Today’s blog is the third 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. (See our first post here and our second here.)
Today’s post addresses two questions:
1) When does information have trade value?
The first condition of trade secret status is that information be secret. However, to be protected as a trade secret, the secrecy of the information by itself is not sufficient. As a second condition, it must also have commercial value resulting from its secrecy (Art. I.17/1, 1°, b) Belgian Economic Code). In other words, there must be a causal link between the secret nature of the information and its commercial value.
In concrete terms, this means that information has commercial value if it provides the holder with a competitive advantage, thereby giving the holder a commercial interest in keeping it secret.[i] In light of this, the Antwerp enterprise court considered that the unique arrangement of production lines built with standard machines did have commercial value, since it could be used by competitors to optimize their production lines as well.[ii] The Ghent enterprise court ruled that the secret information belonging to “the internal kitchen of the claimant” was such that the claimant’s “commercial success […] partly [depended] on it.” Why this was the case was not explained in the decision. However, it should not be inferred from this that trade secret case law readily attributes commercial value to the disputed information. For example, the Brussels court of appeal recently stated that internal e-mails, in which the holder of the alleged trade secret expressed their opinion about a competitor and their products, have no commercial value – even in the hands of the competitor concerned.[iii]
Finally, it is perfectly possible for information to have commercial value even though it is publicly available, which therefore does not confer trade secret status to the information in question. For instance, the President of the Antwerp enterprise court ruled that the logistical and customer information that was the subject of the dispute provided a competitive advantage, but since that advantage could also be obtained on the basis of information that was publicly known, there could be no question of a trade secret within the meaning of Art. I.17/1,1°, b) Belgian Economic Code).[iv]
As a third requirement for information to be protected as a trade secret, Article I.17/1 Belgian Economic Code states that the person who believes he or she holds a trade secret must have taken “reasonable measures to keep the information in question secret.” Because the concept of “reasonable” is by definition subjective, this is a common concern in the best practices of companies that attach importance to the protection of sensitive business information. Often, companies will look for a balance between what is reasonable according to, for instance, (i) the industry in which they operate, (ii) the size of the company, and (iii) the costs and impact of certain measures.
It is striking that only in a limited number of court decisions, the court actually assessed this third condition. However, the available case law immediately shows that the interpretation of the “reasonable” concept entirely depends on the personal appreciation of the judge and the specific facts of the case. For example, the Antwerp enterprise court ruled that sufficient reasonable measures had been taken, even though it had been shown that the independent service provider who was accused of misappropriating trade secrets was not bound by any written agreement, let alone by any confidentiality or other obligation.[v] According to the judge, other measures that were taken provided a sufficient counterbalance and allowed the court to conclude that the set of measures was reasonable. For example, the judge referred to data security on the servers, where users had limited access rights to the information concerned according to their tasks within the company. Reference was also made to confidentiality obligations in contracts with suppliers and employees, even though this is less convincing given that the party accused of misappropriation was an independent service provider not bound by a written agreement. Elsewhere in the decision it is mentioned that several documents that were copied also explicitly stated that they were not to be distributed outside the company. Although the judge did not explicitly state it in this case, “labeling” documents as confidential is also often given as a classic example of a reasonable measure.
In another case, [vi] the Ghent enterprise court also ruled, regarding an employee’s misappropriation of trade secrets based on similar criteria, that reasonable measures had been taken. “Reasonable measures,” according to this judge, were obvious technical and legal measures to shield information from interested parties for whom it is not intended. As an example of such measures, the judge referred to an ICT infrastructure that allowed only limited access to the server and required a secure login and password. The fact that several persons within the company had access to the same information did not detract from its being a reasonable measure once it was shown that all these persons were bound by the same confidentiality obligation.
[i] Orb. Brussels (Nl) 12 March 2020, ICIP 2020/2, 576.
[ii] Orb. Antwerp May 9, 2019, TBH RDC 2020/3, 382, para. 11.
[iii] Brussels August 27, 2020, 2019/KR/25, Krismar NV, Steels Constructions BVBA v. Stephex Holding Comm. V.A. , unpublished, 29.
[iv] Obv. Orb. Antwerp October 16, 2019, IRDI 2020, vol. 1, 109.
[v] Orb. Antwerp May 9, 2019, TBH RDC 2020/3, 382, para. 11.
[vi] Orb. Ghent 24 June 2020, A.R. A/19/03789, NV Entaco v. Comm. V O.F.P.-Chemicals, unpublished, 8.