Trade Secrets Act adopted

In the September issue  we already reported on the new proposal of the Trade Secrets Act, which transposes the EU Directive 2016/943 into the Slovenian legal order and comprehensively regulates the protection of trade secrets. The Act was passed in Parliament on 26 March 2019. Below we would like to draw the attention to the revised definition of trade secret in the adopted law, which differs somewhat from the definition contained in the initial draft. 

The adopted Act defines trade secret as undisclosed know-how and business information, which meets all of the following requirements: (i) it is a secret, which is not generally known among or readily accessible to persons within circles that normally deal with the kind of information in question; (ii) it has a commercial value, (iii) and the trade secret holder has taken reasonable steps to keep it secret. It is assumed that this last requirement of reasonable steps is met, if the holder has designated in writing a piece of information as trade secret and notified thereof the persons who come into contact with this information, especially company members, employees, members of company bodies and other persons. The Act further specifies that information which is public by law or information about a breach of the law or good business practice, cannot be designated as a trade secret. 

Once the Act enters into force, the definition of trade secret as used in sectoral legislation, including the Companies Act, will cease to apply. The main difference compared to the legal rules used heretofore is that Article 40 of the Companies Act had made it possible to designate as a trade secret a piece of information which the company had not designated as such in a written resolution, if it was obvious that the company would incur considerable damage if an unauthorized person were to obtain this information. 

The practical consequence of this new regulation is that it places an additional burden on companies to regulate the trade secret protection in written form, as they will otherwise lose legal protection under the new Act. The Act also expands the concept of trade secret. 

To properly protect trade secrets, we therefore advise companies to adopt appropriate internal rules in which they should specify the information representing trade secrets (e.g. Rules on Professional Secrecy) and adequately notify the persons who come into contact with trade secrets so defined.