EUIPO publishes report on Trade Secrets Litigation Trends in the EU

In June 2023, the European Union Intellectual Property Office (EUIPO) published a report titled "Trade Secrets Litigation Trends in the EU" that delves into the patterns observed in trade secrets litigation following the implementation of the Trade Secrets Directive (Directive 2016/943/EU) in the EU member states. The report offers a comprehensive quantitative and qualitative analysis of trade secrets litigation trends within the EU, drawing from a dataset comprising approximately 700 national judgments rendered between 2017 and 2022.

Trade secrets

Trade secrets vary widely in their forms and contents. According to the Directive, a trade secret is information which: 

• the information is maintained as confidential.
• the information holds commercial value.
• the owner of the trade secret has implemented reasonable measures to safeguard its confidentiality.

These reasonable measures may include implementing technical security safeguards or arranging for involved parties to sign nondisclosure agreements (NDAs), among other protective measures.

Quantitative analysis: important take-aways

According to the report, trade secrets litigation encompasses a wide range of sectors with the manufacturing sector (32%) being the most common. Other notable sectors include “wholesale and retail trade; repair of motor vehicles and motorcycles” (11%), “financial and insurance activities” (7%), and “professional, scientific and technical activities” (7%).

Contrary to the prevailing belief that trade secrets primarily pertain to technical innovation, the report revealed that disputed undisclosed information is more often broadly characterised as “commercial” (62%) than “technical” (33%). The most common types of commercial information in proceedings were “downstream information (distribution methods, advertising strategies, marketing data, customer lists)” (31%), and “financial information (pricing models, accounting data)” (13%). The most common technical information in proceedings was “manufacturing process/knowhow” (19%). Only 3% of proceedings involved information characterised as “prototypes/unreleased product designs”.

Despite the international nature of trade secrets, litigation remained primarily between local parties, in 86% of cases the parties involved were based in the same EU member state.

In most proceedings, claimants are private undertakings: 27% of claimants are categorised as SMEs, 10% as large corporations, and 11% as micro-enterprises. A large proportion of defendants (38%) are explicitly identified as former employees, 13% of defendants are categorised as SMEs, 11% as micro-enterprises, and 4% as large corporations.

Success rates varied significantly across different European countries. The overall success rate for trade secret misappropriation claims stood at 27%. However, the differences per country are great. Claimants in Poland and Bulgaria faced success rates of 14% and 7%, respectively. Claimants in Belgium and Italy, however, enjoyed higher success rates, at 30% and 40%, respectively.

When it came to appeals, trade-secret cases showed an average appeal rate of 46%. There were notable exceptions, such as Italy with a mere 11% appeal rate and Sweden with an appeal rate of 87%.

The most common granted measure is an order for the cessation of use and/or the prohibition of use of the trade secret by the unsuccessful defendant. In 107 proceedings, damages were granted damages. This was most commonly based on the economic prejudice incurred by the successful claimant.

Overall assessment in the Netherlands

The Netherlands exhibits a notably higher degree of international involvement in trade secrets litigation compared to other EU member states and the broader EU landscape. Intra-EU party relationships account for 21%, while extra-EU party relationships make up 26% of such cases. Moreover, the nature of trade secrets disputes in the Netherlands stands out with a greater emphasis on technical subject matter in contrast to the prevailing commercial subject matter found elsewhere.

In terms of key metrics, the Netherlands diverges from the EU-wide pattern. Notably, the appeal rate in the Netherlands appears to be lower at 14%, which is in stark contrast to the 46% seen on a broader EU scale. However, the success rate of claims in the Netherlands remains relatively similar to the EU-wide average with 23% compared to the EU's 27%.

Conclusions

The quantitative analysis in the report shows that trade secrets litigation differ significantly across member states in terms of case volumes, case composition, legal fora, and procedural dimensions. Considered cumulatively, the analysis underscores that trade secrets enforcement remains a broad and dynamic area of litigation. 

The report also provides interesting insights for policy makers, legal practitioners and academics. It is also a helpful tool for businesses, including small- and medium-sized enterprises to better understand the value of trade secrets and the ways to protect them in a highly competitive environment.

Finally, the European Commission has also published a report on the legal protection of trade secrets. We will discuss this report in our next Law-Now article.

For more information on how the implementation of the Directive potentially affects your trade secrets, contact your CMS client partner or local CMS experts.