News

May 25, 2016

What the European trade secrets directive really says

The proposed European directive on trade secrets, which the European Council of Ministers is expected to adopt on May 26, has caused a great deal of concern among investigative journalists. In what follows, Reporters Without Borders (RSF) distinguishes the unwarranted fears from those that continue to be justified.

Journalists fear that the directive, since the beginning of the drafting process two years ago, will restrict their ability to inform the public about the activities of businesses, and in particular, their ability to use internal and confidential documents, which have played a key role in the coverage of many recent cases including LuxLeaks and the Panama Papers.


In theory, the directive’s aim is to protect companies against economic and industrial espionage. Approved by the European Parliament on 13 April and due to be adopted by the Council of Ministers on 26 May, it is intended to harmonise at the European level “measures, procedures and remedies” designed “to prevent, or obtain redress for, the unlawful acquisition, use or disclosure of a trade secret.” The directive allows companies that claim to have been the victims of theft or illegal use of confidential information (such as manufacturing secrets or technological innovations) to go to court to seek redress.


The directive’s initial drafts were very worrying. They insisted, for example, that to reveal a trade secret journalists had to make “a legitimate use of the right to freedom of expression and information.” This put the burden on the media to prove the “journalistic legitimacy” of their revelations, giving rise to considerable concern that they would be deterred from embarking on investigative coverage of the private sector. RSF was therefore very critical of the early versions.


Journalists’ organizations and RSF nonetheless managed to secure substantial improvements to the initial drafts. In particular, they obtained the inclusion of a clause clearly exempting journalists from the directive’s provisions. This clause says: “An application for the measures, procedures and remedies provided for in this Directive is dismissed”, when the alleged acquisition, use or disclosure of a trade secret was carried out for exercising the right to freedom of expression and information as set out in the Charter, including respect for the freedom and pluralism of the media.”


This exemption means that the protection of trade secrets cannot be used to block genuine journalistic activity. It is true that a lawsuit could brought against media outlets under the directive, that a company could claim that the revelation of a secret had violated the directive’s provisions, but the burden of proof would lie with the company, which would have to demonstrate that the reporter or media outlet had not been exercising their right to freedom of information and that they had revealed the confidential information for a different purpose. It is hard to seriously imagine a reporter or media outlet being convicted on the basis of the provisions of the directive – or its overall European version at least – unless of course they had been really engaging in economic espionage.


The directive’s wording is weaker, and gives rise to justified concern, with respect to the protection of journalists’ sources, especially whistleblowers. We must welcome the fact that a European directive has for the first time addressed the issue of whistleblowers and has tried to protect them, but it has done a poor job. Not only does the exemption’s vague wording leave this protection rather uncertain but the Council and the Parliament cannot seem to agree on the definition of terms.

The English-language version of the directive approved by the Parliament says that its provisions should not be applied “where the alleged acquisition, use or disclosure of the trade secret was carried out for revealing misconduct, wrongdoing or illegal activity.” However, the Council’s examination of the directive was postponed from 17 May to 25, then 26, because the French version’s translation of “wrongdoing” as “comportement inapproprié” (inappropriate behaviour) has been challenged. So even those drafting the directive are not sure about the extent of the protection accorded to whistleblowers.


The terms used make a big difference. The protection that this provision provides for whistleblowers varies enormously according to whether it covers misconduct and behaviour regarded as generally bad, or whether it solely covers strictly illegal activity. In the LuxLeaks case, for example, the whistleblower exposed activity that was immoral but not illegal so it presumably would not have been protected by the directive - regardless of the public interest value of the information revealed. So, under the terms use, the directive would cover, for example, those who denounced moral harassment at their place of work but not those who revealed banking practices that were antisocial but legal.


On May 25 however, an agreement was found on the French term “acte répréhensible” (reprehensible act). This suggests that not only acts that are strictly illegal, but also more broadly acts that are morally condemnable, could enter the scope of the exception on whistleblowers.


There is another problem. The directive says that whistleblowers are exempted from its provisions only if they “acted for the purpose of protecting the general public interest.” In other words, it is their intention, their good faith, that counts, not the public interest in the information they provide. And it would be up to the whistleblowers to prove their good faith, which would be very difficult. In a report to the UN General Assembly in 2015, the UN special rapporteur on freedom of expression said that the “whistle-blower’s motivations at the time of the disclosure should also be immaterial” to the decision to grant protection.


Although the directive’s preamble says that “the measures, procedures and remedies provided for in this Directive should not restrict whistleblowing activity”, in practice, the directive clearly fails to protect whistleblowers. It provides journalists with adequate protection but not whistleblowers.


The directive furthermore says that member states can provide trade secrets with additional protection when they convert it into national law. This is worrying. Europe’s civil society in its entirety will be paying close attention to the way member states adopt and implement the directive.


Like other European organizations that defend freedom of information, RSF therefore plans to begin at once to campaign for the swift adoption of another directive on whistleblowers, as it has been requesting for several years at both the French and international level. This directive should serve as a counterpart to the trade secrets directive and should finally provide real protection for those who reveal information that benefits everyone. The Green Group in the European Parliament is already working on a draft. RSF will be at the forefront of the fight for this protection.