(Publ. 27 NOV 2014) Trade secrets are a key competitive advantage for all types of businesses. As businesses and organizations are increasingly basing their activities on internal information and knowledge, this area is more important than ever. Recently, a number of developments have occurred regarding the legal protection of trade secrets, both in Sweden and in the EU.

Sweden

There has been a legislative effort in Sweden to strengthen the protection of trade secrets. In late 2013, a draft to the Council on Legislation, “A better protection for trade secrets”, was announced, which proposes that the Act on the Protection of Trade Secrets should be complemented by a new provision for unauthorized use or misappropriation of trade secrets. The changes will strengthen the protection against company secrets being disclosed and used in bad faith by employees or other individuals in the business. This will be achieved by the fact that certain persons working under employment-like forms, but who are not actually employees, will also be covered by the rules. The draft to the Council on Legislation also proposes more severe penalties for the crime of industrial espionage.

At the same time it has also been made clear in the draft to the Council on Legislation that trade secrets does not prevent employees and others from exposing crime or other serious deficiencies in the operation, i.e. so-called “whistleblowing”. It is proposed that the Act explicitly states that information about such misappropriations can never be trade secrets.

The legislative proposals are part of an effort to create better conditions for innovation and knowledge-intensive enterprises in Sweden. Trade secrets are an important part of this effort. A clear and uniform protection of trade secrets is therefore important to promote a healthy competitive and the innovative creation of information.

EU

On the EU-level, trade secrets have also been given a new focus. In late May 2014 the European Council announced that they will go ahead with an EU Directive to strengthen the protection of trade secrets throughout the EU. In summary, the EU proposal covers civil law regulations and protection against trade secrets being acquired, exercised or divulged illegally. The proposal means that the definition of what a trade secrets are, what constitutes an attack on them, as well as judicial remedies and sanctions will be common in the EU.

The Directive will most likely be consistent with the Swedish Act on the Protection of Trade Secrets in large parts, but some new questions may arise. We will therefore continuously monitor any further developments concerning the Directive, which is expected to be passed during the 2015.