ENTRY INTO FORCE OF THE ACT ON THE PROTECTION OF UNDISCLOSED INFORMATION WITH MARKET VALUE

Posted 14/06/2018

A constant investment of companies in acquisition, development and application of knowledge and experience represents their intellectual capital by which they increase their competitiveness and success on the market. That way they ensure the return on invested capital, whereby confidentiality represents an essential tool for achieving competitiveness and success in the innovation market. On April 7, 2018, by the entry into force of the Act on the Protection of Undisclosed Information with Market Value (cro. “Zakon o zaštiti neobjavljenih informacija s tržišnom vrijednosti“, Official Gazette Number: 30/2018, the “APUIMV“) a more reliable and streamlined legal framework for the protection of information, procedures and other data of importance for subjects dealing with innovation activities was established. LPIUMV implemented two Directives into Croatian Legislation: 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 and Directive 2004/48 EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights which was previously transposed into Croatian intellectual property laws. APUIMV defines trade secret, regulates lawful and unlawful acquisition, use and disclosure of trade secrets and establishes a system for protection in the event of an infringement.

THE DEFINITION OF A TRADE SECRET

Until the adoption of the APUIMV, the protection of commercial and trade secrets was governed by the Act on Data Secrecy Protection while other data was protected by the Data Secrecy Act.

The Act on Data Secrecy Protection defines trade secret more broadly than APUIMV, as every data which is as a trade secret defined by law, other regulation or general act of a company, institution or legal entity, and which represents a manufacturing secret, research results or constructional work and other data of which communication to an unauthorized person may have adverse consequences on the economic interests of the person.

On the other hand, APUIMV provides protection of the legitimate interests of the trade secrets holders which have economic value as a special form of intellectual property. This regulation establishes rules on protection against unauthorized acquisition, use or disclosure of unpublished knowledge and know-how as well as trade and technological information which represent a trade secret. According to APUIMV, the trade secrets are considered to be information not known to the general public nor easily accessible to persons commonly concerned with this type of information, have a commercial value for being secrets and to which the party which possesses them has applied appropriate reasonable procedures in order to keep them secret.

APUIMV continues to develop investigative journalism and “whistle-blower” rights which, with good intentions disclose trade secrets for the purpose of protecting public interest.

Although they do not regulate trade secrets protection in a more detailed manner, the Companies Act (cro. “Zakon o trgovačkim društvima“, “CA”) and the Labour Act (cro. “Zakon o radu”, “LA”) regulate both the responsibilities of the supervisory board members as well as of workers for keeping all the information heard from the confidential reports or inventions made at work as trade secrets.

ENFORCEMENT

APUIMV has established a system of measures, procedures and legal acts within the civil right to the protection of the interest of a trade secret holder.

Thus, a trade secret holder, as well as the holder of the license to the extent to which they are authorized on the basis of an act or regulation, in the event of a breach of the trade secret, have the right to request from the competent commercial court:

utvrđenje povrede;
prestanak povrede;
zabranu korištenja ili otkrivanja poslovne tajne;
dostavu podataka o podrijetlu i distribucijskim kanalima robe ili usluga kojima je počinjena povreda;
oduzimanje i uništenje robe kojom je počinjena povreda;
naknadu štete/uobičajenu naknadu/stečeno bez osnove;
objavu presude i
privremene mjere.

All the participants shall be bound by an obligation of confidentiality regarding trade secrets or alleged trade secret established by the judge and are not entitled to disclose it or use it even after the termination of a court proceedings. Confidentiality of the trade secrets ceases after a court proceeding in case it is determined by a legally binding decision that the alleged trade secret does not meet the protection requirements or if the relevant information becomes general or readily accessible to persons commonly concerned with this type of information.

Addressing the request for the protection of trade secrets is urgent.

THE SIGNIFICANCE OF TRADE SECRET AS A SPECIAL FORM OF INTELLECTUAL PROPERTY

One of the basic features of trade secret in relation to other forms of intellectual property protection is that the trade secret has no time constraint, which suggests that intellectual property can potentially be permanently protected. The added benefits of trade secrets to other forms of protection are that there is no formal registration of rights or registration costs. A study carried out by the European Union Intellectual Property Office (“EUIPO“) in July 2017 showed that many companies would rather opt for the protection of trade secrets than to initiate a patent granting process, as is evident in many economic sectors within the European Union. The study has also shown that many companies will rather opt to protect the services sector innovation with trade secrets, while they tend to protect manufacturing innovation by registered forms of protection.

Trade secret is a suitable form of innovation protection at the early stage of their development, as well as for those innovations that are not eligible for the formal protection such as, for example, unpatentable inventions. Trade secrets can protect various forms of intellectual property from drawings, designs, work processes, business methods, strategies and organizational procedures. Innovators often decide on a combination of trade secrets and patent protection, which is a particularly convenient form of protection when it comes to complex innovations protection.