The event, entitled, “Trade Secrets : How to Ensure their Protection” (Secrets d’affaires : comment garantir leur protection ?), took place on 17 December at the Mouvement des entreprises en France (MEDEF).
In a roundtable called, “Towards better trade secret protection ?” (Vers une meilleure protection du secret d’affaires ?), Liza Bellulo, head of the Legal Sector of the French General Secretary for European Affairs, commented on the European Commission Proposed Directive on Trade Secrets COM(2013) 813 final – 2013/0402 9 (COD). Bellulo underscored its need in order to fill “loopholes as unfair competition rules cannot embrace all the aspects of trade secret protections.”
“The directive [will convey] the advantage of harmonising emerging trade
secrets systems [in Europe] and [will give] a sound common legal basis for future [member state] proposals,” she said, “in particular as regards the definition of trade secrets, inspired from Article 39.2 of the TRIPS, legal and illegal means of acquisition of trade secrets, precautionary measures, and damages.” TRIPS refers to the World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights.
On the preservation of confidentiality in the course of proceedings, she declared that “ [the directive] will establish balance in the right to a fair trial and confidentiality concerns but will leave it to member states to adjust further this balance towards confidentiality protection if they wish so.”
With respect to the French Bill Proposal No. 2139 (Proposition de loi Urvoas) of 16 July 2014, she said, “[t]he directive [will preserve] the possibility for member states to add to civil law regimes criminal rules, as this is the case under the French bill proposal.” (Under the “impact assessment” of the EU Proposed Directive, the convergence of civil law and of criminal law, “including rules on minimum criminal penalties,” was the option chosen).
Noëlle Lenoir, former French minister and partner at Kramer Levin Law Firm, cited in her presentation concerns associated with the application of Article 8 of the proposed EU directive, which aims at preserving confidentiality in the course of proceedings.
Lenoir explained that in light of the new EU directive, French and European jurisprudence, alleged infringers will be able to bring an administrative action to request disclosure of information initially deemed confidential by the competition authority (in a non-confidential form). Under this context, she mentioned the “attorney’s eye[s] only” rule as “one appropriate solution.”
With regard to the French bill proposal, she said, “it adopted the trade secret definition according to criteria espoused by the European Commission proposal based on the WTO [TRIPS agreement] duly ratified by the EU and France.”
As per Article 2 of the EU Proposed Directive, the definition of trade secrets would require information be kept a secret, have commercial value and that the owner of the trade secret take reasonable steps to keep it a secret.
Also, the French bill proposal enacted criminal offences, which in her opinion could be applicable to lawyers and/or experts that breach their duty of confidentiality “as required by a judge in the framework of the future new directive.” (The new Article L.151-8 proposes 3 years imprisonment and €375 thousand euros in fines for anyone who reveals or diverts trade secrets without authorisation).
Another roundtable was titled, “What tools to protect your enterprise” (Quels outils pour proteger son enterprise ?). Speakers included Pamela Passman, president and CEO of the Washington, DC-based Center for Responsible Enterprise and Trade (CREATe) – a global nongovernmental organisation assisting companies in the implementation of anti-corruption practices and in the protection of intellectual property rights, including trade secret theft.
Passman presented a five-step framework model and leading practices that help protecting IPRs and trade secrets effectively at a global scale. To set the context, Passman began by highlighting survey data that link IP and trade secrets with EU exports, financial performance, growth, competitiveness and innovation.
To illustrate, Passman said, “ [i]n an EC-sponsored survey of 537 businesses in Europe (EC, 2013), 75 percent of survey respondents ranked trade secrets as strategically important to their company’s growth, competitiveness and innovative performance.”
In parallel, she named sources instigating trade secret theft, namely globalisation, fragmentation of supply chains, digitalisation and workforce geographic mobilisation, and stated “malicious insiders” (those who have “[a]ccess to sensitive company information through employment or relationships”) as the main threat actors.
Passman also referred to content included in the CREATe – PwC Trade Secret Report : Economic Impact of Trade Secret Theft, notably the “CREATe – PwC Trade Secrets Framework” which institutes five steps : Identity [of] Trade Secrets, Assess of Threat Actors, Relative Value Ranking, Economic Impact Analysis, and Secure Trade Secret Portfolio.
She explained that the fifth step is divided into eight “practices” known as “CREATe Leading Practices for IP Protection.” The practices are : Policies, Procedures & Records, IP Compliance Team, Scope & Quality of Risk Assessment, Management of Supply Chain, Security & Confidentiality Management, Training & Capacity Building, Monitoring & Measurement, and Corrective Actions & Improvements.
Passman’s presentation can be found here. Max Planck and Other Issues
Separately, the Max Planck Institute for Innovation and Competition prepared a Research Paper No. 14-11 providing comments on the EU proposed directive. Among its recommendations was that :
“In order not to jeopardise the harmonising effect or disturb the balance of the Proposal, the provisions of the Directive must neither be undercut nor exceeded by the implementing national legislation. Accordingly, the Directive should require full harmonisation. This precludes the enactment of additional legislation for the protection of trade secrets in the national unfair competition rules, as well as the application of criminal rules that are premised on a higher protection level. The compromise draft of the Council Presidency stating that the proposed Directive should merely provide for minimum harmonisation should be rejected”. (See para. 13).
Additionally, it said the EU proposed directive “should expressly stipulate that the applicable law in case of infringement is determined by Article 6 of the Rome II Regulation.” In fact, the EU proposed directive leaves unclear whether trade secret protection is classified under unfair competition rules or under IPRs. As such, the Research Paper inferred that there are uncertainties regarding the application of the IPRs Enforcement Directive 2004/48/EC, as well as of the applicable provision of the Rome II Regulation 2007/864/EC to regulate the applicable law in case of infringement ; notably, its articles 6 and 4 address acts of unfair competition, whereas its Article 8 is on IPRs. [See paras 16 and 17].
In another development, the digital civil rights group La Quadrature du Net posted an article declaring that it signed an open letter submitted by the Health Action International Europe and it is against the adoption of the EU Proposed Directive on Trade Secrets as it will risk “EU health, environment, free speech and mobility.”
