On April 14, the day on which the European Parliament adopted the new Data Protection Regulation, the European Parliament also voted in favour of the introduction of a new EU directive on the protection of trade secrets, establishing for the first time a harmonised definition of “trade secret” – this being information which is secret, has commercial value because it is secret, and has been subject to reasonable steps to keep it secret.
The directive will come into force within 20 days from its publication in the EU Official Journal.
EU member states – including Malta – will have to transpose the directive into national legislation within two years from its adoption, and this must include common measures aimed at preventing the unauthorised, unlawful acquisition, use or disclosure of trade secrets which can occur through various means, such as illicit copying, economic espionage and breach of confidentiality.
The directive, therefore, seeks to protect confidential commercial information and the misappropriation of trade secrets and to ensure that lawful owners of trade secrets have appropriate redress in the case of an infringement.
The safeguards provided for in the directive are not to restrict employees from using information that does not constitute a ‘trade secret’
The directive also strives to balance the right to protect trade secrets with fundamental rights and freedoms or the public interest, such as public safety, consumer protection, public health, environmental protection, the mobility of workers and freedom of expression and, in so doing, introduces safeguards to employees and their representatives, including whistle-blowers.
Summarily, the safeguards provided for in the directive are not to restrict employees from using information that does not constitute a trade secret as defined in the directive, are not to limit the employees’ use of experience and skills honestly acquired in the normal course of their employment, and must not allow the imposition on employees of contractual restrictions other than those which are in accordance with EU and national law.
The directive dictates that national courts shall be expected to achieve a balance between fair trial, abuse of rights, legitimate interest of the parties and respect of confidentiality.
It requires that member states provide for the preservation of confidentiality of trade secrets in the course of legal proceeding and facilitate the adoption of provisional, corrective and precautionary measures (such as the removal or destruction of the trade secret infringing products from the market) to protect against infringement and in some cases allow for pecuniary compensation and/or damages to be paid to the injured party.
Indeed, while the Maltese legal system does already cater, to an extent, for the protection of confidentiality in trade secrets and local courts are also empowered to issue precautionary measures (including prohibitory injunctions) to protect against unlawful infringement of trade secrets, it is expected that the Maltese legislator will, over the next 24 months, be required to introduce amendments to the laws of Malta to transpose the measures contemplated by the directive.
The directive is a minimum harmonisation directive which requires member states to introduce certain measures, but also allows them to elect to introduce other measures at their discretion – such as an option to introduce a limitation of liability for damages of employees towards employers when the employees act without intent.
Whether and how Maltese law will cater for such measures remains to be seen.
Paul Gonzi is a partner at Fenech & Fenech Advocates specialising in employment, data protection and ICT law