Departing Employees, Confidentiality Clauses and European Trade Secret Protection

Abstract

Departing employees are a classic problem in trade secret law. Employees who wish to set up on their own or accept a job offer from their principal’s competitor may often be tempted to take with them valuable and secret information from the existing principal’s business. The law should protect employers against this. On the other hand, employees have a legitimate interest in being able to change jobs, and trade secret law should not be so protective as to severely hamper labour mobility. According to leading scholars, Directive 2016/943 on the protection of trade secrets does not harmonise the legal protection of trade secrets vis-à-vis departing employees. This leaves room for national legislators and courts to develop the law on this important topic on their own. One might fear that this could lead to substantial legal differences within the European Economic Area. This article explores this question with a particular focus on many employers’ practice of including obligations of confidentiality in their employment contracts or entering into separate non-disclosure agreements with their employees. The author shares the view that the Directive, along with much of the national legislation that implements it, gives courts considerable freedom in how to solve the difficult cases of departing employees, including when the ex-employee is bound by post-employment confidentiality obligations. This is not, however, necessarily a threat to legal certainty, as national case-law prior to the Directive seems to have had many common traits. This could provide important guidelines as to how the relevant parties’ interests have to be safeguarded and balanced also under the Directive. The author has two main points on the substantive law: (1) an agreement that generally prohibits employees from disclosing or using “trade secrets”, “business information” or the like may be important – but not necessarily decisive – for establishing that the employer has taken “reasonable steps” to protect the information, as required by the Directive; (2) however, the concrete assessment of whether a former employee has violated such a contract should not differ much from an assessment of whether they would have violated trade secret law in the absence of such an agreement.