New act on the protection of trade secrets

Until now, there was no statutory regulation in the Netherlands for the protection of trade secrets, which includes non-disclosed know-how and confidential business information. This shortcoming was met by non-disclosure agreements and non-competition clauses. However, contracts only bind the contracting parties and not third parties.

The Draft Trade Secrets Act that fills this legal gap was passed by Dutch Parliament on October 16, 2018.
The law takes effect on a date to be determined by royal decree, which is expected to be published soon. The holder of a trade secret has the legal possibility to initiate legal proceedings against an individual or entity who obtains, uses or discloses the trade secret without the holder’s consent. The intention of the act is to promote innovation and competition in the EU.

The Trade secrets act provides the holder of a trade secret with a number of legal measures which the holder may take against alleged infringers. For example, at the request of the holder of a trade secret the preliminary relief judge may order discontinuation of the use of or prohibit the use or disclosure of the trade secret. At the request of the holder of a trade secret the regular court may order to recall infringing goods from the market. The holder of a trade secret also has the possibility to claim compensation from the infringer. The holder of a trade secret needs to provide evidence that he has taken all reasonable measures to protect the secret. Furthermore, the holder of a trade secret must keep in mind that the act does not stipulate that litigation costs and other costs will be for the account of the party who lost the case. The latter is the general rule if an intellectual property right is infringed. Nevertheless, the judge may decide that all litigation costs and other costs are for the account of the infringer of a trade secret.

The act is deterrent and seeks to strengthen the position of the holder of a trade secret - who enjoys protection for an indefinite period of time.

Ultimately, it depends on whether a claim can be substantiated with sufficient proof or not. This requires the input of sufficient supporting documents that can substantiate the claim with the preliminary relief judge or the regular court. If the holder of a trade secret is unable to do so and only a suspicion of infringement of his right remains, the holder of a trade secret may not achieve his goals by starting court proceedings and may incur also the legal costs of the other party.

It is therefore advisable for companies to identify the most valuable trade secrets, so (technical) measures to protect such secrets can be taken. This could for example consist of the introduction or adjustment of internal policies or the sharpening of non-competition clauses in employment contracts. 

Should you have questions regarding this subject matter, please do not hesitate to contact us.

Stefano Francovich: s.francovich@meritadvocaten.com, +31 (0)20 310 99 83

Mareille Tol: m.tol@meritadvocaten.com, +31 (0)20 310 99 82

 

Although Merit Attorneys & Advisors observe due diligence in compiling and maintaining this memorandum, using sources that are considered reliable, this memorandum is not intended to serve as legal advise and we cannot guarantee the correctness, completeness and topicality of the information provided. Merit Attorneys & Advisors reject any liability with regard to the correctness, completeness and topicality of the information provided.