The European Trade Secrets Directive (ETSD): Nothing New Under the Sun?

Abstract

Trade secrets are essential types of intellectual property assets, especially so for R&D and innovation-intensive firms. They may represent the conscious choice of an inventor not to file for intellectual property rights’ protection (by means of, e.g., a patent application), so as to avoid being bound by the strings attached to filing for patent protection – such as public disclosure requirements with regard to the underlying invention and patent filing and maintenance fees – but they may also represent the second-best choice of an inventor in respect of protecting the underlying invention – such as when the underlying invention, regardless of its value-adding features to the business of the inventor, does not qualify for patent protection under applicable intellectual property laws. In the world of today, where keywords such as “digital”, “big data”, “data analytics”, “data mining”, “cloud computing” and the like are gaining ever increasing momentum in the vocabulary of business men and women and value proposition creators, it is only more than likely that trade secrets – absent any substantial reform on patent law – will assume a much more important role in the innovation ecosystem, as an eligible form of protection for important intellectual property assets, such as algorithms, methodologies, formulas, among others. The European Union (EU) and its member states are, unfortunately, and to the present date, not exactly a “country for trade secret holders”. To be sure, the currently fragmented legal framework amongst EU member states makes it incredibly difficult for trade secret holders to ascertain the exact boundaries and content of their substantive legal position as regards their trade secrets. Things get even tougher, though, when it comes to trade secret holders enforcing their rights on a cross-border basis throughout the EU territory. In response to these issues and recognizing the importance in ensuring effective trade secret protection in a cross-EU fashion, the European Commission (EC) proposed, and the Council of the EU (Council) revised, a proposal for a European Trade Secrets Directive. This paper’s objective is to critically analyze the legislative proposal of the EC and the revision of such proposal by the Council, in search for answers to the question of knowing whether or not does the proposed (and revised) European Trade Secrets Directive effectively responds to the issues remarked in the EU’s legal framework for trade secret protection and enforcement, and whether it improves the legal position of trade secret holders, in a way that will economically reward innovative firms and individuals for their efforts in the development of meaningful, value-adding inventions.