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Protection of Trade Secrets Streamlined in the EU

13.06.2016

Background. Up until now, EU legislators have left Member States to their own devices when it comes to, for example, the definition of trade secrets, the scope of their protection, and available remedies against their misappropriation. However, on 14 April 2016, the European Parliament voted to adopt the European Union Trade Secrets Directive. The Directive sets minimum standards for the protection of undisclosed know-how and business information in the EU and presents a more streamlined and harmonised approach to the issue throughout the Single Market. By removing divergences among jurisdictions, the Directive aims to enable companies to safely share their trade secrets with business partners across the Internal Market, thus promoting innovation and growth.

Definition of trade secret. The Directive introduces an EU-wide definition of ‘trade secret’. It is defined as information that is (i) secret in the sense that it is not generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question, (ii) valuable, meaning that it has commercial value because it is secret, and (iii) protected, as the person lawfully in control of the information has to have taken reasonable steps to keep it secret.

Unlawful conduct. According to the Directive, unlawful acquisition, use, or disclosure of trade secrets is not allowed. Trade secret holders’ right to counter-measures is triggered, for example, when a trade secret is acquired without the consent of the trade secret holder by means of unauthorised access, a confidentiality breach, or conduct that is contrary to honest commercial practices, or when a person that has acquired the trade secret unlawfully uses or discloses such trade secret without the consent of the trade secret holder. Another example of unlawful conduct is the production, offering, and placing on the market of goods that have been manufactured based on an unlawfully acquired trade secret. The import, export, or storage of such goods for abovementioned purposes is also considered unlawful conduct under certain circumstances. However, trade secret holders cannot limit the use of experience and skills honestly acquired by employees in the normal course of their employment or add any restriction for employees to occupy a new position, to those provided for in their employment contract, in compliance with relevant EU and national law. It remains to be seen how courts will interpret “honestly acquired in the normal course of their employment”.

Remedies. Trade secret holders will be able to apply for a wide range of remedies, such as injunctions and damages (provided the action for remedies is brought within three years after the date on which the trade secret holder became aware, or had reason to become aware, of the last fact giving rise to the action).

Civil and Commercial Law v Criminal Law. The Directive does not provide for criminal penalties to be imposed on persons who unlawfully acquire, use or disclose a trade secret. However, Member States may supplement its civil and commercial law provisions with measures under criminal law, provided they take full account of the safeguards laid down in the Directive. This is particularly important for Finland, as the Finnish framework for protection of trade secrets is largely based on the Criminal Code (39/1889). Besides the Criminal Code, trade secrets are also touched upon in other Finnish laws, such as the Employment Contracts Act (55/2001), the Unfair Business Practices Act (1061/1978), and the Act on the Openness of Government Activities (621/1999).

Next steps. Following the European Parliament’s vote, the Directive is now awaiting approval by the Council. As Directives are not directly applicable it must be implemented into Finnish legislation. A two-year implementation period will begin after the Directive is published in the Official Journal after its formal adoption. It remains to be seen what effect the Directive will have on our current framework for the protection of trade secrets. It is worth noting that the new definition of trade secrets largely corresponds to the definition of trade secrets currently laid down in the Criminal Code, and although changes will be necessary, the laws mentioned above already provides a rather comprehensive protection of trade secrets in Finland. It also remains to be seen if Finland will keep its current system where the rules are split in different laws, or whether law makers will look to the west and follow Sweden’s example by enacting a new separate act on trade secrets. The Ministry of Employment and the Economy will start preparing the implementation in the fall.


For further information, please contact:
Petri Kyllönen
Anna Liinamaa

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