In our prior post, we discussed under what conditions business information could qualify as a trade secret under Belgian law (it must be secret, have commercial value, and be subject to reasonable protection measures).
Today’s post, which is the fourth in our series where we spotlight international issues in trade secret law, looks at two other critical questions:
1) Is the use of a trade secret per se unlawful?
Even if it can be successfully demonstrated that the information at issue meets the cumulative conditions of Article I.17/1 Belgian Economic Code and is thus protected as a trade secret, this does not necessarily mean that it has been used unlawfully. The owner of the trade secret must hence demonstrate that their trade secret has been unlawfully used by a third party. The discussion will often revolve around the unauthorized access to the trade secret, as provided for in Article XI.332/4 Belgian Economic Code. This is certainly the case when the party accused of misappropriation is an ex-employee or an independent service provider of the trade secret holder, who gained access to the information in question during their employment or assignment.
In this regard, the Antwerp enterprise court ruled that unlawfulness had been demonstrated because an independent service provider could not reasonably justify why, in order to perform its tasks, it had to copy extremely large amounts of secret information from a secure server onto a USB stick over a very short period of time.[i] In another case,[ii] the President of the Antwerp court ruled that not immediately deactivating access to a server so that a former self-employed consultant could still externally gain access to information on the intranet, download it and pass it on to third parties, did not change the prima facie unlawful nature of the act. The most extensive assessment of the concept of “unlawful use or disclosure” was carried out by the President of the Dutch-speaking Brussels enterprise court.[iii] As part of his prima facie assessment, the President considered the following evidence when assessing the unlawful nature of the use of the trade secret. First, forensic IT investigations had revealed the existence of a draft agreement for the sale of the trade secrets to a competitor. According to the court, the use of a trade secret to draft and negotiate a contract constitutes unlawful use of the trade secret, regardless of whether the trade secret was actually disclosed or the contract was actually concluded. Subsequently, invoices drawn up by the party accused of misappropriation were retained as being consistent with the suspicion that the sale of the trade secrets had indeed taken place. In this regard, the President also took into account an agreement that had been concluded between the alleged infringer and the competitor of the holder of the trade secrets, including a preamble which referred to technology transfer between the parties. Since the party accused of misappropriation could not prove that it involved the transfer of technology not covered by the trade secrets, it was assumed that the information transferred did in fact relate to the trade secrets. Thus, the unlawful use was proven.
2) Who bears the burden of proof in trade secret proceedings and how is evidence collected?
As with so many other proceedings, a claim under the Trade Secrets Act often stands or falls on the evidence available to the claimant. All the more so, because the burden of proof in these proceedings generally lies entirely with the holder of the trade secret. It is for the holder of the trade secret to initially prove that a trade secret within the meaning of the Act exists and that it has been misappropriated by the other party.
In connection with this first point, however, as mentioned in our post here, the President of the Dutch-speaking Brussels enterprise court has ruled that, in certain circumstances, this would be tantamount to proving a negative, namely that the information was not generally known.[iv] According to the judge, it is appropriate in these circumstances to share the burden of proof between the parties to a limited extent. Consequently, it is for the alleged infringer to prove that certain information was in fact generally known if the trade secret holder has convincingly shown that this was not the case. In cases where many hundreds and sometimes thousands of documents have been stolen from the holder of the trade secret, it is sometimes argued by the defendant that it is for the holder of the trade secret to prove exactly which documents, files, etc. are covered trade secrets. The Antwerp enterprise court found in a case that a prohibition could be formulated in relation to information contained in a clearly defined category of files.[v] However, in another case, where dozens of documents were stolen, the President of the Antwerp court ruled that the claimant had to demonstrate the secrecy of each document separately.[vi]
To prove that a trade secret exists within the meaning of the Act, the holder of the information generally does not have to rely on third parties. If available, evidence of the secrecy, the value of the information and the reasonable measures will usually already be in the possession of the holder of the trade secret. However, the reverse is true for proof of the breach. In many cases, those affected may not even realize that certain information has been stolen from the company, let alone be able to prove who is responsible and how the information concerned was further disseminated and/or used. Where intellectual property rights are infringed, counterfeit search and seizure proceedings (i.e. ex parte proceedings aimed at describing the infringing goods and processes at an alleged infringer’s business premises) offer the obvious solution to this problem of proof. However, trade secrets are not intellectual property rights, and such proceedings cannot be used if it is only trade secrets that are threatened. In certain cases, traditional ex parte (i.e., unilateral) summary proceedings can be initiated in order to achieve results that come close to those of counterfeit search and seizure proceedings.
In particular, we are aware of one case since the passing of the new Belgian Trade Secrets Act, decided by the Dutch-speaking Brussels enterprise court.[vii] As is often the case in discussions about unilaterally obtained interim measures, the need for the element of surprise for fear that evidence (here, about alleged infringements of trade secrets) would disappear is discussed at length in this decision. According to the judge, it was correct to unilaterally award the evidence measures in this case. The decisive factor seems to have been that the element of surprise was indeed needed and the measures that were claimed were not disproportionate. The requested measures were purely protective in nature and were carried out by an expert on the basis of a list of documents and exhibits described in as much detail as possible. Although the judge did not explicitly refer to it, this decision was based on an identical application of the criteria as used by the Belgian Supreme Court[viii] in its judgment of May 22, 2017. This Supreme Court judgment confirmed the judgment of the Ghent court of appeal of April 4, 2016,[ix] wherein it was acknowledged that a measure to gather evidence following a unilateral application to demonstrate misappropriation of trade secrets could be granted on the condition that the claimant did not request a blank check or the equivalent of a private search. If the measures exceed what is strictly necessary to obtain a surprise effect, because of their vagueness, disproportionality and unilateral nature, the judge may lawfully refuse them.
[i] Orb. Antwerp May 9, 2019, TBH RDC 2020/3, 382, para. 13.
[ii] Vz. Rb. Antwerp 26 March 2020, A.R. 20/19/C, unpublished , 9.
[iii] Orb. Brussels (Nl) 12 March 2020, ICIP 2020/2, 565.
[iv] Orb. Brussels (Nl) 12 March 2020, ICIP 2020/2, 574.
[v] Orb. Antwerp May 9, 2019, TBH RDC 2020/3, 383, para. 17.
[vi] Vz. Rb. Antwerp 26 March 2020, AR 20/19/C, unpublished, 9.
[vii] Orb. Brussels (Nl) September 9, 2020, A/20/01623, Tecnicas Reunidas v. NV Yara Belgium, unpublished, p. 14 (a.o. third party opposition to Vz. Orb. Brussels (Nl) 30 April 2020 and 4 May 2020, EV/20/0070).
[viii] Cass. AR C.16.0406.N, May 22, 2017 (Umicore Specialty Materials Brugge nv / El Research & Consultancy bvba, E.C.) IRDI 2018, chapters 3-4, 255.
[ix] Ghent 4 April 2016, P&B 2019/1, 40.