Co-author: Lucie Ciaramella
The European Union (“EU”) directive No. 2016/943 of 8 June 2016 on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure was implemented into French law on 1 August 2018 in Articles L. 151-1 to L. 154-1 of the French commercial code.
In accordance with the EU directive, Article L. 151-1 of the French commercial code provides for three cumulative criteria which must be fulfilled in order to have an information protected by the legal regime of trade secrets. The information must:
(i) not be commonly known or easily accessible to persons familiar with this type of information because of their business sector;
(ii) have a potential or effective commercial value because of its secret nature;
(iii) be the subject to “reasonable protection measures” from its legitimate holder, according to circumstances, to keep it secret.
While the EU directive implemented into French law offers effective means to protect trade secrets, in practice, trade secret owners seem reluctant to launch actions to protect their assets.
This may be explained by the lack of clarity of certain concepts related to the protection of trade secrets, such as the requirement for “reasonable protection measures”.
Indeed, this notion was neither defined in the directive nor in French law.
Decisions making the legal provisions related to trade secrets more accessible and intelligible are thus eagerly awaited to make the regime more effective.
In France, it is notably worth noting a case leading to a decision dated 28 September 2022 giving guidance regarding the concept of “reasonable protection measures” in the context of infringement-seizure proceeding concerning a patent related to an innovative process of biomass gasification.
In this case, a patent infringement-seizure proceeding was initiated by the rightsholder against Total Raffinage France. The Paris Court of appeal authorized the seizing party to conduct a description of all the system characteristics likely to constitute a patent infringement and to seek out and copy some documents related to the gasification process.
In this context, the seized party requested interim measures, i.e. the placement of the documents obtained in escrow in accordance with Article R. 153-1 of the French commercial code.
Indeed, following the French decree of 11 December 2018, clarifying the provisional and protective measures that the judge may pronounce to protect trade secrets in the course of proceedings, Article R. 153-1 of the French commercial code now provides that, the judge may order ex officio the escrow of seized documents to ensure the protection of trade secrets. This new mechanism applies both to in futurum investigations to infringement-seizure proceedings.
To qualify for the protection set out by this new mechanism, the documents seized must be protected by trade secrets. Therefore, the judge must assess whether the information fulfills the three cumulative criteria provided by Article L.151-1 of the French commercial code.
In a decision dated 28 September 2022, the Paris court of appeal considered that:
- the seized information was not disclosed to the public and was therefore not commonly known or easily accessible to the public or to the industry players;
- the seized information has effective commercial value due to the industrial stakes of the project, with a research and development budget of about 178.1 million euros;
- the measures taken to keep documents confidential were reasonable: “the company's bylaws, the confidentiality agreement binding the companies, the internal regulations applicable to the establishment concerned by the infringement seizure measure - restraining access to the site, subject to authorization or prohibiting photo -, the measures imposed on the employees, particularly in their employment contract, stipulating an obligation of discretion, confidentiality and non-disclosure” (Paris court of appeal, 28 September 2022, No. 22/06168).
The judges found it irrelevant to order a measure of filtering of the documents seized by an expert. Instead, the setting up of a confidentiality club was ordered to ensure the respect of both trade secrets and the right to prove the alleged infringement. Access to the documents was thus limited to the lawyer and the industrial property attorney of each party, who shall conceal the confidential parts.
Therefore, the court upheld the request for escrow of the confidential documents obtained.
This decision highlights the importance for trade secrets owners to take real and effective measures to protect sensitive information as soon as the secret is developed and this, prior to any proceedings. Judges strictly assess the reasonableness of the measures taken to keep the information secret at the time of the investigations whereas most of the time, the investigation measures are carried out without the seized party being prepared.
Further decisions, which are still rare on the subject, will allow us to further define the contours of the reasonableness of the protective measures expected.
Pt. 1 to this article
