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On June 9, 2018, the new Danish Act on Trade Secrets became effective, implementing EU Directive 2016/943 regarding the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use, and disclosure. The act contains new measures that aim to prevent the misuse of trade secrets, and it includes definitions of some significant concepts.
Danish law did not previously include a formal definition of “trade secret,” which is now defined under the new rules as information that:
- is secret in the sense that the information is not widely known within the applicable sector;
- has commercial value because it is secret; and
- has been subject to reasonable measures to ensure its secrecy by the person who lawfully controls the information.
Protection Against Misuse
Section 23 of the Danish Marketing Practices Act has been replaced by section 4 of the new Act on Trade Secrets, which, like its predecessor, protects against the unlawful acquisition, use, or transmission of trade secrets, but it now also lists examples of unlawful activities.
The new Act on Trade Secrets also expands the scope of protection to provide cover against third-party individuals without any connection to the company by civil sanctions, while the previous condition that the offender must have a connection to the company is retained in relation to criminal proceedings.
Remedies in Case of Misuse
In cases concerning misuse of trade secrets, the Danish courts typically order a temporary prohibition or injunction. The new rules introduce new types of orders aimed at providing effective relief to the wronged party. These include the possibility of orders to hand over objects such as documents or hard drives, as well as orders that the activities resulting in the misuse may proceed but will be conditional upon the provision of a guarantee to the owner of the trade secret. Also, the Act on Trade Secrets allows courts to issue penalty payments and make their judgements publicly available.
Historically, compensation has been awarded corresponding to the value of the damage suffered by the owner of the trade secret. This has sometimes proved problematic, as it is often difficult to specify a direct loss due to a violation. However, the new rules also allow for consideration of non-economic damages as well as any unjustified gain by the offender.
Comments
The new act provides welcome clarification on the protection of trade secrets in Denmark. However, the extent to which the new act will make it easier in practice for Danish companies to obtain compensation—which will depend upon the approach courts take when enforcing the new laws—remain questionable. Companies wishing to protect their trade secrets may want to continue to use noncompetition or nonsolicitation language in customer clauses.
Written by Anders Etgen Reitz of IUNO and Roger James of Ogletree Deakins