In our prior post, we discussed what constitutes unlawful use of trade secrets, who bears the burden of proof, and how evidence can be collected to prove trade secret misappropriation under Belgian law.
Today’s post, which is the fifth and last in our series where we spotlight international issues in trade secret law, looks at two final questions:
1) Protection of trade secrets during court proceedings: who is allowed inside the “confidentiality club”?
A “confidentiality club” may sound rather like a speakeasy, but it is not. For those readers who are not particularly familiar with this area, we will first explain the problem for which the “confidentiality club” attempts to provide a solution. A thorny issue during court proceedings to enforce trade secrets is that the holder of the trade secret sometimes has to reveal more than they would like in order to increase the chances of success. This is often the reason why claimants are deliberately vague about the exact contents of a trade secret, or about where exactly the trade secret value resides. This comes usually with the risk that the claim will be dismissed for failure to meet the burden of proof. It is, understandably, not an attractive option to draw up briefs providing detailed information about the trade secret when it is not clear how much secret information has actually been stolen or is in the possession of the defendant. This would simply provide the contested information on a silver platter to the defendant. A similar problem arises with the pleadings and decisions of the court. Because, as a general rule, court hearings are public in Belgium, interested competitors could be in the audience to listen to everything that is being disclosed about the litigated trade secrets. However, for judgments and decisions to be based on correct reasoning and, above all, for them to be intelligible to parties not involved in the proceedings, judgments will have to include minimum information about the trade secrets. When transposing the Trade Secrets Directive, the Belgian legislator tried to meet this sensible concern by setting out a general protection scheme in Article 871bis of the Belgian Judicial Code. Article 871bis of the Belgian Judicial Code can be applied not only in proceedings about trade secrets, but also in other proceedings where a trade secret is used as evidence and must be submitted for the assessment of the court. Among the measures listed in Article 871bis of the Belgian Judicial Code are the possibility to issue redacted versions of court decisions and, of course, to set up so-called “confidentiality clubs.” These refer to the limited groups of persons who are, in certain cases, given access to certain documents shared in the proceedings and/or at certain hearings (and the relevant reports) during which trade secrets will be discussed.
Although we came across several redacted judgments while preparing this case law overview, the number of judgments regarding the composition of confidentiality clubs themselves was limited to the following two cases.
The first judgment concerned a ruling by the President of the French-speaking Brussels enterprise court in a case concerning the enforcement of patents and not trade secrets.[i] In this case, the defendant had to disclose trade secrets as part of its defense against alleged patent infringement and asked the court to create a “club de confidentialité.” The ruling contains some interesting considerations about exactly who may be part of a confidentiality club. In this regard, the judge first stated that Article 871bis of the Belgian Judicial Code did not impose any limitation as to the number or capacity of the persons making up the club. The only criterion provided in Article 871bis of the Belgian Judicial Code is that the members be limited to those who are strictly necessary to be able to effectively exercise the procedural right of the party in question. In addition, the court ruled that these members can also be persons who work for that party in the technological field to which the trade secrets of the other party relate, as they are very well placed to make a technical assessment of, for instance, infringement arguments. The court also ruled that Article 871bis of the Belgian Judicial Code does not require each member of the confidentiality club to have power of attorney from the party they represent. Furthermore, according to the judge, a patent attorney cannot be considered a substitute for an attorney-at-law because their function and knowledge are fundamentally different. Thus, they can both be part of the same confidentiality club. Finally, it was ruled that a member of the confidentiality club can be replaced in case of impediment, without requiring prior approval by the other party.
In the second judgment, the Antwerp court of appeal gave a clear summary of the conditions that a request for application of Article 871bis of the Belgian Judicial Code must meet: 1) demonstrate that a trade secret must be used during the proceedings and 2) justify which specific measures can be ordered to further guarantee the confidentiality of the information, provided that the confidentiality is accepted.[ii] Elaborating on the concept of a confidentiality club, a number of interesting issues stand out: Article 871bis §2, last paragraph of the Belgian Judicial Code explicitly states that for each party “at least one natural person as well as the respective lawyers” must be part of it. Nevertheless, the court accepted that, as requested by certain parties in that case, only the lawyers of those parties were part of the confidentiality club and not the parties themselves. The court referred to the fact that these lawyers had power of attorney and were authorized to represent the parties anyway. However, the court was consistent and prohibited these lawyers from sharing with their clients’ information circulated within the confidentiality club, either directly or through a discussion in briefs. Anticipating the practical problems that this was likely to create, the court did, however, also explicitly state that it would always be possible to request that “one natural person” be added to the confidentiality circle on a temporary basis.
2) What remedies can be imposed in cases of misappropriation?
Although the Trade Secrets Act took inspiration for its enforcement aspects from the rules on enforcement of intellectual property rights, there are some striking differences. The absence of a counterfeit search and seizure procedure was already mentioned in our last post. In addition, for trade secrets cases, Article XI.336/4 of the Belgian Economic Code provides a whole series of criteria that can be considered by a judge when seeking to determine whether and to what extent certain enforcement measures should be granted.
In practice, however, case law shows a general tendency to grant fairly classic enforcement measures. The Ghent enterprise court imposed a competition ban for six months, subject to necessary penalty payments.[iii] Although the court considered that this measure might on its face appear to be drastic, it argued that it was likely to be effective in stopping the infringement, and that the six-month period allowed the infringer to adapt his conduct and resume lawful competition afterwards. In another case, the Antwerp enterprise court rejected the request to destroy the copied trade secrets, as it would have been easy to copy the digital data again before destroying the original copy.[iv] As an alternative, the court imposed a prohibition on further communication or disclosure of the information, under forfeiture of a penalty payment. The Ghent court of appeal provided an identical measure for the use of confidential information in copied databases.[v] The President of the Antwerp court imposed an obligation to return the information, and also required the identification of all persons to whom the infringer had already disclosed the trade secrets.[vi]
[i] Ond. Brussels (Fr) October 31, 2019, Ing.-Cons. 2019, 657 et seq.
[ii] Antwerp 13 May 2020, A.R. 2020/RK/8, Melis Events BV v. De Lilse Bergen Vzw and others, unpublished, marg. 13 et seq.
[iii] Orb. Ghent 24 June 2020, AR A/19/03789, NV Entaco v. Comm. V O.F.P.-Chemicals, unpublished, 12.
[iv] Orb. Antwerp May 9, 2019, TBH 2020, 383.
[v] Ghent June 4, 2018, IRDI 2018, 264.
[vi] Vz. Rb. Antwerp 26 March 2020, A.R. 20/19/C, unpublished.