European Commission considers reform of laws protecting business/research knowhow

The European Commission has announced a consultation on the effectiveness of laws protecting business and research knowhow.

Knowhow and trade secrets
The Commission notes that in many instances the protections offered by many forms of intellectual property rights are only available in certain circumstances, or are costly to apply for and/or maintain.

An inventor of a patenable invention will also need to keep the invention secret until the patent application is made (because inventions that form part of the prior art (ie they are in the public domain) cannot be patented). A failure to do this is likely to mean that the invention is not patentable, in which case the commercial value of the invention may be lost.

For this reason, many organisations often protect their intellectual assets by keeping them secret, and rely upon contractual and common law confidentiality undertakings, and other remedies such as espionage and theft. Confidentiality undertakings can be enforced by obtaining a court order to stop the recipient of confidential information from using that information, and compensation for damages.

The limits of confidentiality undertakings
However, these remedies are of limited use. For example, no exclusive rights to use the information are granted, and it is not possible to stop someone else creating the same knowhow (for example, by independent research or reverse engineering) and marketing it in parallel.

This means, for example, that there would be nothing to stop me independently coming up with the recipe for Irn Bru (a trade secret) and marketing the product my self (as long as my branding of the product did not infringe AG Barr’s trade marks).

In addition, the way in which trade secrets or knowhow is protected varies between different member states. This means that such information is not always properly protected in cross border business, and may not act as a sufficient deterrent against misappropriation.

The Commission is concerned that this could dissuade organisations from sharing confidential business information with business partners in other member states, who might otherwise be able to help develop innovative products.

The consultation
The Commission is therefore looking for views on how the law currently operates and how trade secrets and knowhow is used by organisations, with a view to considering reform of the law in this area.

The consultation closes on 8 March 2013.

Martin Sloan

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