As you all know the introduction of the Data Protection Regulation (2016/679 with effect on 25th May 2018 had a substantial impact on enterprises on all levels, and received a lot of attention. Shortly after, another act was implemented in the Netherlands which also puts the trade secrets of organization on the map and gives enterprises a competitive advantage.
This new act is called the Trade Secrets Act (Trade Secrets Act) and was implemented in October 2018. The Trade Secrets Acts is the implementation act of the Directive on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure (2016/943) (the Directive). The aim of the Directive was to harmonise the definition of trade secrets and also give enterprises the possibility to initiate interlocutory measures to protect their trade secrets. These rights are similar to the rights available for the protection of intellectual property.
The legislation on trade secrets was spread around different parts of the Dutch Civil Code and case law. With the introduction of the Trade Secrets Act, this has been solved by just one act covering this subject.
Which information is protected under the Trade Secrets Act? Below you will find 3 cumulative requirements that need to be met.
- The information needs to be confidential. This means that the information should not be easily accessible and should not be general knowledge. The Explanatory Note of the Trade Secrets Act states that information should be widely interpreted. So think of recipes, drawings, marketing plans, customer lists etc.
- The information, because is it confidential under sub 1, has a commercial value to the enterprise.
- Reasonable measures need to have been taken to keep the information confidential by those who legally hold the information. What can be considered as reasonable measures?
a. Examples of these are confidentiality agreements or confidentiality clauses in the contracts (including contracts of employment), international commercial agreements, general terms and conditions, agency agreements, distribution agreements, framework agreements etc.
b. Other measures could include classifying the information as confidential with a text or watermark.
c. Technical measures also need to be taken such as the use of passwords, encryption etc.
If these three requirements are met, then the Trade Secrets Act is applicable and the enterprise can take steps to protect its trade secrets.
Which legal steps can be taken by enterprises under the Trade Secrets Act in order to protect their rights?
The owner of the enterprise can take all sorts of legal steps to preserve its rights under the Trade Secret Act. For example a prohibition to use, produce etc. the information, seizure of the information, destruction of the documents, electronic files etc, damages, etc. Furthermore, the courts can award full legal costs to the winner of the proceedings. As the information is confidential and has value to the enterprise, the Trade Secrets Act has also covered this issue. In order to prevent that the information is made public during the proceedings, the court hearing is a closed hearing and the decision is not fully disclosed.
Conclusion
The implementation of the Trade Secrets Act is good news for enterprises, especially when information has commercial value. It is advisable to scan your exciting commercial contracts and amend up the existing confidentiality clauses in agreements to make sure that the information is protected. Please contact Madelon van Breemen on +31 (10) 2092756 or on vanbreemen@lvh-advocaten.nl, who specializes in commercial international agreements and she can advise you.
