The Secrets of the Trade Secret Directive

In connection with today’s World Intellectual Property Day, read new blog concerning protection of trade secrets by Pierre Grangé.

The European Parliament approved the text of the new EU Trade Secrets Directive. This directive aims at harmonizing laws between the 28 member states on the protection of trade secrets. This directive would protect all information which are secret and have a commercial value. It would give all the detainers of trade secrets a high-degree juridical protection against the obtention, use or disclosure of these trade secrets. This new piece of legislation would also not restrain workers’ mobility, by not further protecting the information which are linked to experience and skills acquired by the worker by working in a certain company. The Parliament also introduced in the text certain measures of protection towards whistle-blowers and journalists, thus seeking to ensure the freedom of expression and information, guaranteed by the European Union’s Charter of Fundamental Rights. The fact however that this point particularly raised debate, especially in the context of Panama Papers scandal or the LuxLeaks and Wikileaks cases, calls for a review of the particular methods introduced in this directive.

It can be first noted that the word “whistleblowing” is mentioned in the preamble of the directive in point n°20 which excludes the protection of trade secrets in the cases “in which disclosure of a trade secret serves the public interest, insofar as directly relevant misconduct, wrongdoing or illegal activity is revealed.” Other provisions in that sense can be read in point 19, protecting the activities of investigative journalism in Articles 1-2 (a) and 5 (a) and 18. The protection ensured by this directive seems somewhat sufficient and the member states are then clearly invited to adopt measures in this direction and the work of the European Parliament in amending this directive has been notably partially saluted by the European Federation of Journalists on the protection of investigative journalism.

However, according to Corporate Europe Observatory, these provisions remain insufficient and seem to give too much power to large economic agents like multinational companies.

Taking the example of the Panama Papers leaks, they argue that part of the information contained in these papers is merely just embarrassing and does not fulfil the condition of illegality in which the disclosure or information would be justified, according to the text adopted by the Parliament. Moreover, according to them, the text would give grounds for multinationals to act against whistle-blowers and would give them some leverage to prevent the disclosure of information that might not perfectly fit the provisions included in the text. The Greens/EFA Group in the European Parliament talks about a “chilling effect” for whistle-blowers based on the major “power imbalance” between whistle-blowers and major corporations. The European Federation of Journalists also expressed their reserve concerning the status of whistle-blowers.

The inclusion of these provisions by the European Parliament can be argued to be more than necessary, not only from a contextual point of view, but also from the point of view of the protection of fundamental rights. Nevertheless, judging from the nature of this piece of this legislation, some freedom is still given to the member states, especially on the extent of the protection of trade secrets. The European Commission even calls in the text to enforce more protective legislation than the one provided by text of the directive. This will surely not include illegal actions or an explicit restriction of investigative journalism or whistle-blowing activities, but it may however bring a larger leverage for companies by extending the scope of the protection.

Nonetheless, this directive is based on a matter of unifying the protection of specific intellectual property within the Single Market of the Union, giving “trade secrets” a Union-level definition and seeking to harmonise the protection of these secrets between member states of the EU, which has been found by the Commission to be a major obstacle on the Single Market. It therefore fulfils its goal of protecting businesses and unifying the rules so as to avoid the impact of a negative externality linked to differences in legislation on the single market. Yet, the consequences in terms of freedom of information and expression needed some responses, in an era of mass information and mass communication. The provisions included are not met by everyone with satisfaction, but they still express the need for European and national legislators to pay attention to the importance that these so-called “trade-secrets” should not outweigh the public interest.

The blog was originally published on EurActiv.

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