16.07.2018
The Trade Secrets Directive [1] has closed a long-discussed gap in the protection of intellectual property rights closed.
While (mere) ideas represent a starting point and a significant source of value for many companies in their business activities, these ideas are not or only barely protected under traditional intellectual property law.
Initially, they are not protected by copyright as mere ideas; only their embodiment in the form of a work or a representation can, in individual cases, be subject to copyright as a unique intellectual creation without the need for special registration (comparable to trademark law, etc.). Protection under trademark, design, utility model and patent law requires registration, which is often complex and expensive.
Although the unchanged adoption of concepts was already sanctioned under competition law, for many companies absolute secrecy still represents the most effective protection of confidential business information and concepts as well as know-how.
The unlawful disclosure or exploitation of trade secrets was previously protected (in Austrian law) by Sections 11 and 12 of the Unfair Competition Act and by Sections 122 – 124 of the Criminal Code, but this too was only fragmentary in the form of individual penal provisions.
In contrast, the Trade Secrets Directive takes a comprehensive approach similar to that of a protection right, but does not create an absolute right to trade secrets, but essentially protects access to them by fundamentally prohibiting the dishonest acquisition and use of trade secrets and know-how, whereby lawful acts are explicitly defined, such as – obviously – independent discovery or creation, reverse engineering and „eachde other course of action which is consistent with honest commercial practice under the circumstances" (Article 3 paragraph 1 letter d Directive)
The Trade Secrets Directive also contains procedural provisions designed to ensure that trade secrets are protected in court proceedings in which their infringement is alleged.
Since it has so far been hardly possible under Austrian procedural law to prevent trade secrets from being disclosed to the opponent and the public in the course of proceedings, legal assertion of infringements has often been refrained from.
In this regard, Article 9 of the Directive provides, inter alia, that, upon request, business secrets may be classified as confidential in the proceedings, which prohibits the parties to the proceedings from using or disclosing such information, which becomes available to them only by virtue of their participation in the proceedings. Member States may also provide that such measures may be taken ex officio.
The Directive also provides for other specific measures to protect confidential information in court proceedings, such as restricting access to information to a limited number of persons and issuing non-confidential versions of a court decision in which passages containing business secrets are deleted or redacted.
The directive also contains provisions to enable the publication of judgments while providing adequate protection for business secrets, as well as provisions on preventive measures and compensation.
Austria is now implementing the directive (it was due to be implemented by 9 June 2018) with some delay by amending the Unfair Competition Act and the Code of Civil Procedure, the draft of which is under review until 27 July 2018.
- Section 26b of the UWG adopts the definitions of Article 2 of the Directive, which for the first time also includes a definition of the term “trade secret” in Austrian law that essentially corresponds to the criteria developed by Austrian case law.[2]
- Section 26c of the UWG regulates the fundamental legal consequences of the unlawful acquisition, use or disclosure of trade secrets, whereby the existing claims of the UWG are linked.
- Section 26d UWG defines when the acquisition, use or disclosure of trade secrets is unlawful, Section 26e UWG defines when these actions are to be regarded as lawful.
- Sections 26f and 26g of the UWG specify the legal consequences resulting from Section 26c, while Sections 26i and 26j regulate the possibility of interim injunctions to protect trade secrets.
Finally, the draft aims to amend Section 172 Paragraph 2 of the Code of Civil Procedure so that exclusion of the public upon request is also possible if business secrets have to be discussed for the purpose of deciding the proceedings.
Overall, this implementation of the Trade Secrets Directive brings a welcome addition, both in the substantive protection of industrial property rights and in the associated procedural provisions, and therefore new opportunities for companies to take effective action against the exploitation of their trade secrets by third parties, without having to fear that information will become known through legal action.
[1] Directive (EU) 2016/943 of the European Parliament and of the Council of 8 June 2016 on the protection of undisclosed know-how and confidential business information (trade secrets) against their unlawful acquisition, use and disclosure.
[2] Ummenberger-Zierler, Protection of company know-how in Europe – the EU Harmonization Directive compared to the legal situation in the USA, in Yearbook Intellectual Property 2017, 349 (367).