Psst...New Trade Secret Act on the Way
The Finnish Ministry of Economic Affairs and Employment recently published a draft Government Bill regarding the implementation of the EU Trade Secret Directive in Finland through a new Trade Secret Act. The Trade Secret Act would regulate the protection of trade secrets and provide legal remedies in the event of a breach, and the aim is that the law will enter into force on 9 June 2018. Besides introducing a new law, the draft Bill suggests a number of changes to the Employment Contract Act and the Unfair Business Practices Act. This article provides a short overview of the Government Bill’s key provisions.
What is a trade secret? How can trade secrets be used?
“Trade secret” is defined in the proposed law, as well as in the Trade Secret Directive, as information that meets all the following requirements:
1. it is secret in the sense that it is not, as a body or in the precise configuration and assembly of its components, generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question;
2. it has commercial value because it is secret; and
3. it has been subject to reasonable steps, under the circumstances, to keep it secret by the person lawfully in control of the information.
According to the proposed law, it is prohibited to acquire or attempt to acquire trade secrets unlawfully. The acquisition of trade secrets is unlawful, for example, if documents or electronic files containing trade secrets are accessed or copied without authorization. On the other hand, obtaining trade secrets through, for example, independent discovery or creation or reverse engineering, is allowed under the proposed law.
New law’s effect on employee obligations
The Government Bill proposes that the current Employment Contract Act be changed to prohibit an employee from unlawfully making use of or disclosing its employer’s trade secrets during the course of the employee’s employment. Moreover, the draft Bill suggests that a general reference to the new Trade Secrets Act be included in the Employment Contract Act, which means that besides the provisions in the Employment Contract Act, employees’ use of trade secrets would also be governed by relevant provisions in the Trade Secret Act. For example, the proposed Trade Secret Act includes a provision stating that anyone who has received trade secrets while in the service of another, may not unlawfully use or disclose such secrets during the period of service. Said provision is broader than the one in the Employment Contract Act, and would obligate employees to keep not only their employers’ trade secrets secret, but also the trade secrets of the employers’ customers and partners.
The new rules would not prevent employers and employees from entering into confidentiality agreements that would apply also after the employment relationship has ended.
Whistleblowing and freedom of speech
According to the draft Bill, acquiring, using and disclosing trade secrets is not unlawful, if the trade secret has been acquired, used or disclosed to protect a public interest or to reveal illegal activity. The aim is to protect the person disclosing the secrets, i.e. the whistle blower, and the whistle blower may choose to whom it discloses the information (the authorities, the public, etc.).
This is a new provision and the term “whistle blower” is not yet established in Finland. However, revealing secrets has, in practice, been possible already under the Unfair Business Practices Act under certain circumstances.
The draft Bill also clarifies that acquiring, using and disclosing trade secrets is not unlawful, if it does not surpass what can be regarded as accepted use of freedom of speech.
What happens in case of a breach?
Civil penalties for unlawful disclosure or use of trade secrets include an obligation to:
1. stop the unlawful activities;
2. withdraw from the market, change, or destroy any products that infringe the trade secrets;
3. destroy or hand over to the owner of the trade secrets any documents, material or the like that include the trade secrets;
4. pay compensation for the use of the trade secrets; and/or
5. pay damages.
Criminal sanctions may also be applicable.
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