New Act on the Protection of Trade Secrets
Information is and is becoming an ever more important asset for businesses and has even been called the world’s most valuable asset. Information can be legally protected in a number of ways. For instance, information which has been arranged in a systematic or methodical way may under certain circumstances enjoy protection under the Copyright Act. Information may also enjoy protection by means of rules and regulation concerning employment and contracts which prohibits employees and partners from disseminating information. A further possibility is that information may enjoy trade secret protection. On the 23rd of May this year, the Riksdag (the Swedish parliament) decided that a new Act on the Protection of Trade Secrets shall come into effect on the first of July this year and replace the current act from 1990.
The new act is partly an enactment of an EU-directive (Directive (EU) 2016/943 of the European Parliament and of the Council of 8 June 2016 on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure).
Generally speaking the new act protects information that 1) is not generally known about or readily accessible, 2) has commercial value because it is secret and 3) has been subject to reasonable steps to be kept secret. In these regards, the new law generally corresponds to the previous law but adds a requirement on the holder of the trade secret to take active measures to keep the information secret. The new and the previous law both prohibited infringements of trade secrets, such as acquisitions, uses or disclosures of trade secrets. Importing, exporting or keeping stock of products that are considered infringing, due to, for instance, that their characteristics or functions had been significantly improved through an infringement is also prohibited.
The holder of a trade secret has a number of measures and remedies available if the holder’s trade secrets are infringed. The holder may, for instance, be awarded damages from the infringer or have an injunction against the continued infringement issued against the infringer. A novelty in the new law is that a bona fide acquirer of a trade secret may request that a court authorizes the continued use of the trade secret for reasonable compensation rather than issue an injunction against the continued use of the trade secret.
The Act on the Protection of Trade Secrets is an important complement to intellectual property legislation for businesses which are based on or benefit from intangible assets. Some intangible assets cannot be protected as a form of intellectual property. Other intangibles may not be suitable to be protected as such as the available protection may require the public disclosure of the asset which may diminish or destroy the value of the asset. In such instances, the protection of the intangible as a trade secret may be the most suitable recourse. Trade secret protection, however, is first and foremost a matter of actually keeping the information secret by minimizing the dissemination of the information to employees and others. Secondly, it is about protecting the information, through agreements and ultimately the Act on the Protection of Trade Secrets, when employees and others need to be given access to the information. The new act enhances trade secret holders’ possibilities to take legal action against misuses of their trade secrets. It also constitutes an important part of the harmonization of the legalization between EU member states. This harmonization means that the protection of trade secrets will be more unitary throughout the Union which will facilitate the handling of trade secrets within the Union.