Trade secrets (know-how)

Trade secrets, also known as "know-how," are one of a company's most valuable assets. These can be technical innovations, production methods, market strategies or customer data that provide a competitive advantage. Protecting this information is critical for companies to prevent competitors, employees or other third parties from misusing their unique knowledge.

Below you can read all about the legislative framework and how to best protect your know-how.

What is the legislative framework for protecting trade secrets?

In order to create a solid legal framework within the European Union for the protection of trade secrets, the Directive 2016/943 on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure, enacted.

This directive was transposed into Belgian law in 2018 and given its place in Book XI of the Code of Economic Law (WER).. It gives Belgian companies a robust legal tool to protect their trade secrets from unauthorized use and gives them greater legal certainty in enforcing trade secret protection.

What is a trade secret?

According to Article I.17/1 of the Code of Economic Law, a trade secret is information that meets the following three cumulative conditions:

1. Secret character: The information is not widely known or easily accessible to individuals who normally handle such information within the industry.
2. Commercial value: The information must have economic value because it is secret. This means that the loss of secrecy could be detrimental to the company's competitive position. This could include technical processes, customer databases, production formulas, marketing plans and unique business strategies
3. Protective measures: The holder of the information must have taken reasonable measures to ensure confidentiality, such as drafting confidentiality agreements (NDAs), marking confidential documents and taking physical or technical security measures.

The scope of protection

The law provides protection against both the wrongful acquisition and the wrongful use and disclosure of trade secrets (Article XI.332/4 WER). This protection applies when a third party has obtained, used or disclosed trade secrets in any of the following ways:

• Unlawful acquisition: This can occur when an unauthorized person accesses, removes or copies documents containing trade secrets. Consider theft or hacking.
• Unlawful use or disclosure: If someone is in possession of a trade secret that he has obtained unlawfully, any use or disclosure of it is also unlawful. This is also the case when he violates a confidentiality obligation by doing so.

In addition, obtaining, using or disclosing a trade secret is also considered unlawful when a party should have been aware that the information was originally obtained unlawfully.

Limitations and exceptions

The protection of trade secrets also has some important limitations and exceptions (Articles XI.332/2 and XI.332/5 WER). These ensure that the protection of trade secrets does not disproportionately interfere with other fundamental rights and interests. Some of the key exceptions include:

• Independent discovery or design: If a third party has independently discovered or developed the same information, there is no infringement.
• Reverse engineering: When a product has been placed on the market and a third party has lawfully obtained it, that party may find out about the operation of the product by reverse engineering, unless otherwise contractually agreed.
• Disclosure in the public interest: Disclosure of trade secrets to protect the public interest, such as in whistleblowing to expose illegal or harmful activities, is outside the protection.
• Rights of employees: Employees have the right to use their general knowledge and experience gained on the job in future jobs, as long as they do not unlawfully disclose trade secrets.

What legal procedural options are available to enforce these protections?

If there is a violation of a trade secret, Belgian law offers several judicial remedies. Companies can take legal action to prevent the further violation of their trade secrets and seek damages. The main legal remedies include:

• Strike action (as in summary proceedings): A company can quickly file a cease-and-desist order in court to prevent further disclosure or use of the trade secret.
• Damages: If an infringement has caused damage, the company may seek damages. The amount of damages may vary and may include both the actual damages suffered and the unlawful benefit gained by the infringer.
• Claims for restitution or destruction: In certain cases, the court may order that all documents or materials containing the trade secret be returned or destroyed.

It is important to act quickly and effectively when a breach is identified to limit further damage.

What other Belgian legal provisions protect trade secrets?

In addition to the specific rules on trade secrets, there are other provisions in Belgian law that indirectly contribute to the protection of know-how. For example, the labor law (Article 17.3 Labor Contract Law) and the contract law an important role. Noncompete agreements and confidentiality agreements in employment contracts are often important tools for employers to prevent former employees from passing on sensitive information to competitors.

In addition, it contains criminal law (Section 309 Sw) provisions on industrial espionage and breach of confidentiality, which can lead to criminal prosecution of individuals who unlawfully obtain or disclose trade secrets.

Trade secret and intellectual property rights

Trade secret protection does not create an intellectual property right, but only sanctions specific conduct related to trade secrets.

Trade secrets may also be possible by a intellectual property rights be protected. Thus, certain texts, if sufficiently original, can be protected by copyright which is less evident with texts of a purely informative nature. Patent law may also possibly be invoked, but the requirements for patent protection must be met: novelty and inventiveness. This will generally not be the case with trade secrets containing non-technical information.

However, a company may also have good reason not to apply for a patent. After all, granting a patent means that the technical details of an invention become accessible to the public. Trade secrets, on the other hand, offer protection without a time limit, provided secrecy is maintained, which can be especially useful for processes or techniques that are difficult to reverse engineer.

Moreover, companies can leverage both systems simultaneously by patenting certain technical information while keeping other aspects of their innovation as trade secrets. Properly balancing patent law and trade secrets can help develop a robust intellectual property strategy.

Practical : how does your company ensure optimal protection?

Protecting trade secrets requires an active and structured approach. It is critical that companies take clear measures to protect their sensitive information and minimize the risk of breaches. Here are some steps your company can take for optimal protection:

• Confidentiality agreements (NDAs).: Make sure your employees, contractors and business partners sign an NDA, which stipulates that they cannot disclose or use confidential information without permission.
• Internal procedures: Develop and implement strict internal procedures to ensure that only authorized persons have access to confidential information. For example, use access codes or encryption for digital files.
• Training and awareness raising: Make sure your employees and other stakeholders are aware of the importance of confidentiality and the consequences of breaches.
• Monitoring and enforcement: Conduct regular audits to verify that protective measures are effective and enforced. Intervene immediately if violations are suspected.

Our law firm offers you personalized legal advice and support in drafting confidentiality agreements, developing internal policies and procedures, and taking action against breaches of trade secrets. We guide you through the legal landscape of trade secrets, ensuring that your company is optimally protected against misuse of valuable information.