The European Parliament’s Legal Affairs committee on Tuesday voted on draft legislative proposals on the protection of trade secrets. While the Parliament’s proposals are a slight improvement on the original Commission proposals, my demands on improving transparency requirements were not heard.
Constance Le Grip’s report was adopted with eighteen votes in favour, two against and three abstentions (among which the GUE). I voted against this text. With my colleague from the Greens/EFA, Max Andersson, we were the only ones to oppose this text which we believe to threaten the transparency of the economic life, the exercise of fundamental freedoms and the work of journalists.
Trade secrets are an alternative to the legal protection of exclusive use of knowledge. So why legally protect trade secrets on top of patents? The European Commission states that its proposals were necessary because of the need to harmonise rules across the EU, without creating new intellectual property rights. Despite the statements, this new legislation would introduce substantial changes into European law, which currently does not protect trade secrets. While the member states have national legislation regarding the protection of trade secrets, their definition of what can be considered a trade secret is often much more narrow. The adoption of the European directive could therefore significantly broaden companies’ abilities to keep certain information away from the public eye.
One can question the political agenda behind this directive, whereas the TTIP negotiations are underway with the US, which are also currently discussing in parallel a Federal law on the matter. The EU should rather work on improving the patent system, instead of introducing new layers of legal protection on information. The consequences of an EU wide legal protection of trade secrets, if not strictly defined and limited to legitimate cases involving clearly identified commercial activities, could be disastrous for the freedom of information and of expression, on the free circulation of workers, and on the protection of whistleblowers.
While the Commission’s proposal does not aim at creating new intellectual property rights, it should strive to set a balance between all fundamental rights being involved. Yet such balance is precisely missing. If the freedom to run a business can in certain instances justify the protection of secret information, the exercise of fundamental freedoms, such as the freedom of expression, the freedom of information and the freedom of circulation of workers, should not be jeopardised. Instead of considering the disclosure of trade secrets through the exercise of fundamental rights lawful, the directive only states that no remedies are sought against the “legitimate” use of certain fundamental right such as freedom of expression. In other words, use and disclosure of a trade secret is still unlawful if you’re exercising your right to freedom of information or freedom of the press, and if you don’t want a court to sentence you, it’s upon you to prove that your action was “legitimate” in order to avoid legal action against you (rather than the trade secret holder having to prove that your action was not protected by fundamental rights).
In addition to the lack of protection of fundamental freedoms in Article 4 of the draft Directive, I strongly oppose the blurry definition of trade secrets. For example, up to now, German courts have a list of requirements developed through case law that a piece of information has to fulfill in order for it to be recognised as a trade secret. One of the most important of these requirements is that the disclosure of the information in question would threaten the company’s legitimate economic interests. Yet the draft directive makes no mention of this important test of legitimate interest. This would enable companies to easily withhold from the public any information whose disclosure might embarrass the company. For example, a German court ruled that the information that a company has been fined for filling lower amounts of goods into a packet than advertised cannot be considered a trade secret, because the interest of the company in keeping this information under locks is not legitimate (VG Berlin, Urteil vom 10. 5. 2006 – VG 2 A 72.04). Since Germany does not have a definition of trade secrets written into national law, the very vague definition employed in the European directive would probably be applied once the directive is adopted. That would mean that courts no longer have to test whether there is a legitimate interest by the company to keep the information in question secret.
A broader definition of trade secrets would be devastating for freedom of information in Germany, because our state-level freedom of information laws do not weigh the right to freedom of information against the protection of trade secrets. If somebody is making a freedom of information request that would disclose a trade secret, that part of the request is automatically rejected (in that sense, trade secrets enjoy stronger protection under German freedom of information law than personal data!). The abuse of trade secret protection is mostly kept in check by the courts (though not always successfully) by employing a narrow definition of trade secret – one that is now under threat from the new EU directive.
Fundamentally, the directive’s very vague definition of trade secrets means that companies have leeway to abuse the legislative provisions. My amendment 102, tabled with my colleague from the Greens/EFA, Pascal Durand, was unfortunately not taken into account:
‘Trade secret’ means know-how and business information which meets all of the following requirements: (…) (b)’has independent and significant commercial value because it is secret and because its disclosure will be significantly detrimental to the legitimate economic interest of the person lawfully controlling the trade secret’.
This proposal needs special scrutiny in light of the recent court cases against whistleblowers and journalists involved in uncovering the LuxLeaks tax avoidance scandal, who are on trial in Luxembourg for the disclosure of trade secrets. Whereas the Parliament adopted last year a resolution in reaction to the NSA surveillance programme, seeking to protect whistleblowing activities, I think the vote of the Legal Affairs committee is not consistent. Rather than extending the scope of trade secrets in a new directive hurried through the institutions, we should first adopt a Europe-wide whistleblower protection law and then work on a comprehensive overhaul of the different national trade secrets legislations to ensure that the public interest is protected. Searching and getting such information, and then taking the risk of communicating it in the public interest, should be guaranteed by the freedom of the press. As shown by the wide-scale petition launched in France, this is something that journalists are ready to fight for, and that should be backed by the European people’s representatives.
Nevertheless, the Greens/EFA Group succeeded in adding provisions allowing whistleblowers to reveal trade secrets when it is in the general public interest. In the text adopted this week, whistleblowers are now not obliged — as initially called for by the Commission — to prove that their revelations were ‘necessary’ for the detection of an irregularity.
Next steps
The Legal Affairs committee approved a mandate to start informal talks with the Council with a view to reaching a first-reading agreement.
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