14 July 2018

Upholding of France trade secret

Bastille Day Newsletter 2018 - What’s Hot


The French Blocking Statute (law n°80-538 of July 16,1980, the amended version of the law first passed in 1968) aims at restricting cross-border discovery of information by prohibiting any French party from disclosing commercial information (which may be strategic) whether originating from France or elsewhere in foreign litigation absent of a French court order. This law was only applied once in France in the Executive Life case in 2007 where a lawyer who had sought information for the purpose of American proceedings was fined 10 000 euros pursuant to Article 1 bis of the French Blocking Statute. The US Supreme Court held in the Aerospatiale decision in 1987 that the Blocking Statute does not prevent US courts to require the disclosure of documents during discovery. In addition to this, France signed bilateral agreements such as the Mutual Legal Assistance Treaty (“MLAT”) between France and the United States setting out the rules governing the exchange of information relevant to an investigation which waive the non-disclosure requirements of the French Blocking Statute.

The last decade has witnessed the increase of extraterritorial proceedings especially US proceedings against European companies. Indeed, the Sarbanes-Oxley Act applies the rules of discovery to companies located outside the US. Such proceedings enable American authorities to access strategic information of European companies. The European Union thus decided to implement a protection for its strategic information through the Directive of the European Parliament and the Council on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure. The European Directive is intended to have a deterrent effect against the unlawful acquisition use or disclosure of trade secrets without undermining fundamental rights and freedom of speech.

France just implemented the European Directive. Indeed, the final Bill, examined by a joint equity committee (commission mixte paritaire) in a fast track procedure (procédure accélérée) was approved by the Senate on June 21, 2018. On June 27, 2018 the opposition referred the case to the Constitutional Court.

The French legislation implementing the European Directive forbids unlawful acquisition use or disclosure of information meeting the following three requirements : “1) is secret in the sense that 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) it has commercial value because it is secret 3) it has been subject to reasonable steps under the circumstances, by the person lawfully in control of the information, to keep it secret”. The French legislation defines a new legal framework to determine whether disclosing the trade secrets is legal or not. It is worth mentioning that section 4 of the new French legislation enumerates the exception to the protection of trade secrets namely when the acquisition, use or disclosure of information is carried out “for exercising the right to freedom of expression and information as set out in the Charter of fundamental rights of the European Union».

The new French legislation has suffered several criticisms and some NGOs considered that it could seriously jeopardize the public’s right to information by limiting the disclosure of information (as in the LuxLeaks or the Panama Papers case). It should however be highlighted that the joint equity committee (commission mixte paritaire) abandoned the criminal offence relating to the misappropriation of a protected business information whereas the civil fine for strategic lawsuit against public participation was restored.

The efficiency of the protective mechanism implemented by the French legislation could however be challenged in a global context. Indeed, it should be underlined that pursuant to section 4 of the law, trade secret is not protected when the obtaining, use or disclosure of the secret is required or authorized by European Union law, international enforceable treaties and agreements or in the exercise of investigative, sanctioning, authorizing powers of judicial or administrative authorities. This provision can be interpreted as if a request presented by a foreign authority within the scope of a cooperation agreement would be authorized by national law, meaning that trade secrets would not be protected in such cases. The new legislation could therefore be construed as allowing discovery injunctions by foreign courts. Finally, it must also be outlined that the new legislation does not take into account the particularities of common law and can therefore jeopardize its enforcement and efficiency.

Related content

Conseil Constitutionnel
5 October 2023
Fillon saga: Procedural victory before the French Constitutional Council for the former prime minister in...
In response to an application for a priority preliminary ruling on the issue of constitutionality (“question prioritaire de constitutionnalité”), the...
Press review
24 November 2023
Press review – Week of 20 November 2023
This week, the press review looks back at the criminal proceedings opened against Senator Joël Guerriau, former Socialist Party First...
Formation EFB Navacelle - Session 3/10
23 November 2023
Defining the scope of the internal investigation: internal investigation sources and the investigation plan
EFB Degree - Internal investigation (3/10) What criteria need to be considered when deciding whether to carry out an internal...
ABA International Law Section
21 November 2023
Practical tips when dealing with corruption allegations in arbitration
Navacelle contributes to the American Bar Association International Arbitration Committee's Quarterly Newsletter (Q3 2023).
Press review
Press review Navacelle
17 November 2023
Press review – Week of 13 November 2023
This week, the press review looks back at the criminal proceedings against Bashar Al-Assad, leader of Syria, Gotabaya Rajapaksa, former...
Revue Justice Actualités #28
13 November 2023
Internal Investigation and Negotiated Justice (in French)
Can internal investigation be used to negotiate the investigation phase with prosecuting authorities? An article in French, by Guillaume Daieff, Stéphane...
Press review
10 November 2023
Press review – Week of 6 November 2023
This week, the press review looks back at the trials of the former deputy director of the Bordeaux Criminal Investigation...
GIR Guide to Sanctions - Navacelle 2023
8 November 2023
The Guide to Sanctions (2023) – GIR
Navacelle co-author of the fourth edition of the Global Investigation Review's Guide to Sanctions.
Press review
Press review - Week of 30 October 2023
3 November 2023
Press review – Week of 30 October 2023
This week, the Navacelle press review looks back at Altice's filing of a civil action in the criminal proceedings in...
Navacelle - IBA Paris 2023
2 November 2023
2023 IBA Annual Conference – Paris – Host Committe reception
As a member of the Host Committee, Navacelle co-hosted the Host Committee Reception for the International Bar Association (IBA) 2023...
Press review
27 October 2023
Press review – Week of 23 October 2023
This week, the press review looks back at the seizure of almost 60 million euros by French judicial authorities in...
Autorité des Marchés Financiers - AMF
23 October 2023
Heavy sanction imposed by the French Financial Market Authority (AMF) for market manipulation
In its decision of 7 September 2023, the Enforcement Committee of the “Autorité des marchés financiers” ("AMF") fined the French...
Press review
20 October 2023
Press review – Week of 16 October 2023
This week, the press review looks back at the ECHR's decision on the conviction of Total and Vitol on charges...