Intellectual property is usually perceived through three main rights: copyright, patent and trademarks. Sensitive market-relevant information is usually perceived just as a benefit, but rarely as a right. Protection of trade secrets certainly deserves more attention. To make it easier to all market players to easily comprehend this right and for authorities to apply it, Serbia adopted a new Law on Protection of Trade Secrets, which came into force on 5 June 2020 (the “New Law”). The main reason for the new regulation, as proclaimed by the lawmakers, is the alignment with the EU acquis (especially, the Directive (EU) 2016/943 of the European Parliament and of the Council of 8 June 2016).
The previous legislation provided full protection. However, the New Law brings a few significant changes.
A face-lifted definition
The New Law specifies which information enjoys protection as trade secret and under what conditions. According to the updated definition, information must meet the following conditions:
The information is secret because it is not generally known or easily accessible to persons who usually come into contact with this type of information during their activities;
It has commercial value; and
The person owning it has taken reasonable measures to preserve its confidentiality.
Unlike the previous law, the New Law provides examples of measures for preserving the confidentiality of trade secrets. These are, among others:
internal acts on the handling of trade secrets and the rights and obligations of persons who handle them, physical or electronic protection of access to business secrets,
marking documents as “confidential” or with a similar mark, and
conclusion of non-disclosure agreements (NDA).
When is it allowed to obtain someone else’s trade secret?
The New Law introduces three new specific grounds and prescribes that obtaining someone else’s trade secret will be lawful if the information is obtained:
by independent discovery or creation;
by “reverse engineering”, unless prohibited under separate grounds; and
by exercising employees’ rights to information and consultation following special employment regulations.
When is it forbidden to obtain, use and disclose someone else’s trade secret?
The New Law regulates the acts of trade secret infringement in more detail. Accordingly, a trade secret is illegally appropriated if it has been obtained by unauthorized access, misappropriation or duplication of documents, objects, materials, substances or electronic files which contain a business secret or from which confidential information can be derived, or by other actions contrary to the good business practices.
The use or disclosure of a trade secret is forbidden if done by a person who obtained the trade secret illegally, who has breached the confidentiality agreement or another obligation restricting the use of the trade secret.
As a novelty, the New Law specifies that the production and sale of infringing goods is also considered as the illegal use of trade secrets if the person who performed those activities knew or could have known the trade secret was used illegally.
What is the scope of judicial protection of a trade secret?
Court protection is guaranteed for trade secret violation. Like for patents and trademarks, civil proceedings can be initiated even in cases where there is a likelihood of infringement.
How is damage compensation regulated?
The New Law stipulates that compensation for damage can be claimed according to general rules and explicitly stipulates that compensation for non-pecuniary damage can be claimed as well.
It is no longer possible to claim a remuneration up to three times the amount the owner of the business secret would have typically received for legal use of the confidential information instead of damages when the violation occurred intentionally.
What is the deadline for filing a lawsuit against violation of a business secret?
The New Law extends the deadlines within which judicial protection of business secrets can be requested – a lawsuit may be filed within one year from the day the proprietor learned of the infringement and the person that committed it, but no later than within five years from the day of the breach or the day of the last violation if the violation is committed continuously.
Do foreign persons have the right to protection of business secrets in Serbia?
While foreign legal and natural persons were fully equal to domestic persons the New Law limits protection by stipulating those foreign entities have the same rights as domestic ones if that arises from international agreements applicable in Serbia (e.g. the EU residents are protected under the Stabilisation and Association Agreement Serbia entered into with the EU) or from the principle of reciprocity. The reciprocity must be proven by a person who claims it exists.
What are the sanctions for trade secret violation?
Besides civil protection, the infringers can also be fined in criminal-like procedures. Fines for legal entities can go up to EUR 25,500. The New Law introduces the liability of natural persons and entrepreneurs as well. They can be fined up to EUR 4,250.
The goods produced or put into circulation by trade secret breach can be destroyed, and items that were used to commit the acts of trade secret infringement are to be confiscated.
The information in this document does not constitute legal advice on any particular matter and is provided for general informational purposes only.
By Nikola Kliska, Senior Associate, independent Attorney at Law in cooperation with Karanovic & Partners