Protecting Trade Secrets: What Should You Know?

Legal protection of a trade secret depends on the steps you took to keep it confidential. The Trade Secrets Act (Wet bescherming bedrijfsgeheimen) protects information that is secret, has commercial value because it is secret, and has been subject to reasonable measures to keep it that way. This article explains those measures and how to act against an infringement; our article on the legal framework for trade secrets sets out the statutory test and remedies in full.

What is a trade secret?

Business information qualifies as a trade secret if it meets three conditions under Article 1 of the Trade Secrets Act: it is secret, it has commercial value because it is secret, and you have taken reasonable steps to keep it secret.

Secret. The information must not be generally known or easily accessible, including to experts who normally deal with this type of information.

Commercial value. The Trade Secrets Act also requires that the information has commercial value because it is secret. In other words, someone obtaining, using or disclosing it unlawfully could harm your business, financial or strategic interests or your competitive position.

Reasonable measures. Finally, you must take reasonable measures to keep the information confidential. Think of digital security such as passwords, encryption and security software, together with confidentiality and non-competition clauses in employment and collaboration contracts, clear labelling of confidential documents, and a policy on who may access which information. Law & More’s attorneys can help you draft or review these clauses and policies.

The definition is broad. In general, a trade secret is information that can be used to make money, such as production processes, formulas and recipes, but also concepts, research data and customer files.

An illustrative example. A sales employee copies your customer list and price agreements before joining a competitor. If that list met the three requirements above, you can invoke the Trade Secrets Act against both the employee and the new employer, regardless of whether you also had a non-compete clause in place.

When is there an infringement?

If your business information meets the three requirements of Article 1 of the Trade Secrets Act, it is automatically protected as a trade secret; no registration is required. Obtaining, using or disclosing it without permission is then unlawful under Article 2 of the Trade Secrets Act, as is producing, offering or marketing goods that infringe it.

Unlawful use can also follow from breach of a non-disclosure agreement or another contractual obligation that limits the use of the trade secret. Article 3 of the Trade Secrets Act sets out exceptions to what counts as unlawful acquisition, use or disclosure.

For example, acquiring a trade secret through independent discovery, or through reverse engineering – observing, researching, disassembling or testing a product that has been made available to the public or that you obtained lawfully – is not unlawful.

What can you do against an infringement?

The Trade Secrets Act gives you several ways to act against an infringement of your trade secret.

Under Article 5, you can ask the preliminary relief judge for interim and protective measures, such as a ban on using or disclosing the trade secret, or on producing, offering or marketing infringing goods. Protective measures can include the seizure of goods suspected of infringement.

Under Article 6, you can ask the court in main proceedings for judicial orders and corrective measures. These can include recalling infringing goods from the market, adjusting or removing the feature that embodies the trade secret, destroying goods that contain it, and returning or deleting the documents and data carriers that hold it. You can also claim compensation from the infringer under Article 8 of the Trade Secrets Act if the infringer knew, or should have known, that the acquisition, use or disclosure was unlawful.

The same applies to a claim for the reasonable and proportionate legal costs you incurred, under Article 1019ie of the Dutch Code of Civil Procedure (DCCP): if your claim succeeds, the infringer generally has to pay your full legal costs rather than the standard, lower scale.

Frequently asked questions

Do I need to register a trade secret? No. Protection arises automatically once the information meets the three requirements of Article 1 of the Trade Secrets Act; there is no register and no application procedure.

Can a former employee take my information with them? Not if it is a trade secret. A confidentiality or non-competition clause strengthens your position, but the Trade Secrets Act already applies even without one, provided you took reasonable measures to keep the information secret.

What can I recover if someone infringes my trade secret? Depending on the situation, you can ask for a ban on further use or disclosure, the recall or destruction of infringing goods, compensation for your damage, and a contribution to your reasonable legal costs.

In summary

• A trade secret is protected once it is secret, has commercial value because it is secret, and is covered by reasonable confidentiality measures.
• Protection under the Trade Secrets Act arises automatically; no registration is needed.
• Independent discovery and lawful reverse engineering are not an infringement.
• You can ask the preliminary relief judge for interim measures, or the court for corrective measures and damages in main proceedings.
• A proportionate costs order under Article 1019ie DCCP can follow a successful claim.

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How Law & More can help you with this is explained on our corporate lawyer page.