Web Searches, Cake Recipes Covered in EU Trade Secret Push

European Union regulators are seeking to crack down on theft of trade secrets in a bid to tackle a crime they say holds back innovation in areas stretching from online algorithms to cake recipes.

The European Commission introduced proposals today to make it easier to sue when data, such as manufacturing processes, software design and client lists, is stolen by competitors. The measures also allow companies to obtain injunctions and reinforce court privacy rules.

“We have to make sure our laws move with the times and that the strategic assets of our companies are adequately protected,” Michel Barnier, the EU’s financial services chief, said in an e-mailed statement. Companies “will no longer be dissuaded from investing in new knowledge by the threat of having their trade secrets stolen.”

One in five European companies has been the victim of trade-secret theft or attempted theft in the past 10 years, according to commission data. Almost half of businesses believe the risk of misappropriation has increased during that period, the EU said.

Trade secrets aren’t covered by EU intellectual property laws, making it harder for companies to sue when they are stolen, the commission said. This increases the need to find other forms of protection, it said.

Legal Definitions

The EU plans would harmonize legal definitions across the bloc, and introduce common rules for protection of whistle-blowers.

The limits of intellectual property rules mean that while thousands of patents may be involved in the design of an airplane, the manufacturing processes to assemble one aren’t always protected, the commission said.

Other examples of trade secrets include the manufacturing process of Michelin & Cie. (ML) tires, the recipe for a specialty Portuguese custard tart and Google Inc.’s search algorithm, the commission said.

“The loss of a trade secret and disclosure of a key invention to competitors means a catastrophic drop in value and future performance for” small businesses, Antonio Tajani, the European commissioner for enterprise and industry, said in an e-mailed statement.

Small businesses rely on trade secrets even more than larger companies because of the cost of obtaining intellectual property protection, he said.

To contact the reporter on this story: Jim Brunsden in Brussels at jbrunsden@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net

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