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This article briefly examines legal opportunities for the protection of trade secrets against their unlawful acquisition, use and disclosure in Cyprus.

On the 27th of November 2020, the Law No. 164(I)/2020 (the Law) [1] on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure came into force in Cyprus.

Directive (EU) 2016/943

The Law has incorporated the provisions of Directive (EU) 2016/943 on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure  (the Directive), which aims to harmonise national laws regarding measures, procedures and remedies against the unlawful acquisition, use and disclosure of trade secrets. Moreover, the Directive aims for the proper functioning of the internal market for research and innovation throughout the EU by maintaining equivalent protection of trade secrets throughout the EU.

What is a trade secret?

According to Article 2 of the Law a ‘trade secret holder’ is ‘any natural or legal person lawfully controlling a trade secret’ and, ‘trade secret’ is information that meets the following three requirements:

  • It is secret in the sense that it is not, as a body or in the precise configuration and assembly of its components, generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question;
  • It has commercial value because it is secret;
  • It has been subject to reasonable steps under the circumstances, by the person lawfully in control of the information, to keep it secret.

As long as all the above requirements are met, the Law does not limit the situations where an information can be regarded as a trade secret and examples include information about customers and suppliers of a business, manuals and designs, know-how, copyrights, technical information, or algorithms of a successful software.

It is important to note that for the application of the Law, the information regarded as trade secret must be proven to give a competitive advantage to the trade secret holder, who must be able to demonstrate that ‘reasonable steps [2] have been taken to ensure the secrecy of the relevant information.

It is indeed a challenge to meet the ‘reasonable steps’ requirement, which is a vital component for the protection of a trade secret. This requirement is a proportionate one, meaning that large companies are expected to take more robust protective steps than a small or medium-sized one. Moreover, what may be considered reasonable in one country may not be viewed in the same way in another.

These measures are crucial for protection of trade secrets against an ‘infringer’, who is defined in the Law as any natural or legal person who has unlawfully acquired, used or disclosed a trade secret.

Lawful acquisition of trade secrets

Not all cases of acquisition of a trade secret are regarded as unlawful. According to Article 4 of the Law, the acquisition, use and disclosure of a trade secret shall be considered lawful when a trade secret is obtained by any of the following means:

  1. Independent discovery or creation;

  2. Observation, study, disassembly or testing of a product or object that has been available to the public or that is lawfully in the possession of the acquirer of the information who is free from any legally valid duty to limit the acquisition of the trade secret;

  3. Exercise of the right of workers or workers’ representatives to information and conclusion in accordance with Union law and national laws and practices;

  4. Any other practice which, under the circumstances, is in conformity with honest commercial practices.

Legal measures in case of a violation

The importance of the Law lies in the fact that the trade secret holder is now able to take legal actions against the infringer, and the law provides a variety of measures that the trade secret holder can demand in court if unlawful acquisition, use or disclosure of a trade secret is established.

The Law provides that the Court, at the request of the trade secret holder, can order any of the following provisional and precautionary measures against the alleged infringer:

  1. The cessation of or, as the case may be, the prohibition of the use or disclosure of the trade secret on a provisional basis;

  2. The prohibition of the production, offering, placing on the market or use of infringing goods, or the importation, export or storage of infringing goods for those purposes;

  3. The seizure or delivery up of the suspected infringing goods, so as to prevent their entry into, or circulation on, the market.

Moreover, according to the Law,[3]  the Court can, upon the request of the injured party, order an infringer who knew or ought to have known that he, she or it was engaging in unlawful acquisition, use or disclosure of a trade secret, to pay the trade secret holder damages appropriate to the actual prejudice suffered as a result of the unlawful acquisition, use or disclosure of the trade secret.

The liability for damages of employees towards their employers for the unlawful acquisition, use or disclosure of a trade secret of the employer may be limited, where they act without intent.

Lastly, Article 18 of the Law imposes sanctions on any person who fails or refuses to comply with any measures adopted pursuant to the Law and may be liable to a fine up to €35.000 or imprisonment up to three (3) years, or both those sanctions.

What is the importance of the Law?

Trade secrets are widely used and valued by businesses across the economy to protect their know-how, other commercially valuable information and to create new knowledge. Thereby trade secrets promote competitiveness and innovation.

The Law offers companies and small businesses opportunities to protect their trade secrets without the need of them being covered by the intellectual property rights regime.

Although the Law provides certain opportunities for the protection of trade secrets, it is still advisable that businesses and organisations take preventive measures to mitigate external and internal threats for misappropriation of confidential information.

[1] Full text of the Law can be found here in Greek.
[2] Article 2(c) of the Law.
[3] Article 16 of the Law.

For more information, please visit our website microsite on Intellectual Property or contact Ms. Munevver Kasif  at This email address is being protected from spambots. You need JavaScript enabled to view it.

 

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