In the light of the Panama papers scandal, a soon-to-be adopted EU law on trade secrets has come under renewed scrutiny over fears it will hamstring journalists and whistleblowers.
New EU rules to protect trade secrets could prevent leaks like the Panama papers from coming to light in future, member of European Parliament (MEPs) and activists fear.
According to MEPs and activists, a draft EU directive on the “protection of undisclosed know-how and business information (trade secrets)” focuses on protecting companies over private individuals and freedom of expression.
The Green Party has said it will reject the draft when it is put to a vote in the European Parliament on April 14, but after passing a vote in the Legal Affairs committee in January, it is likely to go through.
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German Green MEP Julia Reda says it should be shelved and rewritten because it allows companies too much leeway to hide information from the public and sue whistleblowers, journalists and even employees who expose misconduct.
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“The main problem with the directive is that any kind of information that a company wants to keep secret can be labelled as a trade secret, and the responsibility is then upon the whistleblower or the journalist to prove that there is an overarching public interest or that they were exposing illegal activity in order for them not to be sued,” Reda told Euranet Plus.
“This kind of legislation has been routinely used in order to silence whistleblowers, and even the law firm that is now connected to the Panama papers is already threatening legal action against any journalists who are using this information,” she said.
“Of course, the cat is out of the bag, and I don’t think any journalist will stop reporting about the Panama papers at this point. But if an individual has to weigh the cost of potentially being sued by their employer, even for sending information to a news editor, I think this could have a real danger for such stories coming out in the first place.”
25% of companies reported a theft
Trade secrets, such as recipes, production processes or search engine algorithms, don’t grant their owners exclusive rights the way patents, copyrights or trademarks do.
Companies say they regularly fall victim to information theft, and, according to the European Commission, the practice is on the rise: one in five companies suffered an attempt to steal trade secrets in the last 10 years, with 18 percent of companies reporting a theft in 2012 and 25 percent in 2013.
To combat this, former European Commissioners Michel Barnier and Antonio Tajani published legislation in December 2013 that they said would foster growth and innovation, and unify a patchwork of national laws on trade secrets.
The draft directive, they said, was necessary especially to protect smaller companies that can’t afford costly patents.
However, transparency campaigners at Corporate Europe Observatory (CEO) say that the directive casts its net too wide, catching journalists and whistleblowers when it should be limited to business competitors who steal commercially valuable information (Article 1).
CEO also says the draft gives companies too much freedom to define what constitutes a trade secret rather than asking them to register their sensitive information up front.
Parliament’s negotiator on the text, French MEP Constance Le Grip, said that significant effort was made to limit the scope of the text and exempt journalists, whistleblowers and unions from prosecution under the law (Article 5). (audio in French)
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“The way in which the EU is legislating to protect trade secrets – and especially the work we have done here in the European Parliament in this regard – is absolutely not going to introduce any opaqueness or harm transparency,” Le Grip, Parliament’s rapporteur on the draft directive, told Euranet Plus.
“In specifying very precisely in the directive that neither journalists nor whistleblowers can be investigated, sued or hit by sanctions for violating or divulging trade secrets, I think we are sending a very clear message to the press and to those who want to exercise their right to freedom of expression and to whistleblowing.”
Campaign reached more than 500,000 signatures
However, it has not placated MEPs and transparency campaigners, who say that it does not go far enough to grant those publishing information in the public interest immunity from prosecution, and that it will fall to the European Court of Justice to rule on individual cases.
The Parliament’s vote comes the week after leaked papers from Panamanian law firm Mossack Fonseca revealed how it set up hundreds of offshore companies to allow businesses and individuals to stash their wealth away from tax authorities.
The firm is now threatening to sue the journalists who published the client lists.
Commissioner for economic affairs Pierre Moscovici said this week that the scandal was “immoral, unethical and, in one word, unacceptable” and that the consortium of journalists who uncovered the information was “remarkable”. “It demonstrates just how vital the freedom to investigate is,” Moscovici said.
French journalist Elise Lucet, who was instrumental in blocking the French government from adopting its own sweeping trade secrets legislation last year, has launched an online campaign to stop the EU directive, reaching over 500,000 of her aimed-for one million signatures.
This week the US Senate adopted an equivalent law on trade secrets, which has yet to be approved by the House of Representatives.
- Author: Sarah Collins, Euranet Plus News Agency
- Further image credits: (middle 1) www.mossfon.com on April 8, 2016 / EPNA (Brussels) | (middle 2) Skyscrapers in the new town of Panama City in 2015 / ec.europe.eu
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