Protection of Trade Secrets

May 21, 2019

Vesela Kabatliyska
Partner
Dinova Rusev & Partners
Bulgaria
End of
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 Panelists

Michael Leftley Philippe Durand Danny Vesters Duncan Inverarity

Partner Partner Attorney Partner
Addleshaw Goddard August & Debouzy Avocats Boontje Advocaten A&L Goodbody
England & Wales France Dutch, Netherlands Ireland
Protection of Trade Secrets
United Kingdom

Michael Leftley
Partner
Addleshaw Goddard LLP
United Kingdom
 What will we cover in the UK?

• UK framework
• What is a trade secret?
• Confidential information
• Other types of protection
• Protection of trade secrets in an
international context

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 UK framework

• Confidential information / trade secrets

• Implied duties in employment
• Express duties in employment
• Skill and knowledge
• The Trade Secrets Directive 2018
• Additional business protection

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 What is a trade secret?

• WTO definition
• Nature of information
• Nature of employment
• How employer treats information
• Is it distinct?
• Potential harm

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 Confidential information

• Protectable
• Skill and knowledge

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 Other types of protection

• Restraint of trade
• Types of restriction
• Enforceability

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 International context

• Brussels Regulation
• Rome I
• Foreign Law Covenants

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Protection of Trade Secrets
France

Philippe Durand
Partner
August Debouzy
France
 Law n° 2018-670 of 30 July 2018
on the Protection of Trade Secrets
This law implements the UE Trade Secrets Directive n° 2016/943/EU. The concept of « trade
secret » did not previously exist in the French Labour Code.

The law defines the « Trade Secret » as:

- Information that is not generally known among, or readily accessible, to
persons within the circle that normally deals with this kind of information;
- Commercially valuable, actual or potential, due to its confidential nature;
- Information that is reasonably protected by its legitimate owner in order to
maintain its confidentiality.

This law is applicable to the employees or to the staff representatives who have obtained or
disclosed trade secrets by an illicit way.

➔ Their civil liability can be triggered and they can be sentenced to pay damages to the
employer.
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 Specific Obligations Binding the Staff Representatives

According to article L. 2315-3 of the French Labour Code, the Staff representatives
shall comply with:
- A professional secrecy duty concerning manufacturing processes;
- An obligation of « discretion » concerning the information revealing a
confidential nature and presented as such by the employer.

The employer must not misuse the confidential nature of the information
presented to the staff representatives. All the information given cannot be
considered as confidential ➔ the employer has to establish that the documents
or the information are confidential in view of the company’s legitimate
interests.

GLOBAL Otherwise, the employer may be liable for a criminal offense of obstruction.
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 Confidentiality Clause

The employer may have an interest, depending on the nature of the

tasks he wishes to entrust to the employee, to include a
confidentiality clause in the employment contract.

Employee’s written consent required.

Confidentiality undertaking may continue to be applied after the

termination of the employment contract. In this case, it must be
clearly specified in the contract.
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 Non-Competition Clause / Restrictive Convenants

Effective after the termination of the employment contrat.

Must be in written form in the employment contract or in any addendum and cannot be
implied.

To be valid, this clause must:

- Be necessary to protect the company’s legitimate interests;
- Be limited in time and in space ➔ a precise geographical area shall be set out;
- Take into account the specificities of the employee’s job / duties;
- Include a financial compensation for the employee, which cannot be « derisory ».

➔ These conditions are cumulative. The absence of one of these conditions leads to the
unenforceability of the clause.
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 Exclusivity Clause
This clause prevents the employee from carrying out another activity with another
employer. This clause is only effective if it is:
- necessary to protect the company’s legitimate interests;
- justified by the nature of the tasks to be performed;
- proportionate to the intented purpose.
The exclusivity clause does not require a financial compensation, but it must be written
and precise concerning the activities that the employee cannot exercise.
But exclusivity clause is not enforceable against the employee:
- During one year for the employee to create his / her own business even if there
is an exclusivity clause in the contract;
- For a part-time employee (such a clause is deemed to constitute a breach of the
freedom of work).

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Protection of Trade Secrets
Dutch Trade Secrets Act

Danny Vesters
Senior associate
Boontje Advocaten
Netherlands
 Trade Secrets
TRADE SECRETS

Employment Non-employment

Contractual Non contractual Article 6:162 DCC

Non-competition (?) Article 7:611 DCC Article 272/273 PC

Relationship (?) Article 7:678 DCC

Non-sollicitation (?) Dutch Trade Secrets Act

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Secrecy
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 Trade Secrets
EU Trade Secrets Directive 2016/943/EU

Dutch Trade Secrets Act (DTSA)

Definition secret (article 1 DTSA)

• information is not generally known or readily accessible to those normally dealing with the
information (Supreme court Amsterdam, June 5, 2018, ECLI:NL:GHAMS:2018:1868)
• it has (actual/potential) commercial value
• it shall be subject to reasonable measures of protection by the person lawfully in possession of it
(proportionality)

Proportional: adequate, decent, acceptable and plausible measures (contractual/non-contractual)

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 Trade Secrets
DTSA vs 7:653 DCC
• In principle no conflict, different
focus/topics
• MvA, EK 34 821, C, page 5,6 and 7
• Paragraph 13 preamble Directive:
• However, current article 7:653 Secrecy clause
paragraph 2, also and future • The employee shall not disclose or use at any time
Balanced Labour Market Act secret/confidential information
• During and after the termination of employment
• Obtained in the course of employment
• The employee knew or should have known it is
secret/ confidential
DTSA vs secrecy clause
• Define secret/confidential (i.e. technological know-
• Conflict secrecy clause and DTSA
how, suppliers, marketing research, recipe etc.)
will not lead to nullity of the secrecy
• Describe commercial value
clause
• Describe measurements of protection
• Secrecy clause in correspondence
with DTSA means applicability DTSA
GLOBAL • Partial applicability of DTSA is
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 Trade Secrets
Article 1019i – 1019ie: stipulates that the court may order the unsuccessful party to pay reasonable
and proportionate legal costs and other costs incurred by the successful party.

Article 8 DTSA: stipulates that the business secret holder can claim damages from an infringer who
knew or should have known that he was illegally obtaining, using or disclosing a business secret.

Free movement of trade and business vs DTSA

• Free movement means that in the course of economic activity it is possible to act in one's own
favor: competition is permitted.
• DTSA does not express an opinion on this principle, the existence of the DTSA and an explicit
referral in a contractual secrecy clause to the DTSA, could influence the attitude of a new
employer.
• Awareness may lead to the realization that the new employer has an information obligation to
inquire with the new employee about the secrecy clause imposed by the previous employer and a
reference to the DTSA that may be included in it.

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Impact of Trade Secret Regulations
Ireland

Duncan Inverarity
Partner
A&L Goodbody
Ireland
 What is a Trade Secret?

• Art 2 of the Directive – mirrored in Ireland’s Regulations

(1) Secret;
(2) Commercial Value; and
(3) Reasonable Steps
• What is NOT a trade secret?
• Lawful vs unlawful acquisition/use disclosure?

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 Protecting Trade Secrets

• Be proactive, not reactive

• Limit access
• Robust and comprehensive confidentiality agreements

• Remedies
(1) Corrective – injunctive relief, delivery up, non-destruction
(2) Criminal
• Fines: up to €50,000
• Imprisonment: up to 3 years

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 Restrictive Covenants

• What are restrictive covenants?

• Are they worth the paper they are printed on?
• How to maximize enforceability
(1) Legitimate Proprietary Interest ; and
(2) Reasonable and Proportionate Manner

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SOLUTIONS
MAIN-45332065-1
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 Restrictive Covenants

Courts will not re-write restrictive covenants

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MAIN-45332065-1
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 Is It Really “Confidential”?

• New definition of “trade secrets” under 2018 Regulation

• Previously, reliance on case-law
• Faccenda Chicken v Fowler
• Implied duty of confidentiality
• High threshold: to amount to “trade secret”
• Distinguish from general know-how/experience
• Three different classes:
(1) Trivial
(2) Confidential
(3) Trade Secret

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MAIN-45332065-1
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 Protecting Trade Secrets –
Restrictive Covenants

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MAIN-45332065-1
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 Whistle-Blowers

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 Whistle-blowers –
Precarious New Ground
• Protected Disclosures Act 2014
• Motivation behind disclosure previously irrelevant.
• New position – MUST show disclosure is in the public interest

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 Thank you!

Vesela Kabatliyska Michael Leftley Philippe Durand Danny Vesters Duncan Inverarity
Partner Partner Partner Attorney Partner
Dinova Rusev & Partners Addleshaw Goddard August & Debouzy Avocats Boontje Advocaten A&L Goodbody
Bulgaria England & Wales France Dutch, Netherlands Ireland
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