What is the problem?
Trade secrets are everything companies keep secret to stay ahead of competitors. A secret recipe or manufacturing process, plans of a new product, prototypes… The theft of trade secrets can be a real problem for companies, and is already punished in all EU Member States. But there was no EU legislation on the matter. A small group of lobbyists working for large multinational companies (Dupont, General Electric, Intel, NestlŽ, Michelin, Safran, Alstom…) convinced the European Commission to draft such a legislation, and helped it all along the way.
The problem is that they were too successful in their lobbying: they transformed a legislation which should have regulated fair competition between companies into a blanket right to corporate secrecy, which now threatens everyone else in society.
The European Parliament is expected to vote on the “Directive on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure” on 12 April 2016. The text can no longer be changed. It is essential that MEPs reject it and ask the Commission to come up with a better one, but are under heavy pressure from business groups to adopt it.
Why is it a threat?
With the very broad and vague definitions used in this directive, almost all internal information within a company can be considered a trade secret. With this text, companies do not need to proactively identify which information they consider a trade secret, as states do when they put “top secret” or “confidential” labels on documents. But employees, journalists, consumers… sometimes also need to have access to, use and publish such information, and would now face legal threats and heavy fines for doing so. The exceptions foreseen in the text do not correctly protect them, and the legal uncertainties created by this text will have a chilling effect that will prevent people in possession of information revealing corporate misconduct or wrongdoing from reporting it.
An additional problem is that the Directive foresees precautionary measures to prohibit the disclosure of documents and proofs during legal procedures, hiding them from public opinion. While it is true that certain companies sue others for the sole purpose of accessing their trade secrets, why should such measures, which risk undermining the rights of defence, apply to individuals?
Last but not least, this Directive only sets a minimum standard in the EU: Member States will be able to go further when they transpose the text in national law, and will be lobbied by industry all over Europe. This will create a situation of uneven legislations in the EU that companies will be able to use, launching lawsuits from the country with the most aggressive measures for trade secrets protection.
In January 2015, when France tried to adopt in anticipation the key elements of the directive, it added criminal measures of three years in jail and a 375,000€ fine for trade secrets violation (and twice as much when vague “national interests” would be at stake). French journalists mobilised to protect their freedom to report on companies’ misbehaviour, and managed to convince the government to withdraw the project; but comparable measures might be considered again in all EU Member States if the Directive is adopted.
More information: Backgrounder-to-call-for-the-rejection-of-the-TS-Directive-by-the-EP