Improvements to the protection of trade secrets and clarity on how to draw the line between legal and illegal use of knowledge

The Ministry of Economic Affairs and Employment received a working group report on national implementation of a trade secret directive on 18 October 2017. The report proposes the enactment of a law on trade secrets which would, among other things, include provisions on a definition of a trade secret and illegal acquisition and use of a trade secret. The report aims to improve a trade secret holder’s legal remedies by extending its rights to damages.

According to the proposal, a trade secret would, in the future, refer to information that, firstly, is not generally known or accessible and, secondly, has commercial value due to its secrecy. The person in control of such information will also be required to take reasonable steps to sustain the information’s secrecy.

The proposed legislation takes a stand on lawful acquisition of trade secrets by excluding situations of independent discovery or creation of a trade secret from the scope of illegal conduct. For instance, it would be lawful to acquire a trade secret by “reverse engineering” meaning that a trade secret could be legally obtained from a lawfully acquired object by studying or testing it. The proposed legislation’s main idea would be to allow acquisition of trade secrets in conformity with honest commercial practices. For example, also a serious and general health threat would constitute legal grounds for the disclosure of a trade secret.

The report includes significant proposals for the improvement of a trade secret holder’s civil legal remedies. In the future, a court could, for instance, in consequence of a trade secret holder’s demand, order goods that infringe trade secret rights to be withdrawn from the market. The legislation proposal would also include provisions according to which actual damages must be paid in full if an infringement is the result of a wilful or negligent act. The aim would be to grant the trade secret holder with damages sufficient to restore the economic position that prevailed before the trade secret’s infringement.

The working group report includes several amendments to the current legislation and is now being circulated for comments. The intention is that the proposed enactment enters into force at the latest on 9 June 2018, which is the deadline for the EU directive’s implementation. We’ll stay tuned!