Present-day breeding companies are assisted by intelligent systems that collect and analyse data obtained from various sources, such as plant phenotyping software, sensors, drones, or other data-driven technologies. These tools generate valuable information about companies’ breeding programmes, which is kept as a trade secret. Trade secrets have become as important as patent rights for protecting innovation. Globalisation and increasing digitalisation present new challenges to safeguarding breeders’ trade secrets.
Trade secrets protection in the EU
Until recently, there was no harmonised protection for trade secrets in the European Union (EU). Although the EU Member States are bound by the TRIPs Treaty, which provides a minimum level of protection for trade secrets, the actual trade secret protection regimes varied substantially between the different EU Member States. Some countries had national trade secrets acts in place; in other countries, the only form of protection was under contract law or tort law. In some countries, no clear definition of a trade secret existed.
On July 5, 2016, the EU Trade Secrets Directive (EU Directive 2016/943/EU) (the “Trade Secrets Directive”) entered into force. The document provides a framework for protecting and enforcing secrets in the EU Member States. The EU Member States have implemented the Trade Secrets Directive in their local legislation.
Definition of trade secrets
Under the Trade Secrets Directive, any type of information can qualify as a trade secret, provided that it (a) is secret, in the sense that it is not generally known or readily accessible to persons within the circles that normally deal with this kind of information; (b) has commercial value because it is secret; and it (c) has been subject to reasonable steps under the circumstances, by the person lawfully in control of the information, to keep it secret. Not only know-how and technical information, but also commercial and other types of business information qualify as trade secrets, provided they are valuable to the holder from an economic perspective.
Trade secret holders are expected to exercise a duty of care, in the sense that they preserve the confidentiality of their valuable trade secrets and monitor the use of such trade secrets. The Trade Secrets Directive provides little guidance here, leaving open what can qualify as "reasonable steps under the circumstances". Hence, whether the trade secret holders have fulfilled their duty of care will have to be established based on the circumstances of a particular case. There are certain factors that are relevant, such as the size of a company, the nature of the trade secrets and the risks of infringement in a specific industry sector. Companies that opt for trade secret protection instead of relying on a patent strategy for economic reasons may be in for a disappointment, as implementing a trade secret policy and state of the art security measures can be more costly than patenting.
Trade secret infringement
The trade secret holder can act against third parties that have unlawfully acquired, used or disclosed a trade secret. Classic examples of unlawful acquisition are theft, unauthorised copying and corporate espionage. In addition, acquisition without permission of the holder by any other conduct that is, in the circumstances, considered contrary to honest commercial practices, is unlawful. The use or disclosure of a trade secret is unlawful if the trade secret has been acquired unlawfully, or if its use or disclosure is contrary to a confidentiality agreement or use restriction.
The trade secret holders can also enforce their rights against parties that produce, offer or place 'infringing goods' on the market, or that import, export or store infringing goods for those purposes, if this party knew or ought to have known, under the circumstances, that the trade secret was used unlawfully. Infringing goods are defined in the Trade Secrets Directive as goods whose design, characteristics, functioning, production process or marketing significantly benefits from trade secrets that have been unlawfully acquired, used or disclosed. The recitals of the Trade Secrets Directive indicate that this will be the case if, among others, the trade secret has a significant impact on the quality, value or price of the goods resulting from that unlawful use or on reducing the cost of, facilitating or speeding up their production or marketing processes.
the phrase 'infringing goods' in the Trade Secrets Directive is somewhat misleading, as this is generally used in relation to Intellectual Property rights. Trade secret rights are not considered to be Intellectual Property rights. An important difference is that the trade secret holders do not have exclusive rights in the sense that they can act against any use of their trade secret without their permission. If a trade secret has been developed independently by a third person or obtained by reverse engineering (which is not contractually prohibited), the holder will have to tolerate this use.
Infringers are not only liable for damages when they actually knew, but also when they ought to have known, that they were unlawfully acquiring, using or disclosing a trade secret. Further recipients of a trade secret also act unlawfully if, at the time of the acquisition, use or disclosure, they knew or ought to have known under the circumstances that the trade secret had been obtained directly or indirectly from another person who was using or disclosing the trade secret unlawfully.
Once trade secret holders have been able to overcome the hurdles of establishing that they have taken reasonable steps to keep their valuable information secret and that there has been unlawful acquisition, use or disclosure of their trade secret, trade secret rights can be a very powerful tool.
Learn more about trade secrets protection in the EU in the Plant Breeding industry from Ms Tuinzing-Westerhuis at the Amsterdam Workshop on IP for Plants, the CIOPORA Academy event, on November 4-5, 2019. Registration
About the author: Fleur Tuinzing-Westerhuis is a Counsel at Houthoff. She specialises in technology-related Intellectual Property matters, with a focus on Patents and Plant Variety Rights. In her daily practice, Fleur represents a wide variety of domestic and international companies that are active in technology-intensive business sectors, such as agrifood and biotech. Fleur is an experienced patent litigator and is one of only a handful of lawyers in the Netherlands with extensive experience in litigation relating to national and Community plant variety rights. Picture: Houthoff