About ten years ago the United States and the European Union passed sweeping trade secret legislation meant, in part, to harmonize protections available to companies for their trade secret assets on both sides of the Atlantic. As innovation continues to accelerate – and cross-border collaboration accelerates along with it – recognizing and utilizing the robust protections available for trade secret assets is more important than ever. By developing strategies and trade secret protection protocols that operate effectively both in the United States and Europe, companies can be assured that their trade secret assets are safe, even when it’s necessary to transmit them across borders to get work done.
Because of the many similarities between trade secret protection regimes in the United States and Europe, companies that operate in the U.S. and Europe can often craft trade secret protection protocols that protect assets both at home and abroad, but to do so companies must understand the intricacies of the trade secret protection regimes in all the jurisdictions in which they are operating. This will be the first in a series of articles where we dive into the particular protections provided by individual European Member States – starting with the European Directive on the Protection of Undisclosed Know-How and Business Information (Trade Secret) Against Their Unlawful Acquisition, Use and Disclosure (“EU Directive”) – and comparing those trade secret regimes to the protections available under the United States’ Defend Trade Secrets Act (“DTSA”). It is critical for companies to understand these laws when devising comprehensive trade secret management strategies that can apply in company locations across the globe.
Defining Trade Secrets
What can be protected as a trade secret? The categories of information that can be counted as a trade secret are very broad under both the DTSA and EU Directive and include financial, business, scientific, technical, economic, or engineering-related information. See 18 U.S.C. § 1839(3); EU Directive, Art. 2(1).
Both the DTSA and the EU Directive require that a trade secret’s commercial or economic value, actual or potential, stem from its secrecy. See 18 U.S.C. § 1839(3)(B); EU Directive, Art. 2(1)(b). Both frameworks also require that a trade secret not be generally known, or readily ascertainable or accessible to others who could benefit from its use, by lawful means. See 18 U.S.C. § 1839(3)(B); EU Directive, Art. 2(1)(a). In other words, a trade secret can be almost any sort of business or technical information that is not known or cannot be readily figured out by those having knowledge in the relevant field that has value by way of its not being publicly known.
Under both sets of laws, the trade secret owner must put in place reasonable protective measures, or steps, to ensure the trade secrets are not publicly disclosed. See 18 U.S.C. § 1839(3)(A); EU Directive, Art. 2(1)(c) Importantly, there is no set definition of what a reasonable measure is because it is circumstance specific. While restricting digital and physical access to the information, using secure storage systems, and limiting disclosure to personnel on a need-to-know basis, are some measures that can be considered reasonable, it’s important to work with your trade secret counsel to determine what measures are appropriate for your business’ size and structure.
Importantly, because these core elements of what defines a trade secret are substantially similar under the DTSA and EU Directive, when companies formulate their trade secret protection protocols, those protocols can be crafted in a way that provide appropriate protections for both trade secrets residing in the United States and Europe, and for trade secrets travelling across borders between company locations. Further, when conducting trade secret audits in relation to a trade secret asset management program, companies can use the same or very similar parameters in their locations in the United States and Europe for identifying, cataloging, and protecting their trade secret assets, leading to numerous efficiencies from not having to devise unique programs for each business location across the globe.
Proactively identifying trade secret assets is also critical to the extent litigation is necessary to address trade secret misappropriation, because identification of the trade secrets that have been misappropriated will be required during the course of any trade secret litigation. Indeed, the failure to adequately describe allegedly misappropriated trade secrets can have dire consequences. For example, in a recent case, a federal court in Utah ordered the plaintiff to pay attorneys’ fees of $2.8 million after finding that plaintiff failed to submit any evidence that would support a finding that it had an identifiable trade secret, and that plaintiff’s claims were “subjectively made in bad faith because [plaintiff] knew or was reckless in not knowing that its claim for trade secret misappropriation had no merit.” Applied Predictive Techs. Inc. v. MarketDial Inc., Case No. 2:19-CV-00496 (D. Utah. March 25, 2025).
Defining Trade Secret Theft
The definition of unlawful acquisition or misappropriation of trade secret assets under the EU Directive and DTSA are similar. Under the DTSA, misappropriation is defined to essentially mean acquisition, disclosure, or use of a trade secret by improper means. See 18 U.S. Code § 1839(5). Improper means is defined as including “theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means,” but does not include “reverse engineering, independent derivation, or any other lawful means of acquisition.” See 18 U.S. Code § 1839(6).
Under the EU Directive, “[t]he acquisition of a trade secret without the consent of the trade secret holder shall be considered unlawful, whenever carried out by unauthorised access to, appropriation of, or copying of any documents, objects, materials, substances or electronic files, lawfully under the control of the trade secret holder, containing the trade secret or from which the trade secret can be deduced.” EU Directive, Art. 4(2)(a). “The use or disclosure of a trade secret shall be considered unlawful whenever carried out, without the consent of the trade secret holder, by a person who,” has “acquired the trade secret unlawfully,” or has breached a confidentiality agreement or any other duty not to disclose the trade secret. Id. Art. 4(3).
While the definitions of unlawful acquisition and misappropriation are not identical, critically for the preparation of cross-border trade secret protection protocols, both stipulate that acquisition and/or use of a trade secret of another without the authorization of the owner of that information is a violation, and courts have recognized the commonality between the definition of what a constitutes a trade secret and misappropriation under both the DTSA and EU Directive. See Medimpact Healthcare Systems, Inc. v. Iqvia Holdings Inc., Case No. 19-cv-1865, 2022 WL 718551, at *8 (S.D. Cal. Mar. 10, 2022) (“Given the recent passage of the Defend Trade Secrets Act (“DTSA”) and the EU Trade Secrets Directive [], it is clear that both regions have recognized the substantial value of trade secrets to the global economy and have decided to take analogous stances on the basics of trade secret law, including what constitutes a trade secret and how a violation occurs. . . . Therefore, the DTSA and EU Directive have similar definition of what constitutes a trade secret and what constitutes misappropriation.”). As such, protection protocols can be drafted in a manner that applies under trade secret protection regimes present in the United States and Europe. In doing so, however, it is important to consult with your trade secret attorney and also take into account the laws of the particular European Member State(s) that will implement the mandates set forth in the EU Directive. See EU Directive, Art. 4(1) (“Member States shall ensure that trade secret holders are entitled to apply for the measures, procedures and remedies provided for in this Directive in order to prevent, or obtain redress for, the unlawful acquisition, use or disclosure of their trade secret.”).
Protecting Trade Secrets
The EU Directive and the DTSA also offer similar categories of remedies for trade secret misappropriation, and tools for stopping the spread of trade secrets after theft has occurred, including:
- Injunctions, court-ordered seizures, or measures to block importation of goods made using misappropriated trade secrets, see 18 U.S. Code § 1836(b)(2)-(3); EU Directive Art. 12; and
- Monetary relief, including damages, attorney’s fees and costs, and in some cases, punitive damages. See 18 U.S. Code § 1836(b)(3)(B); EU Directive Art. 14.
Like the DTSA, the EU Directive provides for injunctive relief and damages, but ultimately enforcement of such protections is left to the individual European Member States, where in the U.S., a company can leverage the DTSA to file suit directly in federal court. In the next installment in this series, we will examine how the protections made available by the laws of individual European Member States compare to those available under the DTSA, and in what situations it may be appropriate to file suit both under the DTSA in the U.S. and under the trade secret statute of the appropriate European Member State. It is critical to seek the advice of your trade secret counsel with respect to available remedial measures to the extent you suspect trade secret theft has occurred.
Conclusion
Because the DTSA and EU Directive offer similar frameworks for the identification and protection of trade secret assets, companies can craft trade secret protection protocols that effectively protect trade secret assets in multiple company locations across the United States and Europe. This avoids the need for different protocols at each company location, which can lead to confusion amongst employees and business units.
As we continue our series, we will look into the particular laws of European Member States to discuss the specific aspects of those statutes that should be considered when drafting cross-border trade secret protection protocols.
For more information on trade secret protection and enforcement and related issues, contact Nicholas Armington, narmington@princelobel.com, or any member of Prince Lobel’s Intellectual Property Group.
