Newly entered into force as of 17 October 2018: Trade Secrets Act

22/1/2019 | One of the main consequences of protection under patent law is that the technological invention or method is published in a public register for the sake of replicability if the inventor concerned wishes to derive protection from it. It is a well-known fact that certain inventions are deliberately not published out of economic interests. For instance, Coca Cola has been guarding its recipe since the late 19th century as a trade secret. Although trade secrets are of a different category and cannot by definition be qualified as intellectual property, the enforcement methods in case of infringement are comparable to those regarding intellectual property rights.

The 1919 Lindenbaum v Cohen ruling showed that trade secrets are legally protected. That case pertained to the protection of trade secrets by eliciting the disclosure of trade secrets by a competitor's employee. It was deemed to be unlawful on account of a violation of the standard of due care in society. In addition, trade secrets are generally protected by confidentiality clauses in mutual agreements, which obviously have a limited scope as they do not extend to third parties. Since there was a need for uniform legislation with respect to the protection of trade secrets at the European level, the Trade Secrets Act entered into effect in the Netherlands on 17 October 2018 in order to implement EU Directive 2016/943/EU.

The Trade Secrets Act defines 'trade secret' as information that is secret and therefore not generally known among or accessible to those individuals who usually deal with such information. This information furthermore has commercial value because of its secret nature. Finally, the rightful owner of the information must have applied reasonable measures to keep the information secret. Under the Trade Secrets Act, a trade secret is infringed if the information has been obtained through unauthorised access or other acts which, considering the circumstances, are deemed to be contrary to fair trading practices. Not unlawful, however, are independent invention or design, obtaining certain information through observation, research, disassembling or testing a product or object that has been made available to the public or that is in the lawful possession of the person acquiring the information and who is not bound to the legal obligation to limit the acquisition of the trade secret.

Once it has been established that an infringement of a trade secret has occurred, the court may order the infringer, at the suit of the holder of the trade secret, to cease the use or disclosure of the trade secret and ban the infringer from producing, offering, marketing or using infringing goods, and from importing, exporting or storing such goods for the above purposes. The provisions from the Code of Civil Procedure regarding attachment and execution for the purpose of surrender of movable property are also among the options. In that sense, the enforcement methods for infringement of a trade secret are comparable to those regarding intellectual property rights.

Still, a trade secret is not an absolute, exclusive right that can be invoked against any third party. After all, it is a relative right, in that it can only be invoked against an infringer who has acquired, used or disclosed a trade secret unlawfully. Moreover, it is bound to be complicated to prove that an alleged infringer has acquired certain secret information unlawfully. This burden of proof does not apply to a holder of a patent right. However, protection of a trade secret can be an alternative to a patent, because an inventor of a technological method has the choice between either applying for a patent right, which would mean disclosing the working method in a replicable manner, or holding it as a trade secret. In the latter case, his knowledge will not be made public in principle and the period of protection can be much longer in practice than the maximum period of 20 years provided by patent law.

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