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Legislative proposal to protect trade secrets: update

Legislative proposal to protect trade secrets: update

Legislative proposal to protect trade secrets: update

07.08.2018 NL law

On 5 July 2016, the EU Trade Secrets Directive came into effect (Directive 2016/943/EU). The directive intends to harmonise rules regarding the protection of undisclosed know-how and business information (trade secrets) across all EU member states. As the directive is not directly applicable in the member states, each member state must enact national implementing legislation.

In the Netherlands, a legislative proposal for the purpose of implementing the directive has been submitted and is currently under review. It is not yet known when the legislation on trade secrets will come into effect.

At present, there is no legislation on the protection of trade secrets in the Netherlands. The legislative proposal that is under review introduces a definition of trade secrets. In order to enjoy legal protection, companies should ensure that their confidential business information is brought under the definition of trade secrets: (1) the information is secret and is not generally known among or readily accessible to persons within the circles that normally deal with such information, (2) the information has commercial value and (3) reasonable measures have been taken to keep the information secret (e.g. by including confidentiality clauses in contracts, by registering trade secrets or using digital measures such as encryption).

On the basis of the current legislative proposal, it will be possible to take action against unlawfully obtaining, using or disclosing trade secrets by third parties (e.g. employees or competitors). Entitled parties will have a number of options to protect their trade secrets. In addition, they will be provided with extra resources to fight trade secret infringements. They can, for example, demand a ban on the use or disclosure of trade secrets or bring an action for the recall or destruction of products. Under certain conditions, damages may also be claimed.

Once approved, the new legislation on trade secrets will give entitled parties the opportunity to protect their trade secrets and to deal firmly with trade secret infringers. In practice, it will probably also have an effect on the drafting of all sorts of confidentiality agreements (NDAs, confidentiality clauses in employment agreements, etc.) as the new legislation will introduce a new legal landscape.

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