A regime finally dedicated to business secrecy
Business secrecy can be defined as the protection of items kept secret (such as know-how, processes…) by companies or individuals. Previously governed solely by contracts, business secrecy was the subject of a new law enacted on July 30, 2018. Until then, business secrecy was only protected by the signing ofconfidentiality agreements (NDAs) or any other contract containing a non-competition or confidentiality clause. With the enactment of this law, it now benefits from a real legal regime, which no longer depends solely on contract clauses.
This law makes it illegal to obtain, disclose or use confidential information without the authorization of the rightful owner, or in breach of a non-disclosure obligation.
Business secrecy will therefore be violated if confidential information is obtained as a result of unauthorized access to a document through unfair or unbusinesslike behavior, regardless of the type of document, and even in the absence of a confidentiality agreement signed between the parties.
What does this law bring?
This system opens the way for emergency or summary proceedings in the event of a breach of secrecy, in order to obtain provisional protective measures. As for the more traditional courts, they can order proportionate measures, or prevent or halt the infringement, if necessary under penalty. It will also be possible to order publication of the conviction, for example in the press, which is a heavy penalty in the business world.
The judge will be able to take sole cognizance of the documents in order to preserve business secrecy. He can also arrange for documents to be communicated between the parties, organize debates and deliver the decision in chambers, and adapt the reasons for the decision and publication procedures to protect secrecy.
In short, a new, more protective legal regime for confidential data and business secrecy has been put in place. This confidentiality is now unlimited in time, and no longer depends solely on contractual clauses that could not be perpetual, and will only cease if the information protected by secrecy becomes legitimately accessible to all, and therefore no longer constitutes a secret.
What do I have to do to be protected by this law?
The company must have put in place “reasonable protection measures”, i.e. means of securing the business secret. This is where NDAs come into their own, and it would be unfortunate to do without them!
NDAs and confidentiality clauses are very effective in this context, as they can be used to provide evidence of these reasonable protective measures.
They would therefore enable the contractual liability regime to be applied in the event of a breach of business secrecy. This is why they should not be neglected, and why we recommend that you have them signed by all the partners who will be collaborating on your project and to whom it will be necessary to disclose all or part of the confidential information. It is also important to include a confidentiality clause and a non-competition clause in the employment contracts of your employees who will have to know or handle the secret elements.
Contracts also enable you toregulate the licensing of your know-how, and it will be essential to include a specific clause governing the exchange and protection of sensitive information. An audit clause is also important to ensure transparency between the parties regarding the information communicated on the know-how, particularly in the case of essential information held only by the licensee, due to its use of the know-how.
NDA + Business Secrecy Act = Winning combo of protection!
NDAs are therefore still very important, as they provide double protection for secrecy and double penalties for breaches of secrecy! Penalty for failure to comply with the confidentiality agreement AND penalty for failure to comply with the law on business secrecy.
Indeed, an NDA coupled with this new regime enables you to bring into play the mechanism of contractual liability resulting from your co-contractor’s breach of his contractual obligations, and to benefit from the derogatory procedure provided by the new law, since it will be applicable to your case. You benefit from two different but complementary protection systems for the same confidential information.
NDAs, coupled with the new business secrecy law, provide a stronger means of dissuading your co-contractors from violating their obligations, and your confidential information will be all the better protected for it.
Find out more about NDA
Contact our experts for contract drafting and negotiation.
