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New Law on the Protection of Business Secret Adopted

New Law on the Protection of Business Secret Adopted

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The Law on the Protection of Business Secret (Official Gazette of RS, no. 53/2021, “LPBS“) entered into force on 5 June 2021 and it completely repealed the previous law that regulated this matter.

The new law introduces the definitions of various terms, namely business secret, holder of business secret, a person who violated business secret, persons suspected of violating of business secret, and it also establishes the reasonable measures for preservation of the secrecy of information that represents business secret.

In accordance with the new law, the information fulfilling the following requirements shall be considered as business secret:

  • they represent business secret because their entirety or the structure and composition of their elements are not generally known or easily accessible to persons who usually encounter such information within their activities (including, among other, knowledge and skills, business information an technological information),
  • they have commercial value because they represent secret,
  • the person controlling them under the law undertook reasonable measures in the given circumstances in order to protect their secrecy.

Therefore, in order for information to be considered as business secret in the terms of this law, it needs to contain the following elements: secrecy, commercial value, that reasonable measures have been undertaken for preservation of its secrecy.

The LPBS also enlists the cases of lawful and unlawful provision, use, and disclosure of business secret.

Civil law protection – filing a lawsuit

The right to file a lawsuit for violation of business secret was envisaged by the previous law as well. However, the rules prescribed by the LPBS with regard to this issue are somewhat different now.

Namely, the LPBS prescribes that, in case of violation of business secret, a lawsuit may request:

  • the establishment of the breach;
  • termination of the breach or, depending on the case, prohibition to use or disclose business secret;
  • prohibition to manufacture, offer, trade, or use the goods that caused the breach, and/or prohibition to import, export or store the goods that caused breach for the purposes of manufacturing, offering, trading, or using the goods;
  • designation of appropriate measures that refer to the goods that caused the breach, which include the withdrawal of such goods from the market, elimination of properties from the goods that made them the goods that caused the breach of business secret or destruction of goods that caused the breach, and, if justified, its withdrawal from the market, given that the withdrawal does not jeopardise the business secret that the lawsuit refers to;
  • total or partial destruction of documents, objects, materials, substances, or electronic documents containing a business secret or representing a business secret and, if applicable, submission of such documents, objects, materials, substances, or electronic documents, in total or in part, to the plaintiff.

A holder of business secret may file a lawsuit against a person whose unauthorised undertaking of an activity represents imminent threat from unlawful provision, use or disclosure of business secret and request the termination of such activity and prohibition of unlawful provision, use or disclosure of business secret.

The stated lawsuit may also be filed against a mediator providing services used by a third person in the activities of unlawful provision, use or disclosure of business secret and/or whose undertaking represents imminent threat of unlawful provision, use or disclosure of business secret.

It is additionally prescribed that, if a plaintiff requires that goods used for breach be withdrawn from the market, it may also request that the goods be handed over to the holder of business secret or to charity organisations.

As persons with active legitimation for filing a lawsuit for protection of business secret are determined holder of business secret, as well as licence holder, if authorised under the agreement or law.

Deadlines for filing a lawsuit for breach of business secret have been extended. It is now envisaged that a lawsuit may be filed within one year after the day the plaintiff learned about the breach and the person suspected of violating business secret, and no later than five years following the day of breach occurrence or the day of last breach occurrence if the breach is done continuously. Under the previous law, subjective deadline for filing a lawsuit was six months and objective was three years.

Under the LPBS, a holder of business secret/licence holder shall also be entitled to damage compensation for the business secret breach, while damage compensation can now be claimed under general rules on damage compensation. Namely, in addition to material, the LPBS explicitly prescribes that non-material damage can now be subject to compensation.

The pronouncing of temporary measures, collection and provision of evidence, obligation to provide information, rules on submission and preservation of secrecy relating to court procedure are regulated in detail.

Regarding the rights of foreign persons, it is stipulated that foreign natural person and legal entity shall enjoy equal rights with domestic natural persons and legal entities with regard to business secret protection, if it arises from international agreements applied in the Republic of Serbia, or reciprocity principle, while the existence of reciprocity shall be proved by the person referring to the reciprocity.

Appropriate application of other laws

The issues pertaining to the procedure upon lawsuit for breach of business secret, proposal to pronounce temporary measure and proposal for evidence collection, which is not specifically regulated by this law, shall be subject to relevant provisions of the law regulating litigation procedure and the law on enforcement and security, while the issues relating to damage compensation that are not specifically regulated by this law shall be accordingly subject to the provisions of the law on contracts and torts.

This article is to be considered as exclusively informative, with no intention to provide legal advice. If you should need additional information, please contact us directly.

By Jovana Milic, Senior Associate, PR Legal

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