Bill tabled for new Danish act on trade secrets

The bill implements Directive 2016/943/EU of the European Parliament and of the Council on the protection of trade secrets. 

With this bill, Danish enterprises can look forward to strengthened focus on the protection of their trade secrets and know-how.

Yesterday, the Danish Minister for Economic and Business Affairs introduced a bill concerning a Danish ”trade secrets act”. 

Largely, the bill is identical to the bill that went out for consultation on 6 October 2017. See our comments to the bill here.

To some extent, the newly introduced bill incorporates the recommendations of the responses to the hearing. Many responses voiced criticism of the fact that the explanatory notes to the bill unnecessarily limited Danish enterprises’ access to ”reverse engineering”. The common definition of ”reverse engineering” is the conducting of a technical, chemical or similar examination of a product that is available on the market and thus revealing the underlying trade secrets. The explanatory notes to the bill’s definition of trade secrets stated that certain - significant - types of reverse engineering would not constitute legal acquisition of trade secrets. This explanatory note has not been kept in the bill. Bech-Bruun considers it highly positive for Danish enterprises that such unnecessary limitation in the access to perform ”reverse engineering” was not maintained.

One of the main principles of the Directive is the protection of the freedom of speech, including for media, labour, and labour representatives (particularly whistle-blowers). With the newly introduced bill, the Minister for Economic and Business Affairs has found it necessary to include directly in the wording of the act that such statements are exempt from legal action, even if they include trade secrets.

On the other hand, the Minister did not comply with several recommendations that enterprises should be able to apply the provisions on the securing of evidence with a view to strengthening the possibilities of sanctioning violation of their rights. Bech-Bruun finds it highly inappropriate that at this point in time there is no basis for enforcing the securing of evidence on misappropriation of trade secrets.

Main elements of the bill

The concept of “Trade secret” is defined. The definition is close to the definition of the concept hitherto applied in case law. Also defined are unlawful acquisition, misappropriation and disclosure of trade secrets, inspired by current case law with respect to these issues. 

Introduction of time limits for initiating legal proceedings. The holder of a trade secret must file for a preliminary injunction/order or initiate proceedings regarding infringement of the rules within a six-month time limit. However, it is still unclear how these limits are to be determined in practice. 

On infringement of the rules, sanction options now include seizure and delivery up of infringing products. Moreover, financial remedies are expanded so that an enterprise may be financially compensated in addition to receiving damages. 

The court may in exceptional cases allow continued misappropriation of trade secrets against the provision of guarantees or financial compensation for the holder of the trade secret. 

Section 23 of the Danish Marketing Practices Act (markedsføringsloven), which regulates the prohibition against unlawful use and disclosure of trade secrets for persons who used to be affiliated with an enterprise, is repealed. 

Schedule The first reading of the bill in the Danish parliament is scheduled for 23 January 2018. Pursuant to the EU Directive (2016/943/EU), Member States must have implemented the Directive into national legislation no later than 9 June 2018.