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New rules on how to protect business secrets

A new Danish Act has been adopted regarding the protection of business secrets to comply with an EU directive. The Act constructs a better overview of the legal area and gives the companies clearer guidelines to protect their business secrets. Furthermore the Act sets out the reaction possibilities to an offending party.

The Ministry of Industry and Commerce has in January 2018 submitted a bill concerning a new Danish Act regarding the protection of business secrets, which has been adopted and entered into force on 9 June 2018. The purpose of the act is the implementation of an EU directive, which aligns legislation throughout the EU. With the implementation, it will be easier and simpler for companies to operate in other EU countries, which leads incentive to innovate across the Union.

The act implements the European Parliament and the Councils Directive 2016/943 / EU of 8 June 2016 on the protection of confidential know-how and confidential business information (business secrets) against unauthorized acquisition, use and disclosure. The aim of the Directive is to enhance the protection of companies’ trade secrets and know-how, and the Directive was adopted for companies to improve and optimize their business. Member States must implement the Directive into their national legislation until 9 June 2018.

The Danish Act ensures protection of business secrets and creates a uniform framework for companies across the EU. The law compiles Danish regulation in this area, so that companies have a better basis for protecting their business secrets. Furthermore, the compilation constructs a better overview of the legal area. The current different laws in EU member states makes it difficult for companies to gain an overview of how their business secrets are protected across the different EU countries. The aim of the implementation is to give companies better tools to actively enforce the protection of their business secrets.

In practice, there are no major changes due to the implementation. Today the Danish Marketing Practices Act, for example, regulates the prohibition against unlawful use and disclosure of trade secrets for employees (article 23). When the new Act on Trade Secrets comes into force, article 23 of the Danish Marketing Practice Act will be repealed.

Additionally, the new Danish Act on Trade Secrets contains specific legal provisions on what constitutes a legal and illegal acquisition and a specific definition of the concept of business secrets. The definition corresponds to previous Danish practices arising from the Marketing Act and the courts, which must be: 
· information that is not publicly available, and which 
· must have economic value, and which 
· is subjected to a certain degree of confidentiality and protection.

The definition of business secrets includes know-how, market and business strategies and inventions.

Furthermore, the act sets out the reaction possibilities of a business secret to an offending party. This means that companies get clearer guidelines and tools when it comes to protecting their business secrets in Denmark and in the EU.

On 10 April 2018, the bill was adopted as issued and the law will enter into force on 9 June 2018. Companies should consider what information is considered as business secrets and whether the company has taken sufficient measures to keep them confidential.

For further information of e.g. confidentiality agreements with your employees or if you become aware of violations of the company’s business secrets, please contact our partner and lawyer Alexandra Huber, at +45 4445 5002, or send an email to alexandra.huber@lead-roedl.dk