Newsflash: The transposition of a European Directive modifies article 17 of the Employment Contracts Act

With a view to the transposition into national law of 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 (hereinafter 'the Directive'), on 19 July 2018, the House of Representatives adopted a draft law and submitted it to the King for ratification.

The Directive aims to harmonise the provisions of the EU member states regarding the protection of trade secrets in order to provide the same level of protection throughout the EU.

A trade secret includes the know-how of a company, its manufacturing or business secrets or certain other information that is secret and therefore of commercial value. Under pressure from, among others, the increasing outsourcing, globalisation and the use of information technology, there is a great need for proper legal protection of the economically important trade secret.

Belgian law does currently not provide for a general legal framework for the protection of trade secrets. Moreover, it is not always possible nor desirable to protect trade secrets by means of a patent or other intellectual property right. However, Belgian legislation provides for a number of legal provisions that allow legal action to be taken in certain situations against the unlawful acquisition, use or disclosure of trade secrets:

  • The Employment Contracts Act, and more specifically article 17(3), obliges employees who, in the course of the performance of their duties, have been aware of trade or business secrets, to refrain from disclosing these secrets. This obligation applies both during the employment contract and after its termination .

  • The Code of Economic Law and, more specifically, article VI. 104 sanctions any act of unfair competition.

  • The doctrine of tort in the Civil Code and the provisions relating to the abuse of trust in the Criminal Code may also be a remedy in certain circumstances.

Given the presence of a number of provisions in Belgian law and the fragmented nature of these provisions, it is not appropriate to provide for a separate legal text to transpose the Directive. The adopted law therefore provides for a number of amendments to the Code of Economic Law, to the Judicial Code and to article 17(3)(a) of the Employment Contracts Act.

At present, article 17(3)(a) of the Employment Contracts Act does not define the concepts of trade and business secrets. In the absence of a legal definition, the established case law of the Court of Cassation is that it is for the judge to decide whether a secret constitutes as a trade or business secret.

The adopted law amends article 17, 3° a) of the Employment Contracts Act to the extent that it will henceforth refer to the concept of trade secret as defined by the Directive. In particular, the Directive aims to establish a uniform definition of trade secrets. The Belgian legislator chose to adopt the definition of the Directive. This definition qualifies a secret as a trade secret when three cumulative conditions are met: (i) the information contains commercial value, (ii) the information is secret and (iii) the information must be subject to reasonable security measures in order to maintain its secrecy.

Finally, the Directive lays down rules to protect trade secrets from unlawful acquisition, use and disclosure. The employee will be required to comply with all the provisions of the Code of Economic Law concerning the transposition of the Directive. The purpose of those provisions is not only to prohibit employees from disclosing trade secrets, but also from unlawfully obtaining them. In this context, the adopted law also amends article 17, 3° a) of the Employment Contracts Act to clearly state that the protection of commercial confidentiality both prohibits the employee from disclosing business secrets and from unlawfully obtaining them.

According to the parliamentary preparation, the purpose of amending the aforementioned Article is not to extend or restrict the scope of court rulings. In other words, the modifications referred to above should in practice not entail any major changes.

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