Shhh….Keeping the Secret Secret and Trade Secret Litigation

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“Whatever you do, don’t tell anyone”

(Queens of the Stone Age – The Lost Art of Keeping a Secret)

I doubt Josh Homme was thinking about trade secrets when he wrote the above lyrics, but there’s some valuable “legal advice” hidden in those lines. Namely, as often pointed out, once a trade secret is out, it may be lost forever.

Indeed, the secret maybe lost but not necessarily given away for free. Trade secret legislation is designed particularly for these unfortunate situations. Once the secret is out, you may not be able to get it back in the bottle again. But you may be able to stop further spreading of the secret and at least get some damages from the perpetrator. This will usually mean you will have to go to court for enforcement. And this is where it may get a bit tricky: Alas, in order for the enforcement to be successful you will probably have to disclose your secret. That doesn’t sound very tempting if your trade secret is valuable, does it?

So, what to do? In essence, the options available will depend upon national legislation and which procedural measures the relevant national court is able to resort to. It will also depend on how familiar the particular court is with the concept of trade secrets more generally. Several procedural possibilities could be envisaged. The court could declare the relevant document or parts of it confidential for a number of years; this is probably possible in many countries. But how to keep the secret safe also in the potential oral hearings? If the procedural rules allow, you could exclude the public and hold in camera proceedings. However, this is not possible everywhere – many countries strongly emphasize the publicity of court hearings. This could also be a “fair trial” issue. Going one step further, the court could appoint an independent expert, who examines the evidence containing the trade secret without the presence of the parties. The expert would of course have to be bound by some type of non-disclosure obligation.

The new EU Trade Secrets Directive (2016/943) is partially designed to tackle the above mentioned issues in Article 9. The provision generally lays down that the participants in a trade secret litigation are bound by confidentiality. In addition, member states are to give their judicial authorities the power to adopt certain measures to protect trade secrets, including restricting access to documents and hearings, and making a non-confidential version of the judgment available to the public. However, when restricting the access to documents or hearings, the right to a fair trial must be observed.

The possibilities to enforce the right to a trade secret without risking further spreading of the secret and being compensated for the loss will be highly dependent upon which national court you are in. If you are lucky, things will run smoothly – if not, the secret is gone and the perpetrator gets a free ride.

Ergo, if possible, keep your secret secret.

Vilhelm Schröder

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