On 17 August 2018, the European Union Intellectual Property Office (the "EUIPO") published a 436-page report analysing the regulatory framework governing trade secrets as well as trade secrets litigation across the EU (the "Report"). The Report covers all 28 EU Member States and addresses how each jurisdiction dealt with the definition of trade secrets, the scope of protection, enforcement of trade secrets and cross border issues prior to the implementation of Directive 2016/943 of 8 June 2016 on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure (the "Trade Secrets Directive") (See, VBB on Belgian Business Law, Volume 2016, No. 5, pp. 10 and 11 and No. 6, p. 19, available at www.vbb.com). The Report was commissioned by the EUIPO as a preliminary assessment to prepare for its future analysis of the impact of the Trade Secrets Directive following its implementation.

To qualify as a trade secret under the Trade Secrets Directive, the following cumulative criteria must be satisfied: (i) the information is a secret; (ii) the information has a commercial value due to its secrecy; and (iii) the information has been subject to reasonable steps in order to be kept secret.

The Report reveals wide discrepancies across EU Member States in terms of procedure, enforcement and remedies in cases of misappropriation and disclosure of trade secrets. First, the Report finds that many jurisdictions lacked a precise definition of "trade secret". This, in turn, made it difficult for companies to ascertain whether the information and data which they hold qualifies as a trade secret. While Sweden was the only EU Member State to have a sui generis law on trade secrets (providing for a clear definition of trade secrets) and Portugal and Italy had a definition of trade secrets in their intellectual property laws, all other EU Member States, including Belgium, did not provide for such a definition. Most EU Member States instead had concepts akin to trade secrets embodied in a series of different legislative acts (unfair market practices, criminal law, tort law, etc.)

As regards Belgium in particular, the Report pinpoints its fragmented regulatory framework dealing with trade secrets prior to the implementation of the Trade Secrets Directive. After listing the various legislative acts providing for some type of protection against the misappropriation of knowhow and trade secrets (e.g., Article VI.104 of the Code of Economic law, Article 1282 of the Civil Code, Article 308 of the Belgian Criminal Code, etc.), the Report invites Belgium to adopt a specific law on trade secrets. This invitation has now become redundant given that the Belgian law implementing the Trade Secret Directive has been adopted (See, VBB on Belgian Business Law, Volume 2018, No. 8, p.12, available at www.vbb.com).

The Report adds that harmonisation was needed the most in the area of remedies mechanisms for aggrieved parties in case of misappropriation of trade secrets. While cease and desist orders against alleged infringers are available across the EU, they may not always be granted against third parties who acquired the trade secrets in good faith. Numerous national legislations indeed held that the need to protect the legitimate interest of third parties unaware of the secrecy of the information prevails over the interests of the proprietary rights. Even the method for calculation of economic damages varied substantially among the different EU Member States, as many did not have a specific criterion in this respect. Instead, most EU Member States adhered to the general rule of extra-contractual liability with regards to damages and loss of profits.

Finally, the Report acknowledges that ordinary proceedings last too long to achieve the trade secret holders' main goal of maintaining the economic value of trade secrets and the concomitant needs to avoid continued misappropriation or disclosure. Yet, the Report did not identify a high number of cases where cease-and-desist/interim injunctions were actually issued by courts. The Report indicates that the main reason is probably that companies are reluctant to disclose litigation resulting from a misappropriation of trade secrets. Such a disclosure could erode trust as the company would be seen as unable to protect sensitive and economically valuable data. To avoid such damage to their reputation, companies therefore generally prefer dealing with trade secrets misappropriation in extrajudicial settlements.

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