THE INITIATIVE

The European Commission (the “Commission”) on 28 November 2013, published proposals for a Directive on Trade Secrets (the “Directive”). About six months later, in May 2014, the Council of the European Union agreed on a revised draft Directive. Recently, on June 16, 2015, the European Parliament legal affairs committee approved the draft rules by a vote of 19-2 (with 3 abstentions). The report was prepared by Constance Le Grip, a French MEP, who stated that the legislation would “provide better protection for innovation, competitiveness and employment in Europe.” Le Grip further stated that, “at the same time, we have substantially amended and improved the initial text since it is all the more crucial to protect fundamental freedoms” such as the freedom of information and workers’ professional mobility. The draft rules include a definition of a trade secret, which provides much-needed consistency across the European Union member states. A trade secret is defined as confidential business information that:

• Is not generally known,
• Has commercial value because it is secret, and
• Has been subject to reasonable steps to keep it secret.

Further, the draft rules, as amended by the legal affairs committee, provide that victims of trade secret misappropriation will not have a remedy if a trade secret was acquired, used or disclosed for the following purposes:

• To make legitimate use of the right to freedom of expression and information (including media freedom), to reveal misconduct, wrongdoing, fraud, or illegal activity, provided the party disclosing the trade secret acted in the public interest, or
• To protect the general public interest or other legitimate interest. The MEPs added a few provisions to the draft rules, including:
• A provision that states the legislation should not affect the freedom of the media;
• A clause which states that the rules do not affect the disclosure of business-related information by EU institutions and national public authorities, so as to promote transparency.

Further, the committee amended the rules to ensure that they do not affect the use of trade secrets honestly acquired by employees in their normal course of employment, which means the draft rules will not create any unjustified barriers to workers’ mobility.

Reception of the Trade Secrets Directive has been mixed. It has been argued by Public health groups that monitor policy-making, health promotion and policy developments that the Directive may allow companies to circumvent transparency, even when an issue of public health is at stake.

For instance, a pharmaceutical company may argue that its clinical development process is a trade secret, but the information on biomedical research could be important to protect patient safety. Alternatively, a company that manufactures cleaning products could withhold product information based on trade secrets, but the products could contain hazardous ingredients.