A legal amendment is introducing numerous changes to the protection of confidential business information and know-how, enabling more sanctions than before to deal with a theft of trade secrets provided that more far-reaching and active safeguards are in place. Only if these safeguards are implemented in future can a company also effectively enforce its rights if necessary. What such safeguards look like in practice and how to proceed if trade secrets are stolen was explained at the CMS Business Breakfast on 20 November.
“Is my company ready for the new trade secrets rules?” – This is a question that is far from easy to answer but should be asked anyway. After all, one thing is for sure: it has never been easier to steal trade secrets since almost all sensitive company information is stored electronically and is often inadequately protected. Then all it takes are a few mouse clicks to successfully steal confidential documents. So, more and more companies are now falling victim to trade secrets theft.
A legal amendment to protect trade secrets will now provide for sanctions that exceed previous rules in the event that secrets are stolen. “The goal of the new Trade Secrets Directive is to introduce an effective set of tools under civil law to protect business information,” said Egon Engin-Deniz, a CMS partner in Vienna and Head of the Intellectual Property and Media Department, at the CMS Business Breakfast in late November. Although in the past the unlawful acquisition and use of trade secrets could be prosecuted in private prosecution and civil proceedings, “the amendment, however, should make it easier to enforce rights effectively”. Not only can the court prohibit the manufacture and distribution of infringing products, it can also order the recall and destruction of such products or the removal of the parts of the product that are affected by the theft of trade secrets. The amendment will also make it easier to assert compensation claims: compensation must be provided not only for lost profit, but also for any other negative economic consequences, such as a loss of image.
However, in order to benefit from these new sanctions, safeguards that are more far-reaching than before need to be put in place. “First and foremost, the proprietors of trade secrets will now be obliged to actively implement adequate safeguards – both technical and organisational measures,” stated Gabriela Staber, a partner at CMS Vienna and an expert in IP and competition law. “This is the only way to ensure that companies can effectively enforce their rights if necessary.”
The attendees of the CMS Business Breakfast not only received a detailed overview of the new regulations from the CMS experts, including numerous practical tips for effective safeguards, they also learned in detail what steps they can take if their trade secrets are stolen. “If they suspect a theft, companies need to act quickly and in a structured manner. An important first step is to perform a computer forensic backup and analysis; this is a key basis for all further steps under criminal and civil law,” explained Gabriela Staber.
Practical relevance is a priority at the CMS Business Breakfast, so a stress test was also part of the agenda. “How ready is my company for the new rules?” – Interested parties were given the opportunity to scrutinise the situation in their own company more closely.
CMS hot topics In 2018, CMS is hosting numerous events aimed specifically at companies wishing to receive timely information about risk assessment and prevention. But alongside Risk & Prevention, CMS Vienna is also inviting companies to exclusive information events dealing with a second major topic area – Digital Economy – in order to present and discuss increasingly important legal issues relating to FinTechs, cybercrime, smart contracts and ICO (Initial Coin Offerings), etc.
For further events at CMS in Vienna please refer to the cms.law website under Events.
More photos of Egon Engin-Deniz and Gabriela Staber can be found here for free use: