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Legal alerts / 24 Oct 2017

Legal Alert – Draft Government Bill Proposes New Legislation on Protection of Trade Secrets

A working group appointed by the Ministry of Economic Affairs and Employment has proposed a new Trade Secrets Act, which will replace relevant provisions in the Unfair Business Practices Act. The proposal provides clear definitions for trade secrets and for the lawful and unlawful exploitation thereof. On the one hand, the proposal introduces limitations to the principle of publicity for the parties as well as new civil remedies for the unlawful exploitation of trade secrets. On the other hand, it legitimises whistleblowing and further introduces changes to which courts have jurisdiction to handle civil trade secret disputes.

Background

The working group preparing the implementation of the EU Trade Secrets Directive 2016/943/EU published its proposal for a draft government bill for the purposes of a public hearing on 19 October 2017. The new Trade Secrets Act would contain provisions on trade secrets (including technical models and instructions) and thus replace the current provisions for the protection of trade secrets that are set out in the Unfair Business Practices Act.

Key Effects

  • New definitions for trade secrets and for the lawful and unlawful exploitation thereof
  • New civil remedies
  • Changes to jurisdiction in civil proceedings concerning the unlawful exploitation of trade secrets
  • Legitimisation of whistleblowing
  • Limitations to publicity for the parties

In addition to the definition of a trade secret, the new Trade Secrets Act would set out provisions on the lawful and unlawful acquisition, use, and disclosure of trade secrets. As required in the Directive, the Act would also include provisions on preconditions for exercising the right to freedom of expression and legitimise whistleblowing, i.e. revealing misconduct or illegal activities with the purpose of protecting the general public interest regardless of the protection of trade secrets.

The proposed Act also offers more specific and extensive civil remedies against the unlawful acquisition, use or disclosure of a trade secret, such as provisions that enable the court to order not only precautionary measures, injunctions and damages, but also corrective measures and – under certain conditions – compensation for use instead of an injunction and corrective measures.

According to the proposal, civil and criminal cases concerning the unlawful exploitation of trade secrets will be decided in the first instance by district courts with general jurisdiction under the Code of Judicial Procedure and Criminal Procedure Act. The Market Court, which under the present regime has exclusive jurisdiction in civil proceedings concerning the unlawful exploitation of trade secrets between legal entities and entrepreneurs, would henceforward hold parallel jurisdiction in such proceedings.

Notably, the Trade Secrets Act would also introduce a limitation to the principle of publicity for the parties with an aim to safeguard the confidential nature of trade secrets during court proceedings concerning the unlawful exploitation of such trade secrets. In cases where legal persons are involved, the new provision would entitle courts to limit the number of natural persons that may have access to trade secrets ruled confidential by the court.

Revision of Other Acts

The proposal sets out certain clarifications to the Employment Act, and it will include a reference to the Trade Secrets Act for the purposes of a uniform praxis. The proposal will require revision of the Code of Judicial Procedure and the Market Court Proceedings Act as well as the Act to Safeguard the Evidence in Civil Actions Concerning Intellectual Property Rights. The proposal does not propose any amendments to the Criminal Code.

What Happens Next?

The draft government bill is currently on circulation for comments, and the deadline for submitting comments is 29 November 2017. The proposed laws will enter into force on 9 June 2018 at the latest.

We will continue to closely follow the legislative process of this proposal and provide updates if necessary.

Borenius’ lawyers are available to assist in addressing any questions you may have regarding this client alert. Please feel free to contact any of the Borenius attorneys listed in this alert or those with whom you usually work.

 

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