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Heightened Trade Secrets Restrictions Could Chill Global Speech

DEEPLINKS BLOG
September 14, 2015

Heightened Trade Secrets Restrictions Could Chill Global Speech

Trade secrets are seeing a resurgence of attention by policymakers at home and around the world. While there can be legitimate reasons to keep commercially valuable information secret, particularly amongst those with whom it has been shared in confidence, the latest trade secrets push goes further, potentially entangling whistleblowers and journalists.

In the United States, most States have adopted the Uniform Trade Secrets Act (UTSA), which codifies the offense of trade secret misappropriation as “acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means”—whether or not that person was directly involved in that impropriety. This goes further than the laws of many other countries, which require the person who discloses a trade secret to have themselves behaved improperly in obtaining it.

One reason why the broader scope of United States trade secrets law has not become a major problem before now is the existence of the First Amendment. For example, in the case of DVD-CCA v. Bunner, where an injunction was sought against multiple defendants for republishing the source code of the DeCSS DVD-descrambling utility, their First Amendment rights were a factor in the ultimate dismissal of the injunction (along with, more fundamentally, the fact that by then the CSS algorithm was no longer a trade secret).

But because other countries do not have the safeguard of the First Amendment, it is potentially much more problematic to extend a duty of confidence to those who are innocent of any impropriety of their own. Yet two parallel measures to extend strict U.S. rules throughout the world would do exactly this.

One of these measures is a proposed European Trade Secrets Directive, which would harmonize, upwards, the continent's mish-mash of national trade secrets laws. This week the proposed Directive heads to a “trialogue” meeting in which the three institutions of the European Union—the European Parliament, the Council, and the Commission—will seek to bash out a draft text, which will then formally go back to the Parliament for a first reading vote.

A significant controversy in the Directive proposal has been over whether it should include exceptions for the disclosure of trade secrets in the public interest, for example by journalists and whistleblowers. Back in June, the Parliament's Legal Affairs (JURI) Committee recommended that it should. But pushback against these protections is very likely to emerge during the trialogue process, and their prospects of survival in the final Directive are fraught at best.

The second measure to heighten trade secrets protection around the world is by the inclusion of a tough new trade secrets provision in the Trans-Pacific Partnership (TPP). Mirroring U.S. law, but at odds with that of some of its partners, the TPP's trade secrets obligation “includes the acquisition of undisclosed information by third parties who knew, or were grossly negligent in failing to know” that it had been obtained in “a manner contrary to honest commercial practices”. In cases where the trade secret is accessed or disclosed over a computer system, it even becomes a criminal offense.

The TPP contains none of the public interest safeguards that the JURI Committee promoted for the EU Trade Secrets Directive. There is a proposal that would allow (but would not require) countries to provide an exception for whistleblowers who reveal a violation of the law. But this is far narrower than the equivalent exception proposed by the JURI Committee, which would also have allowed whistleblowing of misconduct, wrongdoing or fraud—as well as providing a separate guarantee of media freedom and a “general public interest” exception.

The lack of constitutional protection for the rights and liberties of citizens of many of the EU and TPP countries makes it is absolutely essential that if new trade secret rights are to be recognized, these come with robust and broad public interest exceptions. We oppose the TPP outright, for this and many other reasons. As for the EU Trade Secrets Directive, we remain to be convinced that a fair balance will be struck, and will be closely monitoring its progress through the European policy machinery.

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