9 et seq.) orders Member States to ensure legal civil redress against unlawful acquisition, use and disclosure of trade-secrets. But they cannot create barriers to trade within the EU internal market.

The legal remedies will be subject to a limitation period of a maximum of six (6) years.

COURT PROCEEDINGS AND INJUNCTIONS 

The Directive establishes the rule that the legal proceedings for trade-secrets infringement shall ensure that the parties involved (including Claimant and Defendant) respect the confidentiality of the trade-secret. This includes restricted access to documents or hearings … even to the complete text of the Court’s decision.

The Directive (Article 10) orders that Member States ensure precautionary injunctions, when needed.

Member States need to give the infringer the possibility of posting a bond, to lift / avoid the injunction.

The preliminary injunction can only be applied if the Court is satisfied that Claimant is the legal owner of the trade-secret. The Court must take into account:

• The value of the trade-secret.
• Measures taken to protect it.
• Activity of Defendant, when acquiring, using or disclosing the trade-secret.
• Impact of use or disclosure.
• Legitimate interests of third parties.

….. This is important, since it gives lawyers a tip of what is considered trade-secret, according to the Directive.

The Court must take into account public interest; and citizen’s fundamental rights.

Consequences of breach of trade-secret: indemnification and publicity, fines

The Directive (Article 14) establishes that the infringer acting in bad faith or not diligently (“who knew or ought to”) must pay damages. The amount should be appropriate (proportional to) the prejudice suffered by Claimant.

The Directive establishes criteria to calculate damages:

• Profits lost.
• Unfair profits obtained by infringer.
• Moral prejudice.

Alternatively, the damages can be calculated on the basis of the “hypothetical royalty” that would have been paid, at a minimum.

Publishing the Court Order 

The Directive (Article 16) establishes another kind of sanction: the publication of the Court decision against the infringer. This is not an automatic decision.

Consequences of breaching the Court’s Orders

The Directive (Article 15) also provides for sanctions, to be applied to infringer, if he does not comply with the Court injunctions. It specifically refers to fines. But other kind of sanctions could be requested by Claimant, when needed; for example, these disobediences could be considered a crime in Spain: contempt of Court, included in the Spanish Penal Code.

Santiago Nadal