A conference was held on 08/12/2023 in which our firm took part with Mr Antoine Touzain, Professor at the University of Rouen-Normandie, and Mrs Christine Foucher-Gros President of the Commercial Chamber of the Rouen Court of Appeal before an audience of legal experts.

A reminder of the current provisions introduced by the law of July 30, 2018 into the Commercial Code in articles L151-1 et seq. as well as the regulatory part, which states that:

“Is protected as a trade secret any information meeting the following criteria:
1° It is not, in itself or in the exact configuration and assembly of its elements, generally known or easily accessible to persons familiar with this type of information due to their sector of activity;
2° It has a commercial value, actual or potential, due to its secret nature;
3° It is the subject of reasonable protective measures by its legitimate holder, given the circumstances, to preserve its secrecy.”

Trade secret has been protected since 1935, notably in a ruling by the Criminal Division of the French Supreme Court (Cour de cassation) on March 29, 1935, which stipulated that:

“Any manufacturing process of practical or commercial interest implemented by a manufacturer and kept secret from competitors” is a trade secret.

Article L1227-1 of the French Labor Code (which came into force on May 1, 2008) stipulates that “Any director or employee who reveals or attempts to reveal a manufacturing secret is liable to two years’ imprisonment and a fine of 30,000 euros”.

An essential question: the holder of the secret must prove that their secret is protectable.

Three conditions must be met:

1. Possession of secret information.
2. The secret must have commercial value.
3. The information must have been protected.

Methods of protection:

The holder must take the necessary steps to protect it.

Contract law provides tools that were described by the speakers, such as confidentiality agreements, clauses with the company’s partners and shareholders, filing with a trusted third party or with institutions such as the INPI (Intellectual Property French Institute).

The same applies to software.

Once the parties have entered into a joint-venture contract for an invention, each of them must protect what they have acquired and agree on the fate of the joint invention.

Criminal law can also provide protection.

The qualification of theft was upheld in a ruling dated May 20, 2015.

Article 323-3 of the Criminal Code prohibits the fact of “extracting, holding, reproducing, transmitting” data present on an automated data processing system.

Conclusion:

It is therefore necessary to introduce contractual relations to protect at all levels, with sanctions that can, if necessary, be reviewed by the judge.

The secrecy protection agreement could be autonomous from the contract, so that it could survive the nullity of the main contract, like arbitration clauses in contracts.

One precaution: insurance against piracy of secret information.
However, the insurer will require the insured to comply with basic security recommendations.

Certain breaches of secrecy are prohibited:

– L151-4 of the French Commercial Code: Unauthorized access to an element containing the secret or unfair behavior.
– L151-5 of the French Commercial Code: Violation of non-disclosure obligations.
– L151-6 of the French Commercial Code: By the person who “should have known” that the secret was protected and that it was disclosed unlawfully.

Certain infringements are authorized, in particular:

– If the discovery is made by an independent creator or by observation of a product lawfully made available to the public (L151-3 of the French Commercial Code);
– To safeguard freedom of expression (L151-8 of the French Commercial Code);
– To enable the right to report corruption (L151-8 of the French Commercial Code);
– To protect a legitimate interest (L151-8 of the French Commercial Code);
– To protect personal data.

The judge’s intervention:

1) Procedural means

The typical case is that of the plaintiff who claim that their information is secret and that it has been used by a third party.

The plaintiff asks the court to lift the secrecy of the information held by the third party on the grounds of unfair competition, and may ask the court to enter into escrow the documents likely to be seized in order to demonstrate the merits of their action (Article R153-1 of the French Commercial Code).

The defendant may apply to the judge within one month to have the seizure and escrow lifted.

During this period, the documents are not accessible to the claimant.

They are therefore protected until an examination has taken place between the parties and the judge, if necessary under the seal of confidentiality.

The appeal may be suspensive, which means that secrecy can be maintained until the Court of Appeal has established which documents are protected and which are not.

Provisional enforcement cannot be ordered (article R153-8 of the French Commercial Code).

Under American law, the recovery of evidence under the discovery procedure is a means of providing proof. Decree 2002-207 of February 18, 2022 obliges companies faced with such discovery requests to refer the matter to the SISSE (Strategic Information Service for Economic Security) within the Ministry of the Economy and Finance, which assists them in this process and issues an official opinion on the applicability of foreign investigation.

2) Sanctions

Various measures may be ordered by the judge, including:

o Prohibition of the continuation of the incriminated acts.
o Award of damages (L152-3).
o Destruction of documents.
o Publicity measures (L152-7).

08/12/2023

Thierry CLERC
tc@tclerc-avocats.fr