The Commission’s proposal to create common rules for the protection of companies' know-how and business information came a big step closer to becoming law when the European Parliament, Council and European Commission reached a preliminary agreement on 15 December 2015.
Trade secrets are pieces of information that a business needs to protect which could cause a loss of competitive advantage if they were revealed. About one EU company in eight has lost business as a result of trade secret misappropriation, according to recent business surveys. That is a big loss for companies, and ultimately for jobs and Europe's potential as a knowledge-based economy.
Trade secrets are already protected at national level, but current national law only gives a patchwork of protection across the EU, with gaps and disparities, and some legislation is simply out of date. That is why European companies, in particular small and medium-sized enterprises (SMEs), have asked for a clear and uniform set of legal rules to facilitate access to civil action – which is what the European Commission proposed in 2013.
SMEs in particular rely on the protection of their know-how. For an SME, the loss of confidential company information can mean the end of the road. SMEs will be among the biggest beneficiaries of this proposal.
Trade secret protection will also promote a safe environment for creators, researchers and inventors to develop and share innovation in a collaborative manner across borders throughout the Single Market.
The Commission's proposal only deals with unlawful conduct by which someone acquires or discloses, without authorisation and through illicit means, information of commercial value that companies treat as confidential in order to keep a competitive advantage over their competitors. Companies won't be able to invoke a blanket protection of trade secrets to avoid investigation or hide bad behaviour, and someone who discovers illegal activity cannot be gagged by the provisions of this legislation.
The Commission proposal included strong safeguards for journalists, whistleblowers and workers. These provisions have been reinforced in the common agreement.
The Commission welcomes the balanced agreement reached, which is coherent with its initial objectives.
Once the European Parliament and Council formalise their agreement and the proposal becomes law, the EU will be an even better place to innovate and do business in. And that’s good for growth and jobs.