Opening up the Shadowy World of Trade Secrets

Back in January, I wrote about moves within the European Commission to strengthen the protection for trade secrets. That's potentially a worrying development for the world of open source, based as it is on the frictionless exchange of knowledge. Since then, more people have become aware of the threat, and some have started mobilising against it. For example, a site called simply Stop Trade Secrets links to a petition against the move, and offers a useful explanation of the key issues here:

In everyday life, the directive could restrict employees’ ability to freely change employment, for example by introducing the risk of creating a process in a new job, which is too similar to one used in a previous role – employees may feel unable to use their know-how with a new employer. The use of company information by workers’ representatives exercising their trade union rights is also not excluded from the scope of criminal liability.

That effect is probably not something that most people would think of in the context of trade secrets, but indicates just how far-reaching the new legislation might be.

The right to freedom of expression and information could be seriously harmed. The proposal contains no general exception for investigative journalists nor for NGO researchers and whistleblowers, although their work is essential for any modern democratic society. There is also no exception for information which impacts on fundamental rights, in particular regarding public health and the environment.

This is troubling in view of the increasing importance of whistleblowers in revealing malpractice, particularly so in the wake of Edward Snowden's leaks. It is easy to see any broad trade secret law being misused to stifle awkward releases of information about wrong-doing. It would only take a few such cases to have a chilling effect on whistleblowing in Europe.

Finally, the European directive stipulates that in the event of civil or criminal proceedings, access to files or hearings might be restricted, before, during and after the legal action in order to protect trade secrets. This is a serious threat to equality before the law – as the files are not accessible to all parties anymore – and to the freedom of information. Of course, the right to open justice is guaranteed by the constitutions of many EU member states.

Again, things are bad enough with the UK government using secret courts for supposedly sensitive material. Allowing companies to do the same would be a hugely retrogressive step.

Alongside that new campaign, there is an important report on the Corporate Europe Observatory (CEO) site that exposes the way well-funded lobbying is driving this move, and how the European Commission has been at best passive, and at worst complicit in allowing industry to hijack the preparation of the new legislation.

This report is based on the analysis of hundreds of documents, obtained through an access to documents request, exchanged between the European Commission's DG Internal Market and the main corporate lobby groups involved in the development of the EU's draft legislation on so-called “trade secrets”.

Industry's main message throughout the process has been that trade secret theft is a major threat to the EU economy that demands a legislative initiative to improve and harmonise rules on the matter. Industry's recommended approach for this was to define trade secrets as a form of intellectual property (IP).

Eventually, the Commission followed industry's demands almost completely, stopping short of creating a new IP category for trade secrets in the EU but granting the associated means of legal redress.

The analysis points out a specific way in which the proposed trade secrets legislation could harm transparency initiatives involving open data:

It is also feared that the directive would provide additional legal arguments for companies to refuse the disclosure of the data they file with public authorities for their products' market authorisation, such as clinical trials for medicines or toxicological data for chemicals and food products (such disclosure is seen as indispensable to guarantee a scientifically rigorous assessment of these products). The Commission says its text is “neutral” on this point but lobbying goes on in the European Parliament with clear attempts in this direction.

There is already a huge battle over proposals to bring in mandatory release of clinical trials information, even though that move is likely to save many lives and avoid adverse reactions for thousands. Bringing in trade secrets law that made it easier to withhold that would be a serious blow against this big win for transparency.

There's also an intriguing link to the current TTIP negotiations:

Reference was often made to the upcoming TTIP negotiations to justify the action, as comparable legal action was being drafted in the US, and direct lobbying of TTIP negotiators to get trade secrets protected as IP under TTIP was undertaken.

That's one of a number of indications that the European Commission is already trying to accommodate US demands in TTIP by introducing legislation that implements likely elements of the trade agreement. It's actually quite a clever way to get around the promise that "TTIP won't change EU laws": the Commission is trying to change laws *before* TTIP is signed, so that it can claim that the agreement changes nothing. That's true, because the changes are being made now, before the negotiations have been concluded.

Most of the CEO article is devoted to the detailed interactions between the European Commission and business lobbyists. It is overwhelmingly the latter that have determined the direction and key freatures of the proposed trade secrets legislation. That's bad enough, but what's also striking is the almost total neglect by the European Commission of civil society.

It's hard to decide whether the Commission is just too lazy to think through the implications of a trade secrets law for the general public, or simply so arrogant that it doesn't give a hoot about what the little people think. But it's certainly consistent with the Commission's bias during the process leading up to the TTIP negotiations, when 93% of the Commission’s meetings with stakeholders during the preparations of the negotiations were with big business. As the CEO report explains in the context of the trade secrets discussions:

Non-industry groups were completely absent from the Commission's drafting process until the public consultation, and no pro-active outreach to them seems to have been undertaken by the Commission.

The proposed trade secrets legislation is completely of a piece with the TTIP trade negotiations: benefitting only big business, with little but downsides for ordinary people, and imposed by a European Commission whose main preoccupation seems to be satisfying the demands of lobbyists. No wonder, then, that the entire European project teeters on the brink: the contempt shown by the Eurocrats towards the people who pay their not ungenerous salaries remains blatant and unmitigated.

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Copyright © 2015 IDG Communications, Inc.

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