Why a law on trade secrets?
Competing with one's employer during the course of employment is already a practice that constitutes just cause for dismissal or dismissal. In addition, employees may be liable for damages for professional misconduct under the Tort Liability Act, but exceptional circumstances are required for liability to be imposed.
The Trade Secrets Act (2018:558) increases the employee's liability for unauthorized attacks on trade secrets. The Act also means that a new employer who benefits from trade secrets can be held liable for damages.
What is a trade secret?
For something to be classified as a trade secret under the Trade Secrets Act, the following criteria must be met:
- It must concern business or operational relationships.
- The information must not be publicly known or easily accessible.
- The employer must have taken reasonable steps to keep it secret.
- The information must be capable of causing competitive harm if it falls into the wrong hands.
Examples of trade secrets include price lists, customer information, supplier information and internal strategies.
What is non-legal handling?
An attack on trade secrets means that an employee unauthorized:
- Provides access to,
- acquires, or
- otherwise acquires the trade secret.
Here is an example from the legislative history that illustrates the distinction between lawful and unlawful processing:
"A common situation is that an employee who has access to trade secrets, contrary to the employer's instructions, copies secrets to, for example, a USB stick. If the purpose of copying is to facilitate the employee's own work, this is not an unauthorized appropriation. However, it becomes an unauthorized appropriation if the copying is done with the intention of making the trade secret his own, or if the employee, despite the employer's request, does not return or destroy copied documents." (Bill 2017/18:200 p. 40, 142 f.)"
What can be the result of incorrect handling?
The primary focus is on damages.
For damages to be awarded, the attack must have occurred:
- Intentionally or through negligence on the part of the employer and of which he/she has become aware in the course of his/her employment
- Under such conditions that he/she realized or should have realized that he/she must not be disclosed.
Competing with one's employer during the course of employment is also typically an objective reason for dismissal or dismissal.
What happens after employment?
Once employment is terminated, it is required exceptional reasons in order for the employee to be held liable for disclosing trade secrets. The starting point is that loyalty ends when employment does, and the employee is free to compete with his former employer.
However, if it can be shown that the employee has infringed trade secrets during the period of employment, for example by copying them for later use, this may constitute exceptional reasons.
However, information that the employee has in his or her memory may normally be used.
Can this be agreed?
In some cases, it is possible to agree with your staff on what are called non-compete clauses. However, these must be reasonable in order to be binding. It is very common that non-compete clauses in employment contracts are in reality not binding precisely because they are not reasonable.
Tips for further reading:
How the employer can prevent competition
Non-compete clauses in employment relationships Preventing competition is a major...
Applicable legal text
Trade Secrets Act
What is meant by a trade secret
2 § In this Act, "trade secret" means information
1. on the business or operating conditions of a trader or the activities of a research institution,
2. which, neither as a whole nor in the form in which its components are arranged and assembled, is generally known to or readily accessible by those who normally have access to information of the kind concerned,
3. which the holder has taken reasonable steps to keep secret; and
4. the disclosure of which is likely to cause competitive harm to the holder.
Experience and skills acquired by an employee in the normal course of his or her work are not trade secrets. Nor is information about something that constitutes a crime or other serious misconduct a trade secret.
Other expressions in the law
3 § Infringement of a trade secret means that someone without the consent of the holder
1. accesses, appropriates or otherwise acquires the trade secret,
2. exploits the trade secret, or
3. discloses the trade secret.
Exploitation of a trade secret shall also mean the manufacture of goods the design, characteristics, functioning, production or marketing of which substantially benefit from an infringed trade secret. The same applies to offering such goods for sale, placing them on the market, or importing, exporting or storing such goods for these purposes.
The law applies to unauthorized attacks on trade secrets
4 § The law only applies to unauthorized attacks on trade secrets.
An unauthorized attack is never considered to be an attack on a trade secret for the purpose of publishing or disclosing to an authority or other competent body something that
1. can reasonably be suspected of constituting a criminal offense punishable by imprisonment, or
2. may be considered to constitute other misconduct and the publication or disclosure is in the public interest.
Liability for damages
5 § Anyone who commits an offense under section 26 or 27 shall compensate for the damage caused by the offense or by the use or disclosure of the trade secret.
6 § Any person who intentionally or negligently attacks a trade secret of a trader or a research institution which has been disclosed to him in confidence in the course of a business relationship with the trader or research institution shall be liable for the damage caused by the act.
7 § An employee who intentionally or negligently attacks a trade secret of his employer which he has acquired in the course of his employment in circumstances in which he knew or ought to have known that it must not be divulged shall be liable to pay compensation for any damage resulting from such action.
If an exploitation or disclosure has taken place after the termination of employment, the liability referred to in the first subparagraph shall apply only if there are exceptional reasons.
9 § Any person who intentionally or negligently attacks a trade secret which he knows or ought to know has been attacked by another person at an earlier stage shall be liable for the damage caused by the act.