The Luxembourg law of 26 June 2019 on trade secrets (the Trade Secrets Act) implements into Luxembourg law the 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.
The Trade Secrets Act sets out new provisions protecting trade secrets in a context where such secrets can rarely be subject to an intellectual property right, such as a patent or copyright, but still have substantial commercial value for a company and thus deserve legal protection.
The Trade Secrets Act defines a “trade secret” as any information that:
In practice, trade secrets can, for instance, consist in information relating to clients and suppliers (e.g. client or supplier database), markets research, strategies or business plans, specific business methods, etc.
The Trade Secrets Act specifies where the acquisition, use or disclosure of trade secrets is lawful and where it is unlawful.
The use or disclosure of a trade secret will, for instance, be unlawful whenever it is carried out without the consent of the trade secret holder and in breach of a confidentiality agreement or any other contract with the trade secret holder limiting the use of the trade secret. Acquisition of a trade secret will however be lawful inter alia when the trade secret is obtained through independent discovery or creation or through any other method that is in line with honest commercial practices.
To address issues relating notably to freedom of the press or the protection of whistle-blowers, the Trade Secrets Act sets out derogations in relation to unlawful acquisitions, uses and disclosures of trade secrets that are made for:
Prior to the Trade Secrets Act, companies could protect their trade secrets in Luxembourg by using any or all of the following legal grounds:
In addition to these mechanisms, the trade secret holder can now use a wide array of measures, procedures and remedies introduced by the Trade Secrets Act, amongst which are civil proceedings to obtain:
The Trade Secrets Act allows trade secret holders to request the above through summary proceedings (référé), which are fast-track civil proceedings.
Although the measures, procedures and remedies set out in the Trade Secrets Act are meant to apply only once a trade secret has been infringed (e.g. following a data breach), organisations would be well advised to take the opportunity of the newly adopted legal framework to review their policies and practices on the protection of trade secrets.
Indeed, the Act’s definition of a “trade secret” gives a certain amount of leeway to organisations to define what their trade secrets are, and especially to qualify an information as a trade secret, it must notably have been subject to reasonable steps by the trade secret holder to keep it secret. This should encourage organisations to:
The benefits of carrying out the above tasks and being pro-active when it comes to trade secrets are threefold:
PwC Legal is at your disposal should you require additional information on the Trade Secrets Act or wish to take advantage of this new legal framework.
Partner, Avocat à la Cour au Barreau de Luxembourg, PwC Legal
Tel: +352 26 48 42 35 13
Partner, Avocat Liste IV au Barreau de Luxembourg, PwC Legal
Tel: +352 26 48 42 35 98