Business secrets and litigation: what?

 

Business secrecy is protected by material and logical measures.

Can the legal instrument, the confidentiality agreement or clause, or even the law, in addition to its organisational function, be used as a last resort, and if one has the means to take legal action, as an instrument for sanctioning business secrecy or for imposing constraints? Under what conditions?

• Prove contractual fault, breach of confidentiality, resulting damage.

There may be difficulties in identifying information that should be considered confidential, and in tracing its movement.

If the contractual terms are too vague, the judge will be encouraged to interpret them in his own way. On the other hand, too many precautions may make the terms of the confidentiality agreement impractical.

A system of recording meetings, depositing them with a trusted third party, or more or less sophisticated marking of the documents or creations concerned, from the famous "confidential" stamp to geolocation and anti-copying techniques, can be put in place.

As regards the loss, how will it be assessed in the absence of an agreed lump sum penalty? One can refer to the classical tools of economic theory (evaluation by costs, comparables, expected revenues, etc.).

The Directive (EU) 2016/943 of 8 June 2016 on the protection of undisclosed know-how and business information (trade secrets) against unlawful obtaining, use and disclosure, (transposed into the Commercial Code Articles L151-1 et seq.) mentions:

 "The competent judicial authorities may, in appropriate cases, fix a lump sum for damages, based on elements such as, at least, the amount of royalties or fees that would have been due if the infringer had not been a victim of the infringement. Alternatively, the competent judicial authorities may, in appropriate cases, fix a lump sum for damages, based on elements such as, at least, the amount of royalties or fees which would have been due if the infringer had sought permission to use the business secret in question."

• Continue to protect secrecy in litigation

To protect a business secret in court proceedings, the above-mentioned EU Directive 2016/943 provides that judicial authorities may restrict access to the proceedings and hearings, or deliver watered-down versions of the documents concerned.

A preventive measure will most often consist of the sequestration of evidence, for example during a seizure for counterfeiting (based on Articles L615-5, R615-2, R615-4 of the Intellectual Property Code) (Tribunal de grande instance de Paris ordonnance de référé rétractation rendered on 22 November 2019 3rd chamber 3rd section N° RG 19/10783).

Thus, paragraph 1 of Article R153-1 of the Commercial Code provides:

When the matter is referred to the court on the basis of Article 145 of the Code of Civil Procedure or in the course of an investigation ordered on that basis, the court may order ex officio the temporary sequestration of the requested documents in order to ensure the protection of business secrecy.

The Commercial Code then organises a subtle procedure for the protection of secrecy and limited disclosure of confidential information:

Article R153-2 of the Commercial Code:
When, in application of Article L. 153-1, the judge restricts access to the document to persons authorised to assist or represent the parties, he or she may also decide that these persons may not make a copy or reproduction of the document, except with the agreement of the holder of the document.

Article R153-2 of the Commercial Code:
When, in application of Article L. 153-1, the judge restricts access to the document to persons authorised to assist or represent the parties, he or she may also decide that these persons may not make a copy or reproduction of the document, except with the agreement of the holder of the document.

Article R153-3 of the Commercial Code:
On pain of inadmissibility, the party or third party to the proceedings who invokes the protection of business secrecy in respect of a document the communication or production of which is requested shall submit to the court, within the time limit set by the court :
1° The complete confidential version of this document;
2° A non-confidential version or a summary;
3° A statement specifying, for each piece of information or part of the document in question, the reasons why it is a business secret.
The judge may hear separately the holder of the document, assisted or represented by any authorized person, and the party requesting the communication or production of this document.

Article R153-4 of the Commercial Code:
The judge decides, without a hearing, on the communication or production of the document and its terms.

Article R153-5 of the Commercial Code:
The judge shall refuse to disclose or produce the document if it is not necessary for the resolution of the dispute.

Article R153-6 of the Commercial Code:
The judge shall order the communication or production of the document in its integral version when it is necessary for the solution of the dispute, even though it may infringe a business secret.
In the latter case, the judge shall designate the person or persons who may have access to the document in its integral version. Where one of the parties is a legal person, the judge shall designate, after obtaining its opinion, the natural person or persons who, in addition to the persons entitled to assist or represent the parties, may have access to the document.

Article R153-7 of the Commercial Code:
Where only certain elements of the document are of such a nature as to infringe a business secret without being necessary for the resolution of the dispute, the court shall order the communication or production of the document in a non-confidential version or in the form of a summary, in accordance with the terms and conditions it shall determine.

Article R153-8
Where it is given before any trial on the merits, the decision ruling on the request for communication or production of the document may be appealed under the conditions laid down in Article 490 or Article 496 of the Code of Civil Procedure.
The time limit for appeal and an appeal within that time limit shall be suspensive where the decision grants the request for disclosure or production. Provisional execution may not be ordered.

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See as well :

Protection of business secrets

Patents for inventions, employee inventions