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DIRECTIVE (EU) 2016/943 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the protection of undisclosed know-how and business information

DIRECTIVE (EU) 2016/943 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 8 June 2016 on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure

The subject of the Directive is the know-how – that knowledge that is valuable to the entity and not widely known. It is the currency of the knowledge economy and provides a competitive advantage. Businesses and non-commercial research institutions invest in acquiring, developing and applying know-how and information which is a determining factor as regards their competitiveness and innovation-related performance in the market and therefore their returns on investment, which is the underlying motivation for business research and development. Trade secrets have an important role in protecting the exchange of knowledge between businesses. Businesses, irrespective of their size, value trade secrets as much as patents and other forms of intellectual property right.

Trade secrets are one of the most commonly used forms of protection of intellectual creation and innovative know-how by businesses, yet at the same time they are the least protected by the existing Union legal framework against their unlawful acquisition, use or disclosure by other parties. Without effective and comparable legal means for protecting trade secrets across the Union, incentives to engage in innovation-related cross-border activity within the internal market are undermined, and trade secrets are unable to fulfil their potential as drivers of economic growth and jobs.

This problem is intensively discussed worldwide. The World Trade Organization has achieved success in this direction, the result of which is the conclusion of the Agreement on Trade-Related Aspects of Intellectual Property Rights (the TRIPS Agreement). The European Union approved this Agreement with Council Decision 94/800/EC and all Member States, as are bound by it. The TRIPS Agreement containс provisions on the protection of trade secrets against their unlawful acquisition, use or disclosure by third parties, which are common international standards. Notwithstanding the TRIPS Agreement, there are important differences in the Member States' legislation as regards the protection of trade secrets against their unlawful acquisition, use or disclosure by other persons.

In Bulgaria the protection of trade secrets is not detailed regulated. Besides the general prohibition on issuing a trade secret in the Competition Protection Act there is only one such specific obligation for the procurator, commercial proxy, commercial assistant, sales representative and dealer while carrying out their activities. Practically protection in a number of foreign countries is achieved by Non-Disclosure Agreement, which are signed by employees. Recently in Bulgaria such tendency can also be detected, however, the weakness of this approach is that if the Agreement provides a penalty, it has to be awarded by court order, and for this it is necessary first to prove the facts of violation of the obligation of secrecy and the occurrence of the respective damage to the merchant.

This Directive lays down rules on the protection against the unlawful acquisition, use and disclosure of trade secrets. It gives a definition for trade secret and makes a difference between lawful and unlawful acquisition, use and disclosure of trade secrets by excluding from the scope of unlawful acquisition the independent discovery, observation, study and other eligible actions e.g. the exercise of the right of workers or other practice in conformity with honest commercial practices.

Member States must ensure that they provide sufficiently stringent measures to deal with both the protection of trade secrets and the prevention of possible abuse of that right. Such measures may, as appropriate, include awarding damages to the respondent, imposing sanctions on the applicant or ordering the dissemination of information concerning a decision which is usually assumed as a possible sanction for the abuser of the trade secret.

The competent judicial authorities may, at the request of the trade secret holder, order provisional and precautionary measures against the alleged infringer as they may extend to the seizure of the suspected infringing goods from the market The judicial authorities may, as an alternative measure make the continuation of the alleged unlawful use of a trade secret subject to the lodging of guarantees intended to ensure the compensation of the trade secret holder.

When making its decision the Court should consider the special requirements for determining the adequate assurance of the existence of trade secrets and its unlawful acquirement. Also the specific circumstances of the case should be taken into account e.g. the value and other specific features of the trade secret, the measures taken to protect it, the legitimate interests of the parties or third parties and others.

If an judicial decision taken on the merits of the case finds that there has been unlawful acquisition, use or disclosure of a trade secret, the competent judicial authorities may, at the request of the applicant, order one or more of the following measures against the infringer: the cessation of or, as the case may be, the prohibition of the use or disclosure of the trade secret; the prohibition of the production, offering, placing on the market or use of infringing goods, or the importation, export or storage of infringing goods for those purposes; the adoption of the appropriate corrective measures with regard to the infringing goods e.g. the recall or the destruction of the infringing goods or depriving the infringing goods of their infringing quality; the destruction of all or part of any document, object, material, substance or electronic file containing or embodying the trade secret or, where appropriate, the delivery up to the applicant of all or part of those documents, objects, materials, substances or electronic files.

The competent judicial authorities shall order that the measures must be carried out at the expense of the infringer, unless there are particular reasons for not doing so. Those measures shall be without prejudice to any damages that may be due to the trade secret holder by reason of the unlawful acquisition, use or disclosure of the trade secret.

Member States shall bring into force the laws, regulations and administrative provisions necessary to comply with this Directive by 9 June 2018. They shall immediately communicate the text of those measures to the Commission. The European Union will monitor the proper implementation and the changes due to the transposition. Three reports areforthcoming: an initial report of the European Union Intellectual Property Office on the litigation trends regarding the unlawful acquisition, use or disclosure of trade secrets pursuant to the application of this Directive by 9 June 2021, an intermediate report of the Commission drawn up on the application of this Directive by 9 June 2022 which shall be submitted to the European Parliament and to the Council, a report o the Commission that shall carry out an evaluation of the impact of this Directive by 9 June 2026 and shall be submitted to the European Parliament and to the Council.

We have an important step to make in Commercial law and Intellectual property law. The directive can be the basis for the adoption of more detailed regulations in this regard, which will more fully guarantee the rights of merchants and facilitate their protection. The directive provides procedures for protecting the know-how and commercial information and sanctions for their unlawful acquisition, use or disclosure. They can provide a wider range of rights and opportunities for realization and dependability for a merchant on the Bulgarian market.