The European Commission decided to refer Cyprus to the Court of Justice and to request the Court to order the payment of financial penalties because it failed to notify transposition measures for the rules on the protection of undisclosed know-how and business information (Directive 2016/943). The Directive, also known as the Trade Secrets Directive, harmonises the legal protection of trade secrets across the EU and ensures a sufficient and consistent level of civil redress and compensation in the Single Market in the event of unlawful acquisition, use or disclosure of a trade secret.
Cyprus has not communicated any transposition measures so far, while the deadline set by the Directive expired on 9 June 2018. The Commission opened the infringement proceedings against Cyprus in July 2018 and sent a reasoned opinion in July 2019. Since the Cypriot authorities have still not notified any measure to transpose the Directive, the Commission has now decided to refer the case to the Court of Justice.
A trade secret is a valuable piece of information for an enterprise that is treated as confidential and that gives that enterprise a competitive advantage.
Directive (EU) 2016/943 on the protection of undisclosed know-how and business information (trade secrets) harmonises the definition of trade secrets in accordance with existing internationally binding standards. It also defines the relevant forms of misappropriation and clarifies that reverse engineering and parallel innovation must be guaranteed, given that trade secrets are not a form of exclusive intellectual property right.
Without establishing criminal sanctions, the rules harmonise civil means through which victims of trade secret misappropriation can seek protection such as:
- stopping the unlawful use and further disclosure of misappropriated trade secrets;
- removingfrom the market goods that have been manufactured on the basis of a trade secret that has been illegally acquired;
- the right to compensation for the damages caused by the unlawful use or disclosure of the misappropriated trade secret.