Academic journal article Defense Counsel Journal

The Global Harmonization of Trade Secret Law: The Convergence of Protections for Trade Secret Information in the United States and European Union

Academic journal article Defense Counsel Journal

The Global Harmonization of Trade Secret Law: The Convergence of Protections for Trade Secret Information in the United States and European Union

Article excerpt

AS major regions across the world seek to harmonize trade secret law within and across jurisdictions, international companies now should focus on building their own uniform policies and procedures for protecting their intellectual property and defending against claims of misappropriation. Given the recent passage of the Defend Trade Secrets Act (''DTSA'') and the EU Trade Secrets Directive (the ''Directive''), it is clear that both regions have recognized the substantial value of trade secrets to the global economy and have decided to take analogous stances on the basics of trade secret law, including what constitutes a trade secret and how a violation occurs. Although the similarities are not unexpected the WTO Agreement on TradeRelated Aspects of Intellectual Property Rights (''TRIPS Agreement'')1 provides many foundational provisions there are important nuances in each locale's rules that affect how companies should consider enforcing trade secret rights and defending against misappropriation claims across those major international jurisdictions.

I.Overview of the DTSA

After several unsuccessful attempts over more than five years,2 Congress in April overwhelmingly approved3 and President Obama in May signed4 the DTSA, which provides a Federal private right of action for trade secret misappropriation. The DTSA is incorporated into the previously-enacted Economic Espionage Act (''EEA''),5 which provides criminal penalties for misappropriation.6

The DTSA pulls heavily from the Uniform Trade Secrets Act (''UTSA''),7 already in force in some form in 48 states,8 by providing similar definitions of key terms and remedies for misappropriation.9 In addition to providing the right to sue in Federal court (importantly, without preempting parallel state law claims10), the DTSA provides an ex parte seizure mechanism and whistleblower immunity.

II.Overview of the EU Directive

In 2013, after studies11 showed the importance of trade secrets to the economy, particularly to small and mediumsized enterprises, and the fears of many organizations that asserting claims for misappropriation would result in inadequate remedies and potentially place their trade secrets at risk of public disclosure, the European Commission proposed a Directive to address differences in the trade secret laws of the EU Member States.12 Late last year, members of the European Parliament and Council reached a preliminary agreement on the text of the Directive,13 which was approved by the European Parliament14 and adopted by the European Council on May 27, 2016.15 EU Member States now will have until May 2018 to implement the Directive's provisions.

Like the DTSA, the Directive seeks to harmonize trade secret laws across the EU, in accordance with the TRIPS Agreement, by providing a common definition of what a trade secret is, how trade secrets are to be protected, and what remedies are available for misappropriation. At the same time, the Directive only sets a floor for what is required of Members; individual States can craft more stringent provisions, if desired.17 Additional harmonization discussions are expected once Member States begin drafting national legislation.

III.Key Provisions

1. Trade Secret Definitions and Requirements for Misappropriation

The DTSA18 and Directive19 both seek to protect confidential commercial information, and they therefore set out similar definitions for what information is eligible to qualify as trade secret (i.e., almost all types of confidential business and technical information). Both require that the information be kept secret and that it derive economic value from not being generally known or readily ascertainable. They also focus on protecting the underlying information itself, as opposed to simply the memorialization of that information (e.g., documents)-although that distinction often blurs in the practical sense, since proving a trade secret is more easily done via documentary evidence. …

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