The new Trade Secrets Act will enter into force on 20 April, introducing further clarity to Slovenian legislation with a renewed definition of business secrets. The new Act comprehensively regulates business secrets, as it uniformly defines the concept of a business secret – which was, until now, regulated in several sector-specific acts. In the event of potential violations of business secrets, the Act also provides for different protective measures and judicial proceedings.
Why renewing business secrets?
The adoption of the Act is due to the implementation of Directive 2016/943 on the protection of undisclosed know-how and business information – trade secrets, against their unlawful acquisition, use and disclosure. Business secrecy was previously defined in Slovenian legislation in several acts – the Companies Act, Public Information Access Act, the Employment Relationships Act and the Prevention of Restriction of Competition Act, while different acts contained procedural provisions related to its protection.
The concept of trade secrets has been defined differently throughout the European Union, which gave rise to uncertainty and unpredictability. Therefore, the European Commission decided to unify this important field that effects the day-to-day conduct of business. The aim of the Directive is to establish a standard framework of the minimum standards for the protection of trade secrets, thus increasing the efficiency of legal protection, while simplifying it at the same time.
The main solutions of the new legislation
The Act redefines the concept of a trade secret, the basis of which was previously defined by the Companies Act and, as such, was often subject to interpretation in court proceedings. The concept of a trade secret incorporates new undisclosed know-how and business information. The following elements of a trade secret must be simultaneously met:
- A trade secret is a secret that is not widely known or easily accessible to persons from spheres who typically deal with this type of information;
- It has a market value;
- A person who has legal control over this information has to act in a manner to preserve it as a secret in the current circumstances. This condition will in principle be met, if the company adopts a resolution on the determination of a trade secret and informs the relevant persons thereof.
The Act distinguishes between legal and unlawful acquisition, use or disclosure of trade secrets. In the context of judicial protection, the holder of a trade secret may submit against the infringer clearly provided claims, as well as claim compensation for damages. An interim injunction is available for the immediate rectification of the violation.
Importantly, the obligation to keep a trade secret confidential is explicitly ensured also within judicial proceedings. The Act also provides for cases in which legal protection may be denied to the holder of a trade secret, in order to protect the third person’s legitimate interest. This regulates the activity of persons who disclose the disputed practices of companies and other organizations (i.e. whistle-blowers).
What should companies do?
As a first step, companies will need to adopt appropriate internal acts or to amend existing ones in such manner that will ensure the widest protection of their trade secrets.
It is worth considering which data should be protected as a trade secret and to whom such information should be disclosed. The old wisdom of “less is more” should be kept in mind. It will only become clear over time, and through the use of this Act in judicial proceedings, whether the legislator succeeded in achieving the desired simplification of the protection of trade secrets.
By Igor Anglovski, Partner / Independent attorney at law in cooperation with Karanovic & Partners