Proportionality of Trade Secret Remedies in European Union – In Comparison with Patent Law Enforcement

IIC https://doi.org/10.1007/s40319-022-01244-0 ARTICLE Proportionality of Trade Secret Remedies in European Union – In Comparison with Patent Law Enforcement Ulla-Maija Mylly Accepted: 16 August 2022  The Author(s) 2022 Abstract In academic discourse it has been pointed out that many European courts do not pay sufficient attention to assessing the proportionality of patent law remedies. Article 3 of the Enforcement Directive (IPRED), which harmonizes the remedies for all intellectual property rights (IPRs), requires that remedies be proportionate. However, it seems that this requirement is often overlooked, with more attention being paid to the rest of Art. 3, namely the requirements that remedies be efficient and dissuasive. This article contributes to the discussion on the potential over-enforcement of IPRs, but focuses in particular on analyzing the remedies available under the Trade Secret Directive (TSD). Special attention will be paid to the explicit proportionality factors under the TSD. The availability of the bona fide defense under the TSD will also be analyzed. In this article, comparisons will be made between remedies under patent law and those under trade secret law. This article argues that the trade secret regime differs from the patent regime. Therefore, balancing the various interests under the TSD proportionality factors and the bona fide defense is more important under the trade secret regime than under the patent regime. This article seeks both to identify the differences between the two regimes and to dissect possibilities for a more balanced approach to enforcement practices under the IPRED for patent rights. Keywords Trade secrets
Patents
Remedies
Proportionality
Fundamental rights
Public interest This article was written within the framework of the project ‘‘Dissecting the Trade Secret Chimera in the Era of Data-Driven Economy DISTRASEC (338849)’’, funded by the Academy of Finland. U.-M. Mylly (&) Academy Research Fellow (Associate Professor), Hanken School of Economics, Accounting and Commercial Law, Helsinki, Finland e-mail: 123 U.-M. Mylly 1 Introduction There is an emerging body of literature on the over-enforcement of patent rights. Academics have pointed out that many European courts do not pay sufficient attention to assessing the proportionality of remedies. This has been a problem in particular when granting injunctive relief without due consideration but rather quasi-automatically. Such injunctions issued without discretion pose a problem, for example, in cases where a patentable invention constitutes only a minor element of a potentially infringing product. Consequently, unless properly tailored, an injunction may be too strong a remedy. Article 3 of the Enforcement Directive (IPRED),1 which harmonizes the remedies for all intellectual property rights (IPRs), requires that remedies be proportionate. However, it seems that this requirement is often overlooked, and that the European courts pay more attention to the rest of Art. 3, namely the requirements that remedies be efficient and dissuasive.2 If patent enforcement has been identified as a problematic issue, it is easy to understand that the enforcement of trade secrets may prove even more challenging for defendants. Yet, in many instances, trade secret claims are intertwined with patent claims. However, for trade secrets, there is, prior to a lawsuit, only a putative trade secret holder’s belief and claim that the trade secret exists and meets the cumulative criteria of the Trade Secrets Directive (TSD).3 In this regard, the starting point in trade secret cases is far more uncertain than for registered patent rights. This uncertainty comes on top of other issues identified in the discourse related to patent enforcement. Therefore, the proportionality of the remedy should be a particularly important factor when courts issue remedies for trade secret claims. The IPRED does not explain the concept of proportionality. In comparison, the TSD, in Arts. 11 and 13, sets forth factors to be taken into account when evaluating the proportionality of remedies for trade secret infringements. When the TSD was drafted, the available remedies for trade secret infringements were partly copied from the IPRED.4 However, it was considered important that the TSD have remedies of its own and that these differ to a degree from those available under the IPRED. It has been rightly argued that enacting remedies independently under the TSD without bringing trade secret remedies under the umbrella of the IPRED indicates that the EU seeks to conceptually distinguish trade secrets from intellectual property proper.5 This legislative choice highlights the different nature of trade secrets when compared to intellectual property proper. This article contributes to the discussion on the potential over-enforcement of IPRs, but focuses on analyzing the remedies available under the TSD. Particular 1 Directive (EC) 2004/48 of the European Parliament and the Council of 29 April 2004 on the enforcement of intellectual property rights. [2004] OJ L 157/45. 2 See, for example, Strowel and Ldonard (2020), pp. 1, 8, 17–18. 3 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 [2016] OJ L157/1. 4 Riis (2020), p. 220. 5 Udsen et al. (2020), p. 23. 123 Proportionality of Trade Secret Remedies in European Union… attention will be paid to proportionality factors under the TSD, which need to be taken into account when issuing both preliminary and final injunctions. This article will focus on final injunctions. Another area under analysis will be the availability of the bona fide defense under the TSD. The article will compare remedies under patent law with those under trade secret law. The aim is to identify the differences but also to dissect possibilities for a more balanced approach to enforcement practices under the IPRED for patent rights. This article will critically analyze some of the remedies under the TSD, which may give IPR-type protection to trade secrets. It is argued here that justifications for trade secrets differ from those for IPRs in such a way that protection, including the availability of remedies, should also be different. The aim of trade secret protection is not to grant exclusive rights, and this should be borne in mind also when tailoring remedies for infringements. It is particularly alarming if problems detected in the enforcement of IPRs spread into the area of trade secrets. As the remedies under the IPRED and the TSD resemble each other to some extent, this is a valid concern. The analysis at EU level will compare the provisions of the IPRED and the TSD. The analysis of national-level implementations and interpretations will focus mainly on German and Finnish approaches. These countries are among tho (...truncated)