EC Proposed Directive on the Protection of Business Secrets

To provide a harmonized legal framework that will help protect businesses from unauthorized use of trade secrets in the EU, in January 2014, the European Commission adopted a proposal for a new Directive on the Protection of Business Secrets. The EC acknowledges the potential of data room solutions to help meet the requirements in the directive.

Collaboration & Protecting Business Secrets

The past few years have seen dramatic changes in the pace and scope of corporate collaboration, whether in scientific research, open-source development, product advances, or market entry.

Whilst intellectual property protection remains critical to encouraging innovation, strict information policies may also hold back creative solutions: witness the recent decision by Elton Musk to open Tesla’s patents for fair use of its electric vehicle technologies. The advantages of collaboration are encouraging businesses to share confidential information with business partners, or with internationally dispersed project teams.

Yet, the risks of collaboration, particularly for businesses with smaller market positions, are many. During collaboration, multiple trade secrets are shared, and sent (often unprotected) via e-mail or messaging tools.

Trade secrets comprise information that is just as valuable as traditional intellectual property, but which is not currently legally protected in a coherent manner. Indeed, currently trade secrets are covered by widely diverse and opaque set of national laws, written and unwritten.

To provide a harmonized legal framework to help protect businesses from unauthorized use of trade secrets in the EU, in January 2014, the European Commission adopted a proposal for a new Directive on the Protection of Business Secrets.

Subject to reasonable steps to keep information secret?

The proposed directive aims to protect information which is secret, in the sense that it is not generally known within the relevant business circles, has commercial value because it is secret, and has been subject to “reasonable steps … to keep it secret”

The proposed directive is subject to adoption by the European Parliament and the Council of the EU. The text was discussed by the Council on 26 May 2014 and will be subject to revision. However, the text already provides important guidance for companies, particularly with regard to corporate processes for the sharing of trade secrets.

Data room solutions

Certain data room solutions help meet the requirements in the proposed directive for companies to maintain “reasonable steps … to keep [information] secret”.

For example, MERAR data rooms allow users and third parties to access confidential information, not through direct access to a file, but through controlled access to a protected & encrypted file in an audited environment. Accessible on any device, data room solutions such as MERAR data rooms allow secure access to confidential information to third parties, to distributors and sales agents, to internal project teams across the world. Introducing data rooms as secure collaboration tool, help protect from cyber-crime, business secret misuse, and in full compliance to take advantage of the legal protections that will be available.

For more information on how MERAR data room solutions could help protect your confidential information please contact us. We will be delighted to give guidance and solutions.

Richard Clegg, Director
richard.clegg@merar.com
www.merar.com

Image courtesy: LOSINPUN, 2011, Flickr CC.