Trade secret laws and regulations in Luxembourg

Explore reliable legal information about trade secrets in Luxembourg

  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. What is the limitation period for claims relating to misappropriation of trade secrets?
    9. 9. When does the limitation period begin to run?
    10. 10. Are there any circumstances that interrupt or suspend the limitation period?
    11. 11. Are mechanisms available to preserve confidentiality of trade secrets in the course of legal proceedings?
    12. 12. Are there any particular legitimate interests which may be invoked as an exception to the measures, procedures and remedies for trade secrets protection?
    13. 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?
    14. 14. Are separate legal proceedings required for such measures?
  4. Employee / employer liability
    1. 1. In addition to any statutory protection of trade secrets, what protections can employers put in place to avoid misuse of trade secrets by its workforce? 
    2. 2. Are there implied rights of protection for employers regarding misuse of trade secrets by its workforce?
    3. 3. What other means can employers use to protect misuse of trade secrets by the workforce, particularly when staff leave?
    4. 4. Are there any protections for “whistleblowers” or similar rights for employees in relation to infringement of trade secrets?
    5. 5. 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 Directive (EU) 2016/943 has been implemented through Law of 26 June 2019 on the protection of know-how and undisclosed commercial information (trade secrets) against unlawful obtaining, use and disclosure.

No.

3. How are trade secrets defined? 

According to article 2 of Law of 26 June 2019, trade secrets mean information that meets all of the following conditions: 

  1. they are secrets in the sense that, as a whole or in the exact configuration and assembly of its elements, they are not generally known or not easily accessible to persons in the circles normally concerned with the type of information in question;
  2. they have commercial value because they are secret;
  3. they have been kept secret by the person lawfully in control of them by making reasonable provisions, having regard to the circumstances, for keeping them secret;

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

According to the definition of trade secrets given by the Law of 26 June 2019 (article 2), it is stated that trade secrets should meet the following criteria: “have been kept secret by the person lawfully in control of them by making reasonable provision, having regard to the circumstances, for keeping them secret”. In that case, we can say that specific provisions for keeping the information secret has to be implemented to benefit from protection as a “trade secret”. There are no examples of such measures or protections in the Law of 26 June 2019.

Dealings in and ownership of Trade Secrets

1. Are trade secrets transferable and/or licensable?

Yes.

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

If trade secrets are transferred or licensed by a party other than the trade secrets' owner, and without his/her consent, it will be considered unlawful access, use or disclosure of trade secrets, when such a person has:

  1. obtained the trade secret unlawfully;
  2. acted in breach of a confidentiality agreement or any other obligation not to disclose the trade secret;
  3. acted in breach of a contractual obligation or any other obligation limiting the use of the trade secret.

3. Is co-ownership of trade secrets permitted?

The article 2 of the Law of June 26 2019 defines the holder of a trade secret as “any natural or legal person who controls a trade secret in a lawful manner”. If it can be proved that two natural or legal persons have such control, then co-ownership would be possible.

Enforcement of Trade Secrets

1. What actions constitute infringement of trade secrets?

Access, use or disclosure.

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

Yes. According to the article 7 of the Law of June 26 2019, the holder of a trade secret can request the President of the competent Luxembourg Commercial Court to grant an interim injunction in order to obtain: 

  1. the cessation or, as the case may be, prohibition of the provisional use or disclosure of the trade secret;
  2. the prohibition of the production, offering, placing on the market or use of infringing goods, or the import, export or storage of infringing goods for those purposes;
  3. the seizure or delivery of suspected infringing property, including imported products, so as to prevent their entry or movement on the market.

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

As for the interim measures please see above.

As for the final measures and remedies, the court can order:

  1. the cessation or, as the case may be, prohibition of the use or disclosure of the trade secret;
  2. the prohibition to produce, offer, place on the market or use infringing products, or to import, export or store infringing products for these purposes;
  3. the adoption of appropriate corrective measures in respect of infringing property (1. recall of the infringing goods from the market; 2. removal of the infringing goods from the market; 3. destruction of the infringing goods or, as the case may be, their withdrawal from the market, provided that such withdrawal does not prejudice the protection of the trade secret in question);
  4. the destruction of all or part of any document, object, material, substance or electronic file that contains or materialises trade secrets or, as the case may be, the delivery to the applicant of all or part of such documents, objects, materials, substances or electronic files.

The court can also grant financial damages or order the publication of court decisions.

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 9 of the Law of 26 June 2019, it should be done within a “reasonable time-frame” or one month after the order of the interim measures granted by the President of the competent Luxembourg Commercial Court.

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

No specific circumstances are mentioned in the Law of 26 June 2019.

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

No.

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

According to the article 12 of the Law of 26 June 2019, in fixing the amount of damages referred to in paragraph 1, the court will take into account all appropriate factors such as the negative economic consequences, including loss of profit, suffered by the injured party, the profits unjustly made by the infringer and, in appropriate cases, elements other than economic factors, such as the non-material damage caused to the holder of trade secrets as a result of the unlawful obtaining, use or disclosure of the trade secret.

Alternatively, the court may, at the request of the injured party, fix a lump sum for damages on the basis of elements such as, at least, the amount of royalties or fees that would have been due if the infringer had requested permission to use the trade secret in question.

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

According to the article 16 of the Law of 26 June 2019, a claim will be time-barred after two years from the time when the holder of the trade secret has knowledge of the unlawful obtaining, use or disclosure of the trade secret and knows the identity of the offender.

9. When does the limitation period begin to run?

N/A

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

The limitation period will be interrupted by any summons to cease and desist issued by a bailiff and by any action for interim relief or action on the merits of the case brought before the courts.

According to article 14 of the Law of 26 June 2019, the parties, their lawyers or other representatives, court staff, witnesses, experts and any other person participating in judicial proceedings concerning the unlawful obtaining, use or disclosure of a trade secret, or having access to documents forming part of such proceedings, will not be allowed to use or disclose a trade secret or an alleged trade secret, which the court has, in response to a duly motivated request by an interested party or of its own motion, classified as confidential and of which they have become aware as a result of such participation or access.

The court may, in addition, at the duly reasoned request of a party or of its own motion, take such special measures as may be necessary to protect the confidentiality of any trade secret or alleged trade secret used or referred to in the course of legal proceedings relating to the unlawful obtaining, use or disclosure of a trade secret. The measures referred to will include at least the possibility of:

  1. restricting access to all or part of a document containing trade secrets or alleged trade secrets produced by the parties or by third parties to a limited number of persons;
  2. restricting access to hearings, where trade secrets or alleged trade secrets may be disclosed, and to minutes or notes of hearings to a limited number of persons;
  3. making available to any person other than the limited number of persons referred to in letters (a) and (b) a non-confidential version of any judicial decision in which passages containing trade secrets have been deleted or crossed out.

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

According to article 5 of the Law of 26 June 2019, a request for the application of the measures, procedures and remedies provided for in the provisions of this Law will be rejected where the alleged obtaining, use or disclosure of the trade secret has taken place in any of the following circumstances:

  1. exercising the right to freedom of expression and information as laid down in the Charter of Fundamental Rights of the European Union and the Constitution, including respect for media freedom and pluralism;
  2. disclosing misconduct, wrongdoing or illegal activity, provided that the defendant acted to protect the general public interest;
  3. disclosing by employees to their representatives in the context of the legitimate exercise by those representatives of their functions in accordance with European Union or national law, in so far as such disclosure was necessary for that exercise;
  4. supporting the protection of a legitimate interest recognised by European Union or national law.

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?

According to the article 8 of the Law of 26 June 2019, the president of the Commercial court may make the interim measures subject to the provision by the plaintiff of an adequate bond or equivalent security to ensure compensation for any damage suffered by the defendant and, where appropriate, by any other person affected by the measures.

According to the article 9 of the Law of 26 June 2019, where the interim measures are revoked or cease to apply as a result of any act or omission of the plaintiff, or where it is subsequently established that there has been no unlawful obtaining, use or disclosure of trade secrets or threat of such conduct, the defendant or an injured third party may apply to the court to order the plaintiff to pay appropriate compensation for any damage caused by those measures.

No, the defendant in the same proceeding can request it.

Employee / employer liability

1. In addition to any statutory protection of trade secrets, what protections can employers put in place to avoid misuse of trade secrets by its workforce? 

It is recommended that employers place contractual obligations on employees to protect trade secrets and confidential information. Generally, this takes the form of a specific clause in the employment contract protecting the interests of the employer during the term of the contract, but also after its termination. In some cases, a separate confidentiality agreement could also be signed.

It is important to underline that such a clause is only valid if it is drafted in a circumscribed and precise manner. The clause must not be a simple clause with a vague and imprecise style, which would prohibit any general indiscretion. Such a general clause would not be valid.

2. Are there implied rights of protection for employers regarding misuse of trade secrets by its workforce?

In some sectors, employees are obliged, even in the absence of a confidentiality clause, to respect professional secrecy (e.g. in the banking or medical sectors).

In general, the Civil Code provides for an obligation of good faith performance of contracts. Therefore, the employee must perform his or her contractual obligations in good faith and must not aim to harm the employer. If this is the case and the intention to harm can be proved, the employer can claim damages from the employee for the prejudice suffered.

In addition, the law dated 26 June 2019 establishes rules that provide open-ended protection of trade secrets against unlawful procurement, use and disclosure. The employer may claim damages against an employee for infringement of a trade secret. However, the law specifies three limitations: 

  • the prohibition on disclosing business secrets cannot prevent an employee, once his contract has been terminated, from using the experience and skills acquired in an honest and normal manner;
  • the disclosure of business secrets by employee representatives may be justified if they are acting in the legitimate exercise of their duties;
  • disclosure is not unlawful if a whistleblower discloses the secret in order to reveal misconduct, wrongdoing or illegal activity, provided that the individual is acting to protect the general public interest.

Finally, the Penal Code also protects business secrets and punishes any violations of these secrets.

3. What other means can employers use to protect misuse of trade secrets by the workforce, particularly when staff leave?

In addition, employers can add a penalty clause in the contract signed by the employee. This clause allows that after the termination of the contract, for a determined period of time (e.g. 12 months in cases where the employee does not respect his confidentiality obligations), the employer can claim a certain amount as compensation. However, in order not to be judged excessive by the court, the amount claimed must be proportional to the salary the employee receives during the execution of his contract.

The employers can also establish internal regulations concerning trade secrets and the respect of confidentiality obligations in this area. It will be necessary to communicate these regulations and obligations to employees or post them in the company's premises, so that each employee has direct access to them.

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

Yes. However, in Luxembourg, the Directive EU 2019/1937 of the European Parliament and of the Council of 23 October 2019 on the protection of persons who report breaches of Union Law (“Whistleblower Protection Directive”) has not been implemented yet despite the fact the implementation deadline expired on 17 December 2021. As of today, the transposition has been postponed without a precise date, most certainly for the duration of 2022.

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

Yes, under certain circumstances, the employer may be liable for an employee's violation of another company's trade secrets where the acts were committed in the course of the employee's work.

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