Trade Secrets: From Second Class To Second Best

The reality of today's trade secrets - generally understood as "commercially valuable and not publicly available information with limited access"- is mainly shaped by the advent of the "Fourth Industrial Revolution" which has led to the digitization of entire social and economic environments and the creation of new technologies. On the other side of the coin, this achievement has also been shown capable of distorting digital information quite easily, be it by means of theft, unauthorized copying, economic espionage or violation of confidentiality obligations, not counting the fact that information today travels borderless at light speed and cannot entirely be controlled anymore (just think of big hacks like Ashley Madison or Home Depot and security leaks like Meltdown or Spectre).

Business information worth keeping a secret can virtually be found in every company. What differs is the way this is dealt with, both on a corporate and legal level. Certainly not all trade secrets are duly recognized and protected as essential corporate know-how. The damage caused by unprotected, lost or stolen trade secrets may thus significantly affect both the corporate, and on a larger scale, even the national economy. This nonchalant attitude of giving the defense of know-how secondary importance has long been shared by the lawgivers as well.

Trade secrets were often seen as a sub component of unfair competition rules or even labor law rather than as an IPR on its own. See the general rule incorporated in Art. 10-bis Paris Convention entitled "Unfair Competition," originally added in the year 1900 and subsequently further revised, which is not specifically addressing trade secret protection. More recently, the TRIPS Agreement explicitly recognized the "protection of undisclosed information" (Art. 39, from 1994), while on EU-level know-how has been addressed by EC-Regulation 1999/2790 and EU-Directive 943/2016. The latter has to be transposed into national law by June 9, 2018.

The European Commission has stigmatized the costs associated with the disparity of norms as well as the urgency of promoting substantial and procedural convergence of national systems. In 2011, an EU-study on commercial confidentiality in the internal market highlighted the following results: out of a sample of 537 European based companies, comprising 323 SMEs and 214 multinationals, 75% respondents believed industrial secrecy is a strategically important asset for growth, competitiveness and commercial performance, while 39% were...

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