Increased protection of undisclosed know-how and business information in Cyprus.

 

 

Cyprus has enacted a law transposing the provisions of the European Directive 2016/943 on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure.

 

The relevant law, as with the Directive, has as its goal to provide trade secrets’ owners an increased protection to their right to prevent the business information lawfully under their control from being acquired, used in any way or disclosed by other individuals without their consent in a way contrary to ethical business practices and procedures. High level of protection will be extremely beneficial when the secret in question is excluded from patentability or during the patent “prosecution” process.

 

In order to attract the protection, the legal controller of the claimed trade secret, must have made reasonable efforts for the protection of the confidentiality of the trade secret. 

 

The acquisition of a trade secret is considered lawful when the trade secret is obtained by any of the following means:

 

1. independent discovery or creation;
2. observation, study, disassembly or testing of a product or object that has been made available to the public or that is lawfully in the possession of the acquirer of the information who is free from any legally valid duty to limit the acquisition of the trade secret;
3. exercise of the right of workers or workers' representatives to information and consultation in accordance with Union law and national laws and practices;
4. any other practice which, under the circumstances, is in conformity with honest commercial practices.

 

The law also clearly states the list of ways in which an acquisition, use or disclosure of trade secrets and know-how without the consent of the trade secret’s owner is considered illegal. The acquisition, use or disclosure of trade secrets is considered illegal whenever:

1. Carried out by:
   1. unauthorised access to, appropriation of, or copying of any documents, objects, materials, substances or electronic files, lawfully under the control of the trade secret holder, containing the trade secret or from which the trade secret can be deduced;
   2. any other conduct which, under the circumstances, is considered contrary to honest commercial practices.
2. Carried out, without the consent of the trade secret holder, by a person who is found to meet any of the following conditions:
   1. having acquired the trade secret unlawfully;
   2. being in breach of a confidentiality agreement or any other duty not to disclose the trade secret;
   3. being in breach of a contractual or any other duty to limit the use of the trade secret.
3. A person, at the time of the acquisition, use or disclosure, knew or ought, under the circumstances, to have known that the trade secret had been obtained directly or indirectly from another person who was using or disclosing the trade secret unlawfully (within the meaning of “b above”).

 

The production, offering or placing on the market of infringing goods, or the importation, export or storage of infringing goods for those purposes, is also considered an unlawful use of a trade secret where the person carrying out such activities knew, or ought, under the circumstances, to have known that the trade secret was used unlawfully (according to “b”).

 

Penalties and damages under the Law

 

Any party, counsel for the parties, employee of the Court, witness, expert or other person participating in judicial proceedings concerning the unlawful acquisition, use or disclosure of a trade secret or having access to documents forming part of such judicial proceedings, who knowingly discloses or uses any trade secret or alleged trade secret in the hands of the Court, as provided for in Article 9, shall be guilty of an offence and in the case of conviction will be subject to a penalty up to 53.000 Euros or/and imprisonment not exceeding three years.[1]

 

Any person that has suffered any loss as a result of the illegal act, acquisition, use or disclosure of the trade secret by the offender is entitled to compensation.

 

When deciding the amount of damages payable to the claimant the court will take into account all the relevant considerations including:

• the value and other specific features of the trade secret;
• the measures taken to protect the trade secret;
• the conduct of the respondent in acquiring, using or disclosing the trade secret;
• the impact of the unlawful use or disclosure of the trade secret;
• the legitimate interests of the parties and the impact which the granting or rejection of the measures could have on the parties;
• the legitimate interests of third parties;
• the public interest; and
• the safeguard of fundamental rights.

 

Finally, there are also various other measures someone can use to protect trade secrets in addition to this legal right. Measures include confidentiality agreements/NDA’s, non-disclosure and non-solicitation/dealing clauses/agreements, agreements with non-compete covenants etc.

 

Concluding, as long as trade secret controllers ensure that they legally establish their trade secrets and take all the necessary steps to protect them, the trade secret law will provide additional for trade-secret holders and encourage an innovative economic environment within the island.

 

For further information on how to protect your valuable business trade secrets and know-how reach out to us.

 

This article is provided for information purposes only and it does not constitute legal or any other professional advice.

 

 

 

 

 

 

 

 

 

BIBLIOGRAPHY

 

CyLaw, The law on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure 164(I) of 2020, available at <http://www.cylaw.org/nomoi/indexes/2020_1_164.html> accessed 5 January 2021

 

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, available at <https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32016L0943> accessed 5 January 2021

 

The law on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure 164(I) of 2020