DEFINITION OF BUSINESS SECRETS IN THE LIGHT OF THE NEW ACT

On 17 December 2018 the Restriction of Unfair Competition and Protection of Business Secrets Act (RUCPBSA) has entered into force in Estonia, one of the goals of which is to bring Estonian law into conformity with the EU directive on the protection of trade secrets.

The explanatory memorandum to the bill indicates that there is nothing new in the definition of business secrets as the Supreme Court has given similar meaning to the definition of business secrets in its previous case law. It is noteworthy that the definition of business secrets set out in the Act is rather general and may be difficult to understand for people with no legal knowledge. According to the RUCPBSA, a business secret is information that meets the following requirements:

1. 1) it is not, as a body or in the precise configuration and assembly of its components, generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question;
2. 2) it has commercial value because it is secret;

   and

1. 3) it has been subject to reasonable measures under the circumstances, by the person lawfully in control of the information, to keep it secret.

The bill points out that irrespective of the contents or nature, information can only be considered a business secret if it complies with all three of the requirements set out in subsection 5 (2) of the Act based on the bill. Thus, on the basis of this definition each undertaking must consider what the information related to their company is that has commercial value and that is subject to measures by the undertaking to keep it secret. Arising from the above, every piece of information related to a company does not constitute a business secret.

The correct definition of a business secret is also significantly affected by the circumstance that unlawful acquisition, use or disclosure of business secrets can be subject to both civil and criminal liability.

However, the RUCPBSA contains an exception of the so-called whistleblowing. The acquisition, use or disclosure of a business secret is not deemed unlawful if it is necessary to reveal unlawful acts for the purpose of protecting public interests; enable employees to protect their rights and interests through the representative of employees, provided that the disclosure of a business secret by an employee to a representative is necessary for exercising the functions within the competence of the representative; or protect a recognised legitimate interest.

The advisors of the Tax and Legal Advice Department of LEINONEN Tallinn office can provide advice to companies in this area, assistance in establishing the definition of business secrets in a company and consultation upon implementing effective measures to protect the business secrets.