The European Chemistry Council (CEFIC) has welcomed the European Parliament’s (EP) thumbs-up on a European Commission proposal for a Trade Secrets Directive that would protect undisclosed business information against unlawful acquisition, use and disclosure. Passed by 503 votes to 131, with 18 abstentions, the EP resolution, informally agreed with ministers before the vote, is the temporary culmination of a long-running legislative process dating back to 2011. Its provisions stem from negotiations between the Parliament and the Council of Ministers to clarify the Commission’s proposal.

The legislation now must be endorsed by the legal affairs committee and the full House as well as by the Council. Purpose of the directive, which also introduces an EU-wide definition of trade secrets – i.e. information that has commercial value because it is secret, and has been subject to “reasonable steps to keep it secret” – is to harmonize the laws of the 28 national systems.

CEFIC said the new rules, which will help companies protect themselves against dishonest practices in the internal market, are “of crucial importance” to SMEs in Europe.

“With one company out of every five a victim of theft of trade secrets every year, harmonization should allow the creation of a safe and trustworthy environment,” said rapporteur Constance le Grip, who also stressed that the new directive will also provide safeguards for journalists and company employees.

Under the agreed text, EU member states will be obliged to ensure that victims of misuse of trade secrets are able to defend their rights in court and seek compensation. The terms also lay down rules to protect confidential information during legal proceedings.

While the new directive will set minimum requirements for legal redress, its provisions allow any member state to provide for more far-reaching protection, as long as the inherent safeguards are respected. The legislation additionally places restrictions on redress. Victims of the theft or misuse of trade secrets will not have the right to redress, for example, if a trade secret was acquired, used or disclosed for clearly defined purposes.

As the new directive also guarantees the right to freedom of information, trade secrets are deemed to be unworthy of protection if the intent of revealing them is to uncover misconduct, wrongdoing or illegal activity or to protect a legitimate interest recognized by EU or national law – provided the respondent is acting in the public interest.

Finally, the text stipulates that trade secrets disclosed by workers to their representatives as part of the “legitimate exercise of their representative functions in accordance with EU or national law” are not protected, “provided such disclosure was necessary for that exercise.”