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Business Secret Protection in the European Union

Business secrets are not recognised as intellectual property (copyright) in many European Union countries. This is in spite of international law, particularly the TRIPs agreement and the European Convention on Human Rights, which require community authorities and EU member states to protect business and trade secrets as part of companies’ intellectual property.
From a practical standpoint, business secrets are extremely important drivers of innovation, competitiveness and growth of companies.

In this respect, it is a fact that a good part of the results of R&D do not meet the criteria for protection via copyright or patent, however, they do comprise technical know-how that has taken a lot of time and money to generate. That is why legal systems should recognise the possibility of protecting this type of useful knowledge which, as such, should be an acknowledged category of intellectual property.

A secret, therefore, should be defined as an intellectual property right that covers all information, of any nature, of which companies can make practical use and which enhances their specific activities or industries.

Given that, one of the natural limits of the secret is the possibility that a third party will gain access to it through independent development, the right to a secret is a temporary privilege that enables the owner to use this knowledge exclusively before third parties, bestowing an important competitive advantage on the owner of the secret.

We can therefore see how it shares the same nature as other intellectual property rights, and that it also has the same socialising role, to the extent that the secret, as a knowledge protection tool, enables this to be transferred to society (under licence), thus preventing stagnating dominance in key strategic sections such as energy and telecommunications while making it possible for this knowledge to reach the market more swiftly in the form of technological progress and new, more efficient products that benefit consumers.

In spite of case law from the European Court of Justice, which is steadfast in its recognition of business secrets as a form of intellectual property, the truth is that business secrets are not yet specifically or uniformly protected in the EU area. Protection is afforded, to a greater or lesser extent, through the national legislation of the member states.

Most European countries give legal cover to business secrets through competition and unfair competition law. However, countries such as the United Kingdom, Ireland and Holland apply different regulations from their civil, criminal and labour laws. Others, such as France, Italy and Portugal do so through their own Intellectual Property laws.

Regardless of which regulation or combination thereof is used to protect business secrets, it is true to say that there is an almost Europe-wide dearth of specific regulations.

Sweden is the only country which, aware of the strategic importance of business secrets as a factor for economic development, decided to protect these by passing law 1990:490 on Business Secret Protection more than 20 years ago.

Carmen Sánchez-Puelles