Today’s blog post is the first in a series where we spotlight international issues in trade secret law, in particular, answering practical questions and providing insights into the application and interpretation by Belgian courts of specific aspects of the Belgian Trade Secrets Act.
On August 24, 2020, a dedicated few celebrated the second anniversary of the entry into force of the 2018 Belgian Trade Secrets Act.[i] With this new law, the Belgian legislator transposed the 2016 EU Trade Secrets Directive[ii] into national law. The Trade Secrets Directive is the result of a European Commission regulatory initiative, taken after a number of issues were revealed by studies conducted at its request.[iii] In particular, it was found that EU Member States lacked a uniform approach to trade secrets and that some of them had very limited trade secrets protection, which in turn hindered innovative cooperation between companies across the EU. In addition, trade secrets were perceived as important assets for companies in terms of innovation and competitiveness. This was particularly true for SMEs which, given their more limited resources, attach greater importance to trade secrets than to other, generally more expensive, forms of protection (such as patents). The need for effective and coherent protection had thus increased significantly in recent years, partly because of an increased risk of misappropriation and abuse of confidential business information. The Trade Secrets Directive aimed to harmonize the rules across the EU and to ensure that companies could rely on both substantive and enforcement provisions, with the ultimate goal of achieving an adequate and consistent level of civil measures to protect trade secrets throughout the internal market.[iv] The Belgian Trade Secrets Act and its application in case law should be seen in this specific context.
Although Belgian law is just an example of how the EU Trade Secrets Directive may have impacted trade secret protection and enforcement in the EU, Belgian case law may serve as an inspiration for foreign judges and parties. It should also be noted that Belgium is an international logistics hub and home to many actors in international research-based industries, in particular in the life sciences and petrochemical sectors. These industries typically rely heavily on technical know-how and are exposed to a higher risk of trade secrets misappropriation. Belgian trade secrets case law reflects such international exposure: the majority of the cases analyzed involve a foreign party.
Today’s post addresses two questions:
A surprisingly large number of companies still have the misconception that the biggest threat to their trade secrets is external. Competitors and corporate spies are often seen as the “usual suspects.” However, the opposite is true: most cases of trade secret misappropriation involve employees or ex-employees, and consultants.
This is clearly reflected in recent Belgian case law. Almost all cases involved an ex-employee or a self-employed service provider.[v] Only one exception was found: in that case, the party accused of misappropriation of trade secrets was a competitor. It was accused by the claimant of using the claimant’s trade secrets for its own benefit, after it had become aware of them through a number of confidential documents exchanged in the context of a joint venture.[vi] As a side note, it should be mentioned that, as a variation on the same theme in a limited number of cases, in addition to the ex-employee or self-employed service provider, the ex-employee’s new employer,[vii] or the company set up by the defendant, [viii] was also involved in the proceedings.
The Trade Secrets Act provides several procedural options to enforce trade secrets protection, which are:
- the imposition of a protection order relating to the infringing goods;
- the imposition of provisional prohibition measures or permission for the continuation of the alleged unlawful use in exchange for a guarantee from the defendant;
- a claim on the merits: art. XI.336/3 Belgian Economic Code mentions a number of possible measures that a judge on the merits can determine;
- a cease-and-desist order (in proceedings similar to summary proceedings), in which the judge can order the same measures as on the merits (except, of course, regarding compensation) insofar as the measures will contribute to the cessation of the infringement or its consequences.
From this list of procedural options, it is immediately obvious that there is no evidence-gathering procedure, such as is provided for by counterfeit search and seizure proceedings in the case of an alleged infringement of intellectual property rights. This lack results from the legislator’s decision not to qualify trade secrets as intellectual property rights.[ix]
Although the case law does not indicate any particular preference for a specific procedure when acting against the misappropriation of trade secrets, it does show that the main goal is to stop the infringement. Whether this is achieved by way of classic adversarial summary proceedings[x] or by a cease-and-desist order seems less relevant.[xi] The choice of procedure seems to be dictated mainly by whether or not there is sufficient evidence, or whether there is a risk that the evidence might be suppressed. At least, that is what can be inferred from the fact that in all cases where a cease-and-desist claim was brought, it was clear that the claimant already believed it had sufficient information to bring a claim – whether thanks to internal investigations or because of the blatant nature of the infringement. However, this belief did not necessarily lead to the claimant’s claim also being upheld.
As far as criminal cases are concerned, there seems to be only one case that has been decided since the transposition of the Trade Secrets Directive into Belgian law.[xii] That there have not been more criminal cases is probably due to reasons that also applied prior to the entry into force of the Trade Secrets Act and which make this option less popular than the civil law route. For example, the fraudulent intent required under art. 309 Criminal Code, the narrower definition of the criminal law concept of “trade secret,” the obligation to relinquish control of the proceedings as claimant, are all factors that may explain the lack of criminal cases.
[i] Act of July 30, 2018 on the protection of trade secrets.
[ii] Directive 2016/943 of June 8, 2016 on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure.
[iv] Recital (10) Trade Secrets Directive.
[v] Notably in the following cases: Ghent June 4, 2018, IRDI 2018, chapters 3-4, 256; Vz. Arb. Brussels 22 October 2018, unpublished; Orb. Antwerp 9 May 2019, TBH RDC 2020/3, 380; Vz. Orb. Antwerp October 16, 2019, IRDI 2020, afl. 1, 109; Corr. Leuven 12 November 2019, unpublished; Vz. Rb. Antwerp 26 March 2020, AR 20/19/C, unpublished; Orb. Brussels (Nl) 12 March 2020, ICIP 2020/2, 565; Orb. Ghent 24 June 2020, AR A/19/03789, NV Entaco t. Comm. V O.F.P.-Chemicals, unpublished.
[vi] Obv. Orb. Brussels (Nl.) September 9, 2020, Tecnicas Reunidas v. NV Yara Belgium, unpublished, 8.
[vii] See Ghent June 4, 2018, IRDI 2018, chapters 3-4, 256; Brussels August 27, 2020, 2019/KR/25, Krismar NV, Steels Constructions BVBA v. Stephex Holding Comm. V.A., unpublished; Vz. Orb. Antwerp October 16, 2019, IRDI 2020, afl. 1, 109.
[viii] Orb. Ghent 24 June 2020, AR A/19/03789, NV Entaco v. Comm. V O.F.P.-Chemicals, unpublished; Corr. Leuven 12 November 2019, unpublished, in which the civil party filed a complaint against both its ex-employees and the companies founded by the ex-employees.
[ix] Draft Act of June 12, 2018 on the protection of trade secrets, Explanatory Memorandum, Parl. St., Parliament 2017-2018, no. 3154/001, p. 9.
[x] Vz. Rb. Antwerp 26 March 2020, AR 20/19/C, unpublished.
[xi] Obv. Orb. Antwerp October 16, 2019, IRDI 2020, afl. 1, 109; Orb. Brussels (Nl) 12 March 2020, ICIP 2020/2, 565; Orb. Ghent 24 June 2020, AR A/19/03789, NV Entaco t. Comm. V O.F.P.-Chemicals, unpublished.
[xii] Corr. Leuven November 12, 2019, unpublished, referring to the case law of the Court of Cassation.