A summer of secrets
summer, in Beijing, Brussels and Washington DC, politicians are
discussing trade secrets.
As our Asia editor Peter Leung reported on Friday, a
first draft of a revision to China’s trade secret
law will be submitted later this month. The country has
been looking to enhance protection for trade secrets, and last
Shanghai court issued the first preliminary injunction
against a defendant in a trade secrets case.
Meanwhile, in the United States, both houses of Congress
introduced federal trade secrets bills that would update
the Economic Espionage Act to provide stronger protection
beyond state boundaries.
Finally, in Europe, the Commission published a
draft directive on trade secrets in November last year, and
the Council of the EU
stated its position on the topic on May 26. The European
Parliament is expected to debate the draft in the autumn, with
some speakers at a recent
conference I attended predicting that a directive will be
adopted early next year. Member states will then probably have
two years to implement it.
Why is it happening now?
It may just be
coincidence that the world’s largest economic
areas are all discussing trade secrets reform at the same time.
But there are at least three common themes in the efforts.
First, many businesses place increasing value on data that
cannot easily be protected by other IP rights. But that data
can also easily walk out of the door in a single email, USB
download or over an unsecure network (a downside of
bring-your-own-device (BYOD) policies). So definitions have to
be re-thought. In China, for example, the proposals seek to
address how to prove that information was kept secret. In the
US, as Aaron Cooper told us, the bills seek to
balance the need for quick action with protecting innocent
Second, how do you prove misappropriation? At our recent
China International IP Forum in Beijing (left), speakers
discussed the challenges of establishing trade secrets
claims in countries such as China and Japan where it can be
hard to obtain relevant documents. As more valuable corporate
assets exist in the form of information, it is vital to be able
to show when they have been taken.
Third is the desire for harmonisation. The EU directive is
explicitly designed to harmonise protection in the 28 member
states, in the
words of the EU Council to create "a single, clear and
coherent regime". In the US, as our Americas editor Michael
Loney explains, there is no federal civil remedy to protect
trade secrets, though 48 states have adopted the Uniform Trade
Secrets Act, and the bills in Congress would remedy that.
Protection across jurisdictions is key for
today’s information-rich businesses, where data
can be transferred across borders in milliseconds. In fact, for
many companies, pan-US or pan-EU harmonisation will not go far
enough: the dream would be a treaty that defines trade secrets,
sets out minimum levels of protection and provides guidance on
remedies worldwide. That, however, will surely remain a dream
for a generation at least.
Reform may be controversial
underestimate the possibility of opposition to these proposals.
many people have concerns about who controls data (see our
article on the TPP). They will want to see safeguards for
whistleblowers as much as big business wants to see fences
placed around valuable information. There could yet be some big
fights as these legislatives proposals are further debated, and
it may take a while before any reform is passed.
In some cases, though, that may not matter too much. While
there are examples of large-scale corporate espionage, much
trade secrets misappropriation takes place at the individual
level, at least according to some of the speakers I heard at
the conference mentioned above. It may not please lawyers to
hear it but education, technical tools, simple employee checks,
preventative measures such as reporting hotlines and simple,
clear contracts may all be more important in the long term than
new legislation in keeping secrets safe.