Trade secrets in France

  1. General
    1. 1. Has the Directive (EU) 2016/943 of the European Parliament and of the Council of 8 June 2016 on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure (“Trade Secrets Directive”) been implemented?
    2. 2. Are there any other applicable sources of law related to trade secrets?
    3. 3. How are trade secrets defined? 
    4. 4. Do specific measures or protections need to be put in place for information to benefit from protection as a trade secret?
  2. Dealings in and ownership of Trade Secrets
    1. 1. Are trade secrets transferable and/or licensable?
    2. 2. Are there specific consequences arising from transfer or licensing of trade secrets by a party other than the trade secrets owner?
    3. 3. Is co-ownership of trade secrets permitted?
  3. Enforcement of Trade Secrets
    1. 1. What actions constitute infringement of trade secrets?
    2. 2. Are there any measures allowing the trade secrets' owner to gather and/or preserve evidence of infringement of trade secrets?
    3. 3. What specific interim and final measures and remedies are available in the event of infringement of trade secrets?
    4. 4. Is there a specific period after obtaining interim measures by which the applicant must bring proceedings for a substantive decision on the merits of the claim?
    5. 5. Are there circumstances in which damages or other financial compensation may be available in place of an injunction and other measures?
    6. 6. Are any interim or final measures and remedies available through ex parte hearings?
    7. 7. How is financial compensation to the trade secrets holder calculated?
    8. 8. Can an employer be liable for their employee’s infringement of a third party’s trade secrets?
    9. 8. What is the limitation period for claims relating to misappropriation of trade secrets?
    10. 11. Are mechanisms available to preserve confidentiality of trade secrets in the course of legal proceedings?
    11. 12. Are there any particular legitimate interests which may be invoked as an exception to the measures, procedures and remedies for trade secrets protection?
    12. 13. Are any measures available where proceedings concerning trade secrets are manifestly unfounded and / or found to have been initiated abusively or in bad faith?
    13. 14. Are separate legal proceedings required for such measures?
  4. Employee / employer liability
    1. 1. Are there any protections for “whistleblowers” or similar rights for employees in relation to infringement of trade secrets?
    2. 2. Can an employer be liable for their employee’s infringement of a third party’s trade secrets?

General

1. Has the Directive (EU) 2016/943 of the European Parliament and of the Council of 8 June 2016 on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure (“Trade Secrets Directive”) been implemented?

Yes. The Trade Secrets Directive was transposed into French national legislation through Law No. 2018-670 of 30 July 2018 on the protection of trade secret and Decree No. 2018-1126 of 11 December 2018 on the protection of trade secret. These provisions have been mainly implemented in the French commercial code (hereafter “FCC”) at Article L.151-1 and seq.).

Yes. General civil and criminal legal bases could also be used in case of trade secret misappropriation, depending on the circumstances, in particular:

The French civil law legal basis, which may be relevant to take action further to trade secret disclosure/misappropriation:

  • General tortious liability, particularly unfair competition or parasitism (art. 1240 Civil code);
  • Contractual liability (art. 1103 Civil Code); and
  • French Intellectual Property Code includes specific provisions prohibiting employees and directors from disclosing manufacturing know-how (“secret de fabrication”) (art. L.621-1 Intellectual Property Code and Article L.1227-1 Employment Code).

The French criminal law legal basis, which might be relevant to take action further to trade secret disclosure/misappropriation:

  • Information theft (art. 311-1 to 311-16 French Criminal Code): French case-law admits that information misappropriation may qualify as theft (Cass. Crim., June 28, 2017 n°16-81.113). The party receiving the information may be charged with fencing (art. 321-1 French Criminal Code).
  • Breach of trust is the misappropriation by a person, to the detriment of others, funds, assets or any property whatsoever, which has been handed over to him and which he has accepted to make specific use of (art. 314-1 to 314-4 of the French Criminal Code); and
  • Specific criminal provisions to refrain breaches of IT security systems (art. 323-1 and seq. of French Criminal Code). 

3. How are trade secrets defined? 

According to article L.151-1 FCC, any information meeting the following criteria will be protected as a trade secret:

  1. it is not, in itself or in the exact configuration and assembly of its components, generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question;
  2. it has commercial value, actual or potential, because of its secret nature;
  3. it has been subject to reasonable steps under the circumstances, by the person lawfully in control of the information, to keep it secret.

4. Do specific measures or protections need to be put in place for information to benefit from protection as a trade secret?

Yes, as stated in Article L.151-1 c) FCC the person in control of the trade secret must put in place ”reasonable steps under the circumstances (…) to keep it secret”. French law does not provide any further details on the nature of such measures.

Dealings in and ownership of Trade Secrets

1. Are trade secrets transferable and/or licensable?

Yes, but French law does not provide for a licensing or transfer regime specific for trade secrets. Moreover, the question whether transfer of a trade secret can be considered a transfer of a property right is not settled under French law.

Notwithstanding these doctrinal controversies, this kind of operation is possible in practice. Such a transfer could be done through a contract allowing one party (the communicating party) to provide confidential information to a second party, which will be subject to an obligation of non-disclosure. If the transfer is exclusive, the agreement must expressly specify that the communicating party is subject to an obligation to cease to use/disclose/transfer the concerned information.

2. Are there specific consequences arising from transfer or licensing of trade secrets by a party other than the trade secrets owner?

No specific consequences.

3. Is co-ownership of trade secrets permitted?

Yes. The definition does not restrict the ownership of the trade secret to a single holder. Therefore, it is possible to have more than one trade secret owner.

French law does not provide for a specific co-ownership regime. Co-owners should define their own rules on co-ownership or refer to existing co-ownership regimes (e.g. genal regime or regime applicable to patents), which could be applied mutatis mutandis.

Enforcement of Trade Secrets

1. What actions constitute infringement of trade secrets?

According to Article L.151-4 to L.151-6 FCC, an infringement of trade secret is:

  • unauthorised access to any document, object, material, substance or digital file, which contains the secret or from which it can be deduced, or from unauthorised acquisition or copying of these elements; any other behaviour considered, in the circumstances, to be unfair and contrary to commercial practice.
  • use or disclosure of a trade secret when it is carried out without the consent of its lawful holder or when the person acts in breach of an obligation not to disclose the secret or to limit its use.
  • the production, offering or placing on the market, as well as the import, export or storage for those purposes of products resulting from trade secret infringement where the person carrying out those activities knew, or should have known in view of the circumstances, that the secret was being used unlawfully.
  • obtaining, using or disclosing a trade secret where, at the time of obtaining, using or disclosing this secret, the person knew, or should have known in view of the circumstances, that the secret had been obtained, directly or indirectly, from another person who used or disclosed it unlawfully.

2. Are there any measures allowing the trade secrets' owner to gather and/or preserve evidence of infringement of trade secrets?

Yes. Article 145 French civil procedure Code gives the parties the right to obtain evidence prior to any proceedings. This could include investigations in certain designated locations, such as the defendant’s premises, completed by a bailiff or an expert. Such investigative measures in view of a future legal action have to be authorised by the court. The authorisation is generally granted through inter partes proceedings, but it is possible, under certain circumstances, to obtain such authorization ex parte.

The “saisie-contrefaçon”, which is a specific procedural tool to gather evidence in IP infringement cases, is not available to gather evidence in case of infringement of trade secrets only. However, in cases where there are infringements of both IP rights and trade secrets, saisie-contrefaçon may be a relevant evidence gathering option.

3. What specific interim and final measures and remedies are available in the event of infringement of trade secrets?

Interim measures. The court may order any proportionate measure to prevent or end a trade secret infringement. It may order:

  • An injunction to cease, under a financial penalty, the trade secret infringement acts;
  • An injunction to cease acts of production, offering, placing on the market or use of products resulting significantly from the infringement of a trade secret or the import, export or storage of such products for such purposes;
  • Destruction of any document, object, material, substance or digital file containing the trade secret concerned or from which it may be deduced or order its total or partial delivery to the applicant;
  • Recall of the products significantly resulting from the violation of a trade secret from the channels of commerce, permanently removed from those channels, modified in order to eliminate the violation of a trade secret, destroyed or, as the case may be, confiscated for the benefit of the plaintiff.

Final measures. All measures, which can be ordered in the scope of interim measures can also be ordered through a final injunction. Additionally, final damages can be awarded to the claimant.

4. Is there a specific period after obtaining interim measures by which the applicant must bring proceedings for a substantive decision on the merits of the claim?

Yes. According to Article R.152-1 V FCC, an action on merits will be brought within one month following the interim order.

5. Are there circumstances in which damages or other financial compensation may be available in place of an injunction and other measures?

Yes. The infringer may ask the court to order, instead of an interim measure, the payment of compensation to the trade secret holder, only if the following conditions are met (Art. L.152-5 FCC):

  1. at the time of the use or disclosure of the trade secret, the infringer did not know, or could not have known in the circumstances that the trade secret had been obtained from another person who was unlawfully using or disclosing the trade secret;
  2. the enforcement of the measures would cause disproportionate prejudice to that infringer;
  3. the payment of compensation to the injured party appears reasonably satisfactory. 

6. Are any interim or final measures and remedies available through ex parte hearings?

Yes. Ex parte motions to obtain provisional measures in case of trade secret infringement are explicitly mentioned by Article L.152-4 FCC.

7. How is financial compensation to the trade secrets holder calculated?

According to Article L.152-6 FCC, the court will take into account separately:

  1. The negative economic consequences of the breach of trade secret, including loss of profit and loss suffered by the plaintiff, including loss of opportunity;
  2. The moral prejudice caused to the injured party;
  3. the profits made by the infringer, including the savings in intellectual, material and promotional investments that the infringer has made as a result of the infringement.

The court may, as an alternative and at the request of the plaintiff, award as damages a lump sum, which will take into account, in particular, the amount that would have been due if the infringer had requested authorisation to use the trade secret in question. This sum will not be exclusive of compensation for non-material damage caused to the plaintiff.

8. Can an employer be liable for their employee’s infringement of a third party’s trade secrets?

Yes. According to Article 1242 al. 5 French civil code, the employer is liable for damages caused by his employee when the latter acts within the scope of his employment. Thus, if an employee discloses/uses/transfers a third party’s trade secret, his employer may be held responsible and will be required to compensate the holder of the trade secret. 

8. What is the limitation period for claims relating to misappropriation of trade secrets?

According to Article L.152-2 FCC, actions relating to a violation of a trade secret are time-barred after five years from the day on which the lawful owner of the trade secret knew or should have known of the last infringement.

The limitation period is interrupted by the introduction of a legal claim (Article 2241 of the French Civil Code) or by a judicial enforcement proceeding (Article 2244 of the French Civil Code). The limitation period may be suspended in the event of the enforcement of investigative measures (Article 2239 of the French Civil Code) or in the event of the use to alternative methods of dispute resolution (Article 2238 of the French Civil Code). 

9. When does the limitation period begin to run?

N/A

10. Are there any circumstances that interrupt or suspend the limitation period?

N/A

Yes. If the communication or production of a document, which has been alleged by a party or a third party to breach a trade secret is requested, the judge may, if the protection of this secret cannot be ensured otherwise and without prejudice to the exercise of the rights of defence (Article L.153-1 FCC):

  1. analyse this document and, if he deems it necessary, order expertise and seek the opinion, for each of the parties, of a person authorised to assist or represent him, in order to decide whether one of the following protective measures should be applied;
  2. decide to limit the communication or production of that document to certain of its elements, order its communication or production in summary form or restrict access to it, for each of the parties, to no more than one natural person and one person authorised to assist or represent him;
  3. decide that the trial hearing will take place and the decision will be pronounced in “chambre du conseil” (chambers = closed session);
  4. adapt the motivation for his decision and the arrangements for its publication to the requirements of the protection of the trade secret.

The practice referred to in b) is called “cercle de confidentialité” (confidentiality clubs). This “club” should at least consist of one natural person for each party and the lawyer for each party or other representatives of those parties to the legal proceedings.

Moreover, according to Article L.153-2 al. 1, any person having access to a document or the contents of a document considered by the judge to be covered or likely to be covered by trade secret will be bound by an obligation of confidentiality prohibiting any use or disclosure of the information it contains.

12. Are there any particular legitimate interests which may be invoked as an exception to the measures, procedures and remedies for trade secrets protection?

Yes. According to Article L.151-8, in proceedings relating to an infringement of trade secrets, secrecy will not be invoked where it was obtained, used or disclosed:

  • for the purpose of exercising the right to freedom of expression and communication, including respect for the freedom of the press, and freedom of information as proclaimed in the Charter of Fundamental Rights of the European Union;
  • To reveal, in order to protect the general interest and in good faith, an illegal activity, a fault or reprehensible behaviour, including during the exercise of the right of alert;
  • For the protection of a legitimate interest recognised by European Union law or national law.

Moreover, Article L.151-9 FCC provides that, in proceedings relating to an infringement of a trade secret, secrecy will not be invoked where:

  • the trade secret was obtained in the context of the exercise of the right to information and consultation of employees or their representatives;
  • the disclosure of business secrecy by employees to their representatives took place in the context of the legitimate exercise by the latter of their functions, insofar as such disclosure was necessary for this exercise.

The information thus obtained or disclosed will remain protected as a matter of business trade with respect to persons other than the employees or their representatives who had knowledge of it.

13. Are any measures available where proceedings concerning trade secrets are manifestly unfounded and / or found to have been initiated abusively or in bad faith?

Yes. Article L152-8 FCC thus provides that "anyone who acts in a dilatory or abusive manner [on the basis of trade secret infringement] may be sentenced to a civil fine up to 20% of the amount claimed for damages. In the absence of a claim for damages, the amount of the civil fine may not exceed EUR 60,000.” Additionally, the defendant can also claim for damages in case of abusive proceedings.

No separate legal proceedings will be necessary. Such a claim will be brought as a counterclaim by the defendant.

Employee / employer liability

1. Are there any protections for “whistleblowers” or similar rights for employees in relation to infringement of trade secrets?

N/A

2. Can an employer be liable for their employee’s infringement of a third party’s trade secrets?

N/A

Portrait of Anne-Laure Villedieu
Anne-Laure Villedieu
Partner
Paris
Portrait of Jean-Baptiste Thiénot
Jean-Baptiste Thiénot
Counsel
Paris