Trade secrets protection act

For many businesses, specific knowledge and expertise are an important pillar of their success in the market. Specific knowledge or ‘know-how’ can enable a business to make products or provide services that give it a significant competitive advantage. The Coca-Cola recipe is perhaps the best-known example: the recipe is kept strictly secret and must under no circumstances fall into the hands of competitors. It is a trade secret.

Trade Secrets Protection Act

Better and statutory protection
for your trade secrets

Remarkably, until recently there was no specific legislation providing protection for trade secrets. This changed in 2018 with the introduction of the Trade Secrets Protection Act (Wet bescherming bedrijfsgeheimen, Wbb). The Act protects knowledge that is important to you and is not intended to be shared with your competitors.

The Act therefore regulates:

what is meant by a trade secret,
how you can take action in the event of unlawful acquisition, use or disclosure of this confidential information, and
what measures you can take.

Trade secrets – do you have them?

But what constitutes a trade secret under the Act? The Act sets out three conditions that information must satisfy in order to be protected as a trade secret.

First, the information must not be generally known within your sector. In other words, it must be information that distinguishes you from your competitors and cannot readily be ascertained by them. Again, the Coca-Cola example applies: many manufacturers can produce soft drinks, but only the specific recipe gives Coca-Cola its unique taste.
The information must enable you to make products that you can place on the market. After all, only the recipe enables Coca-Cola to be made. The information therefore has commercial value. This is the second statutory requirement.
The third requirement is that the person in control of the information must have taken reasonable steps to keep it genuinely secret.

Do you possess highly specific and confidential knowledge that you use in your business? If so, there is a good chance that you have a trade secret.

Acquisition, disclosure and use of trade secrets

It may sound obvious: secrets are meant to remain secret. That is why unlawfully copying or stealing trade secrets is wrongful. Employees or former employees who take trade secrets with them in order to set up a competing business also act unlawfully. This occurs regularly.

Reverse engineering is permitted

The Act also recognises a number of situations in which acquiring a trade secret is not unlawful. For example, a competing business may independently arrive at exactly the same findings through its own research. It is also permitted to dismantle, analyse and examine products that a competitor has placed on the market. This is known as reverse engineering and is therefore lawful.

What can you do if your trade secrets are being used?

The Act gives you a fairly extensive range of remedies that you can use where someone has unlawfully acquired and used your trade secret. At your request, the court may order the following measures:

the cessation of, or prohibition on, the unlawful use or disclosure of the trade secret;
a prohibition on producing, offering, placing on the market or using infringing goods, or importing, exporting or storing infringing goods for those purposes;
the recall of the infringing goods from the market;
the removal of the infringing characteristics of the infringing goods;
the destruction of the infringing goods or their withdrawal from the market, provided that such withdrawal does not undermine the protection of the trade secret;
the destruction in whole or in part of documents, objects, substances, materials or electronic files containing or embodying the trade secret unlawfully, or the delivery up in whole or in part of those documents, objects, substances, materials or electronic files to the trade secret holder.

Is urgent action required? Bring summary proceedings

If you need to act urgently to stop an infringement of a trade secret, you can apply to the interim relief judge and bring summary proceedings. You may also seek protective measures and have goods made using the secret knowledge and know-how seized.

Do you believe that your trade secret is being used unlawfully? Contact one of our intellectual property lawyers promptly.

Special procedure prevents trade secrets from becoming public

If you bring legal proceedings concerning trade secrets, you will inevitably need to explain what your confidential know-how consists of, how the opposing party obtained it from you and how that party is misusing your trade secrets. But does that not mean that your trade secrets become public? Does litigating over trade secrets automatically mean giving them up?

No. To prevent this, the legislature amended the Dutch Code of Civil Procedure specifically for proceedings concerning trade secrets. For example, the court may restrict access to confidential information so that not everyone involved in the proceedings is permitted to inspect your secrets. The court may appoint a person who is allowed to review the confidential information on behalf of the opposing party without disclosing it. In this way, your secrets remain protected even if you start legal proceedings.

More favourable recovery of legal costs

In most civil cases in the Netherlands, the unsuccessful party is also ordered to pay the legal costs. However, those costs are assessed by the court using a fixed scale. They therefore do not reflect the actual costs incurred, which are generally higher.

In intellectual property cases (copyright, trade mark law, patent law, etc.), the position is different: the unsuccessful party is often ordered to pay the reasonable and proportionate legal costs actually incurred. The same applies in legal proceedings concerning trade secrets.