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European directive to protect trade secrets

16 December 2013

In an age where information, data, creativity and proprietary rights are as big an asset for businesses as the large manufacturing plants were 100 years ago; it is imperative to have a global system  which protects intellectual property and enforces proprietary rights.

The digital economy has meant that people and their creativity are central to economies, whilst at the same time people and their misuse or theft of proprietary rights are a challenge to economies.

Intellectual Property Rights cover a wide range of protections for creativity from patents to trademarks to designs to copyright to trade secrets and to information. At the time that Intellectual Property Rights were created to protect creativity it was at a time when creativity took very physical forms and tangible property was the key item that deserved protection.

We now live in an age where we must not only protect tangible property, but more importantly intangible property, particularly where technology is both the means of protection and theft.

There is a triangle of key players in this new world namely government as a legislator, businesses and entrepreneurs as owners, and beneficiaries and individuals as users.

All three players have demonstrated that they are as capable of adhering to the rule of law as they are to ignoring it.

The Organisation for Economic Co-operation and Development (OECD) carried out a study in 2008 into the international trade in counterfeit and pirated goods in which they concluded that there was a continuing increase in counterfeit and piracy of Intellectual Property Rights particularly in tangible products. More recently the European Commission proposed rules to help protect against the theft of confidential business information whether in tangible or intangible form.

In its press release on the 28 November 2013 the European Commission said amongst other things that "in today's knowledge economy, the capacity of companies to innovate and compete can be seriously harmed when confidential information is stolen or misused. According to a recent survey one in 5 companies has suffered at least one attempt to steal its trade secrets in the last ten years."

As a consequence of the increase in theft of trade secrets the European Commission has proposed a Directive on the protection of trade secrets against their unlawful acquisition, use and disclosure.

Businesses and entrepreneurs and indeed individuals are in many respects their own worst enemies when it comes to the protection of intellectual property particularly with the increase in the use of social media and the lack of understanding as to how to protect information in the digital world.

The lack of education is particularly noted in the case of young people where research has shown that they generally have technical ability but no notion of discretion, and therefore in the workplace there is an increasing risk year on year that otherwise confidential information will be put into the public domain unwittingly by individuals.

At the same time there is an increase in digital piracy based on lack of education and the fact that some young people do not perceive that there is any criminal act in copying unlawfully or plagiarising the creativity of others.

A study on behalf of the British Brands Group in 2012 by Speechly Bircham looked at Confusion, Heuristics and the Consumer particularly where consumers are focused on brand but often misled by copycats who play on their knowledge of how consumers make purchase decisions.

This in itself is a challenge for protection of intellectual property but also to fair competition.

Apart from either wilful or simply uneducated misuse of intellectual property there is of course the increasing rise in cybercrime and cyber espionage using inherent weaknesses within global networks and local networks.

There is no harmonised approach to the enforcement of intellectual property and more particularly to the legal actions necessary to bring the criminals to justice, many of whom do not see their activities as criminal but more as a form of real world gaming.

In order to protect the digital economy and its businesses as well as to secure the strength of economies and revenues there needs to be a concerted effort by the three key players in the triangle mentioned before to create realistic legal regimes, policing and enforcement mechanisms and education.

For more information please contact Robert Bond, Partner

T: +44 (0)20 7427 6660