The new Trade Secrets Protection Act (WWB) will come into effect on October 23, 2018.
Mr. Daniël Maats , employment lawyer at
BvdV Attorneys and Tax Advisors in Utrecht,
wrote an interesting article about confidentiality clauses in employment contracts.
We’d like to share this article with you.
Trade secrets better protected; pay attention to confidentiality clauses in employment contracts!
31 – 10 – 2018 • Daniël Maats
For many entrepreneurs, protecting their trade secrets is essential for the continued existence of their business. Therefore, many
employment contracts include some form of confidentiality clause. However, these agreements often provide insufficient protection.
The new Trade Secrets Protection Act (WEB) offers entrepreneurs more options. However, entrepreneurs must take action to achieve this.
Trade Secrets Protection Act
The Dutch Trade Secrets Act originates from a European Directive on the Protection of Trade Secrets, which entered into force in 2016. Member States were then required to incorporate this directive into national legislation. The Netherlands has done so with the Trade Secrets Act, which entered into force on October 23, 2018.
What information is protected?
Trade secrets, what exactly does that detail? The new rules apply to know-how and business information that is not generally known. To be protected, the following is required:
- The information must be secret and therefore, in its entirety or in its proper compilation and arrangement of parts, not generally known or easily accessible to experts;
- The information must have (potential) commercial value because it is secret;
- The entrepreneur must have taken reasonable measures , depending on the circumstances, to keep the information confidential;
What are trade secrets protected against?
If it is established that the information is a trade secret, the rightful owner of that information receives several benefits. The acquisition, use, and disclosure of the trade secrets by others who are not the rights holders is therefore automatically unlawful.
The rightful entrepreneur can ask the court to prohibit the production or marketing of products using the trade secret. The court can also order the recall or destruction of unlawful products. Last but not least, damages can be claimed for the damage caused by the unlawful conduct. However, a whistleblower cannot be restricted from disclosing trade secrets by invoking the WBB if it concerns misconduct, errors, or illegal activities, if this was done with the aim of protecting the public interest. The same applies to disclosures by journalists.
Other WBB benefits
The Trade Secrets Act also addresses another problem previously faced by entrepreneurs whose trade secrets have been leaked. If the entrepreneur was forced to initiate legal proceedings, the secrets would still have to be disclosed to demonstrate unlawful use. The court can order that the proceedings take place behind closed doors. As with intellectual property proceedings, unsuccessful parties in trade secret infringement proceedings can be ordered to pay the full legal costs. This can result in significant expenses for the unlawful user of trade secrets and limits the damages suffered by the entrepreneur.
Tips
The Trade Secrets Protection Act is a major step forward. It offers employers excellent opportunities to address the unlawful use of trade secrets. However, entrepreneurs must take action:
- Review the standard confidentiality clause in the employment contract and determine whether it adequately protects the desired information. It’s wise to explicitly state which information the employee must keep confidential.
- Ensure that the information to be protected cannot be viewed and/or copied by employees who do not need to have access to it to perform their work;
- Investigate whether the company information is sufficiently protected technically, for example by securing computers and servers and having the correct password policy;
- Be careful when concluding a termination agreement. It must be clear that an agreed confidentiality clause remains in effect even after the end of the employment contract. If there is no confidentiality clause, one can still be agreed upon in a termination agreement;
- Also include confidentiality agreements in trade contracts and in discussions about collaborations or acquisitions.
If you have any questions about how best to protect your trade secrets, please feel free to contact BvdV.
Daniel Maats
