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17 January 2018

A "private sphere" for entrepreneurs – are you ready for the new Trade Secrets Directive?

While companies generally do not have a right of privacy (at least under Austrian law), the protection of trade secrets has a somewhat similar objective: to grant leeway for development, which others must respect.

Why is this important? The content of this article was a secret until I submitted it. Now it is protected by copyright law and therefore must not be copied without permission. This example illustrates a very common sequence: Idea > confidential realisation (trade secret) > publication / registration (Intellectual Property Right, "IPR", be it a copyright, trademark, design or patent). Or as the European Commission put it almost poetically: "Every IPR starts with a secret."

In fact, not only IPRs but of course all commercial activities start with an idea and thus a secret. Some might be trivial, but others are brilliant and valuable. And while certain ideas or concepts may later be protected by registered or unregistered IPRs (like this article), other information is kept secret because:

  • no adequate IPR is available (eg to protect customer data, delivery conditions, etc);
  • protection (eg by patents) is too expensive; or
  • protection as a trade secret simply has advantages (eg if reverse engineering is not possible, an invention may be kept secret to avoid publication).

Against this background, the protection of trade secrets is a necessary supplement to the protection conferred by IPRs. Being aware of this important function, the EU has recognised that the protection in the Member States is inconsistent and often insufficient. Thus, with Directive (EU) 2016/943, a modern and for the first time EU-wide harmonised regime for the protection of trade secrets was established. Member States will have to transpose the directive into their national laws by 8 June 2018.

Are you ready for the new regime? While the Directive will undoubtedly strengthen the protection of trade secrets, it requires owners to take care of their assets. Trade secret protection may only be invoked if the information in question has been subject to reasonable steps taken by the person lawfully in control of the information to keep it secret.

You are therefore well advised to identify your valuable knowhow and business information and to implement protection measures right now. Until the courts give sufficient guidance, an initial "toolbox" of technical, organisational and contractual measures may include:

  • implementing a secrecy policy;
  • appointing a person responsible for the secrecy policy;
  • reviewing compliance with the secrecy policy;
  • limiting the sharing of information only to the people who really need to know it (in-house staff and external contractors), while
    - knowing their identity;
    - informing them about the secrecy policy;
    - binding them by a (contractual) non-disclosure obligation;
  • storing documentation separately and securely (both paper and digital data by using locks / passwords / encryption).

Take good care of your ideas and trade secrets!

Further reading

Is trademark a celebrity's best friend?
Interview with the President of the Austrian Patent Office: "We offer a good deal"



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