Choice of Law in EU Trade Secrecy Cases

Abstract

As trade secrecy has become a widespread strategy for appropriating returns from innovation, problems related to globalization have come to the fore. Joint ventures among firms from different countries are now common; technological employees often switch jobs; modern business practices, including value-chain production methods, spread confidential information from developers to geographically dispersed manufacturers, distributors, sellers, and maintenance organizations. Moreover, developments in computer technology make it ever easier to take valuable information from remote locations. As its Preface suggests, the Directive on the protection of undisclosed information was enacted in recognition of these potential cross-border problems. While it attempts to reduce inconsistencies among the protective regimes of member states, it falls far short of harmonizing the law. For example, it explicitly imposes only a minimum standard, allowing member states to enact stronger protection; it does not affect certain national rules on disclosure (art. 1); and it gives member states the right to make exceptions to protect their legitimate interests (art. 5). Furthermore, experience in the United States suggests that many of the concepts used in the Directive are susceptible to multiple interpretations. Examples include “use of experience” (art. 1); “generally known,” “commercial value” and “reasonable steps” (art. 2). But despite the likelihood of divergence, the Directive does not include a choice of law rule and it is not evident that existing instruments on applicable law produce clear and workable answers. Using the U.S. experience and drawing on EU choice of law for contracts and torts, including intellectual property infringement, this Chapter offers views on the approach EU adjudicators could take to resolving transnational trade secrecy disputes.