ACT No. XXIX of 2018 AN ACT to transpose Directive 2016/943/EU on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure.

I assent.

(L.S.)

MARIE-LOUISE

COLEIRO PRECA

President

13th July, 2018

ACT No. XXIX of 2018

AN ACT to transpose Directive 2016/943/EU on the protection of

undisclosed know-how and business information (trade secrets) against

their unlawful acquisition, use and disclosure.

BE IT ENACTED by the President, by and with the advice and

consent of the House of Representatives, in this present Parliament

assembled, and by the authority of the same, as follows:-

(1)

The short title of this Act is the Trade Secrets Act, 2018.

(2) This Act shall come into force on such date or dates as the

Minister responsible for Intellectual Property may by notice in the

Gazette establish, and different dates may be so established for different

purposes and for different provisions of this Act.

PART I - GENERAL

In this Act, unless the context otherwise requires

"competent court" and "Court", unless otherwise prescribed

by regulations made under this Act, means the Court that is

competent to take cognizance of a case according to the rules

established in the Code of Organization and Civil Procedure;

"contrary to honest commercial practices" shall mean at

least practices such as breach of contract, breach of confidence

and inducement to breach, and includes the acquisition of

undisclosed information by third parties who knew, or were

grossly negligent in failing to know, that such practices were

involved in the acquisition;

"infringer" means any natural or legal person who has

unlawfully acquired, used or disclosed a trade secret;

"infringing goods" means goods, the design, characteristics,

functioning, production process or marketing of which

significantly benefits from trade secrets unlawfully acquired, used

or disclosed;

"the Minister" means the Minister responsible for

Intellectual Property;

"trade secret" means information which meets all of the

following requirements

(a) it 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;

(b)

it has commercial value because it is secret;

(c) it has been subject to reasonable steps under the

circumstances, by the person lawfully in control of the

information, to keep it secret;

"trade secret holder" means any natural or legal person

lawfully controlling a trade secret.

(1) This Act lays down rules on the protection against the Scope.

unlawful acquisition, use and disclosure of trade secrets.

(2) This Act transposes Directive (EU) 2016/943 of the European

Parliament of the Council of 8 June 2016 on the protection of

undisclosed know-how and business information (trade secrets) against

their unlawful acquisition, use and disclosure.

(1)

This Act shall not affect

Non

Applicability.

(a) the exercise of the right to freedom of expression and

information as set out in the Charter of Fundamental Rights of the

European Union, the Constitution of Malta and the European Cap. 319.

Convention Act including respect for the freedom and pluralism of

the media;

(b) the application of rules requiring trade secret holders

to disclose, for reasons of public interest, information, including

trade secrets, to the public or to administrative or judicial

authorities for the performance of the duties of those authorities;

(c) the application of rules requiring public authorities to

disclose information submitted by businesses which public

authorities hold pursuant to, and in compliance with obligations

and prerogatives set out in law;

(d) the autonomy of social partners and their right to enter

into collective agreements in accordance with law.

(2) Nothing in this Act shall be understood to offer any ground for

restricting the mobility of employees. In particular, this Act shall not

provide any ground for

(a) limiting employees’ use of information that does not

constitute a trade secret as defined in article 2 of this Act;

(b) limiting employees’ use of experience and skills

honestly acquired in the normal course of their employment;

(c) imposing any additional restrictions on employees in

their employment contracts other than those restrictions imposed

by law.

PART II - ACQUISITION, USE AND DISCLOSURE

OF TRADE SECRETS

(1) The acquisition of a trade secret shall be considered

lawful when the trade secret is obtained by any of the following means

(a)

independent discovery or creation;

(b) observation, study, disassembly or testing of a product

or object that has been made available to the public or that is

lawfully in the possession of the acquirer of the information who is

free from any legally valid duty to limit the acquisition of the trade

secret;

(c) exercise of the right of workers or workers’

representatives to information and consultation in accordance with

law and practices;

(d) any other practice which, under the circumstances, is

in conformity with honest commercial practices.

(2) The acquisition, use or disclosure of a trade secret shall be

considered lawful to the extent that such acquisition, use or disclosure is

required or allowed by law.

(1) The acquisition of a trade secret without the consent of Unlawful

the trade secret holder shall be considered unlawful, whenever carried acquisition,

and disclosure

out by

of trade secrets.

(a) 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;

(b) any other conduct which, under the circumstances, is

considered contrary to honest commercial practices.

(2) 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 is found to meet any of the following

conditions

(a)

having acquired the trade secret unlawfully;

(b) being in breach of a confidentiality agreement or any

other duty not to disclose the trade secret;

(c) being in breach of a contractual or any other duty to

limit the use of the trade secret.

(3) The acquisition, use or disclosure of a trade secret shall also be

considered unlawful whenever a person, at the time of the acquisition,

use or disclosure, knew or ought, under the circumstances, to have

known that the trade secret had been obtained directly or indirectly from

another person who was using or disclosing the trade secret unlawfully

within the meaning of sub-article (2).

(4) The production, offering or placing on the market of infringing

goods, or the importation, export or storage of infringing goods for those

purposes, shall also be considered an unlawful use of a trade secret

where the person carrying out such activities knew, or ought, under the

circumstances, to have known that the trade secret was used unlawfully

within the meaning of sub-article (2).

An application for the measures, procedures and remedies Exceptions.

provided for in this Act shall be dismissed where the alleged acquisition,

use or disclosure of the trade secret is carried out in any of the following

cases

(a) for exercising the right to freedom of expression and

information as set out in the Charter of Fundamental Rights of the

European Union, the Constitution of Malta and the European Cap. 319.

Convention Act including respect for the freedom and pluralism of

the media;

(b) for revealing misconduct, wrongdoing or illegal

activity, provided that the respondent acted for the purpose of

protecting the general public interest;

(c)

disclosure by workers to their representatives as part

of the legitimate exercise by those representatives of their

functions in accordance with the law, provided that such

disclosure was necessary for that exercise; or

(d) any disclosure by an employee to a whistle-blowing

reporting officer or a whistle-blowing reports unit as provided for

in the Protection of the Whistleblower Act;

(e) for the purpose of protecting a legitimate interest

recognised by law.

PART III - MEASURES, PROCEDURES AND REMEDIES

(1) The competent court shall apply the measures, procedures

and remedies provided for in this Act in a manner that

(a)

is proportionate;

(b) avoids the creation of barriers to legitimate trade in the

internal market; and

(c)

provides for safeguards against their abuse.

(2) Where an application concerning the unlawful acquisition, use

or disclosure of a trade secret is manifestly unfounded and the applicant

is found to have initiated the legal proceedings abusively or in bad faith,

the competent court, upon the request of the respondent, may apply

appropriate measures. Such measures shall, as appropriate, include

awarding damages to the respondent, imposing sanctions on the

applicant or ordering the dissemination of information concerning a

decision as referred to in article 15.

(1) The parties, their lawyers or other representatives, court

officials, witnesses, experts and any other person participating in legal

proceedings relating to the unlawful acquisition, use or disclosure of a

trade secret, or who has access to documents which form part of those

legal proceedings, is not permitted to use or disclose any trade secret or

alleged trade secret which the competent court has, in response to a duly

reasoned application by an interested party, identified as confidential

and of which they have become aware as a result of such participation or

access to the proceedings.

(2) The obligation not to use or disclose any trade secret or alleged

trade secret referred to in sub-article (1) shall remain in force after the

legal proceedings have ended. However, such obligation shall cease to

exist in any of the following circumstances

(a) where the alleged trade secret is found, by a final

decision, not to meet the requirements of a trade secret as defined

in article 2; or

(b) where over time, the information in question becomes

generally known among or readily accessible to persons within the

circles that normally deal with that kind of information.

(3) The competent court may ex officio take specific measures

necessary to preserve the confidentiality of any trade secret or alleged

trade secret used or referred to in the course of legal proceedings relating

to the unlawful acquisition, use or disclosure of a trade secret.

(4) Upon an application referred to in sub-article (1) the competent

court may

(a) restrict access to any document containing trade

secrets or alleged trade secrets submitted by the parties or third

parties, in whole or in part, to a limited number of persons;

(b) restrict access to hearings, when trade secrets or

alleged trade secrets may be disclosed, and the corresponding

record or transcript of those hearings to a limited number of

persons;

(c) make available to any person other than those

comprised in the limited number of persons referred to in

paragraphs (a) and (b) a non-confidential version of any judicial

decision, in which the passages containing trade secrets have been

removed or redacted

Provided that the number of persons referred to in paragraphs

(a) and (b) shall be no greater than necessary to ensure compliance with

the right of the parties to the legal proceedings to an effective remedy

and to a fair trial, and shall include, at least, one natural person from

each party and the respective lawyers or other representatives of those

parties to the legal proceedings.

(5) When deciding on the measures referred to in this article, the

competent court shall take into account the need to ensure the right to an

effective remedy and to a fair trial, the legitimate interests of the parties

and, where appropriate, of third parties, and any potential harm for either

of the parties, and, where appropriate, for third parties, resulting from

the granting or rejection of such measures.

(6) Any processing of personal data pursuant to this article shall be

carried out in accordance with the Data Protection Act and Regulation

2016/679 of the European Parliament and of the Council of 27 April

2016 on the protection of natural persons with regard to the processing

of personal data and on the free movement of such data, and repealing

Directive 95/46/EC (General Data Protection Regulation).

The competent court may, upon an application of the trade

secret holder issue precautionary acts against the alleged infringer for

(a) the cessation of or, as the case may be, the prohibition

of the use or disclosure of the trade secret on a provisional basis;

(b) the prohibition of the production, offering, placing on

the market or use of infringing goods, or the importation, export or

storage of infringing goods for those purposes;

(c) the seizure or delivery up of the suspected infringing

goods, including imported goods, so as to prevent their entry into,

or circulation on, the market.

(2) As an alternative to the measures referred to in sub-article (1),

the competent court may make the continuation of the alleged unlawful

use of a trade secret subject to the lodging of guarantees intended to

ensure the compensation of the trade secret holder

Provided that the disclosure of a trade secret in return for the

lodging of guarantees shall not be allowed.

(3) In the application of this article, the provisions of Title VI of

Book Third of the Code of Organization and Civil Procedure shall

mutatis mutandis apply, save as otherwise provided in this Act.

(1) The competent court shall only apply the measures in

article 10 upon the applicant providing evidence that may reasonably be

considered available in order to satisfy itself with a degree of certainty

that

(a)

a trade secret exists;

(b)

the applicant is the trade secret holder; and

(c) the trade secret has been acquired unlawfully, is being

unlawfully used or disclosed, or unlawful acquisition, use or

disclosure of the trade secret is imminent.

(2) The competent court shall ensure that in deciding or granting or

rejecting an application and assessing its proportionality, it shall take

into account the specific circumstances of the case, including where

appropriate

(a)

the value and other specific features of the trade

secret;

(b)

the measures taken to protect the trade secret;

(c) the conduct of the respondent in acquiring, using or

disclosing the trade secret;

(d) the impact of the unlawful use or disclosure of the

trade secret;

(e) the legitimate interests of the parties and the impact

which the granting or rejection of the measures could have on the

parties;

(f)

the legitimate interests of third parties;

(g)

the public interest; and

(h)

the safeguard of fundamental rights.

(3) The court, upon a request of the respondent, shall revoke or

otherwise cease the precautionary acts referred to in article 10, if

(a) the applicant does not institute legal proceedings

leading to a decision on the merits of the case before the

competent court, within a reasonable period determined by the

competent court ordering the measures where the law permits or,

in the absence of such determination, within a period not

exceeding 20 working days or 31 calendar days, whichever is the

longer; or

(b) the information in question no longer meets the

requirements of a trade secret as defined in article 2, for reasons

that cannot be attributed to the respondent.

(4) The competent court shall ensure that the measures referred to

in article 10 are subject to the lodging by the applicant of adequate

security or an equivalent assurance intended to ensure compensation for

any prejudice suffered by the respondent and, where appropriate, by any

other person affected by the measures.

(5)

Where the measures referred to in article 10 are revoked on the

basis of paragraph (a) of sub-article (3), where they lapse due to any act

or omission by the applicant, or where it is subsequently found that there

has been no unlawful acquisition, use or disclosure of the trade secret or

threat of such conduct, the competent court shall have the authority to

order the applicant, upon the request of the respondent or of an injured

third party, to provide the respondent, or the injured third party,

appropriate compensation for any injury caused by those measures.

(1) Where a judicial decision is taken on the merits of the

case finds that there has been unlawful acquisition, use or disclosure of a

trade secret, the competent court may, at the request of the applicant

order one or more of the following measures against the infringer

(a) the cessation of or, as the case may be, the prohibition

of the use or disclosure of the trade secret;

(b) the prohibition of the production, offering, placing on

the market or use of infringing goods, or the importation, export or

storage of infringing goods for those purposes;

(c) the adoption of the appropriate corrective measures

with regard to the infringing goods;

(d) the destruction of all or part of any document, object,

material, substance or electronic file containing or embodying the

trade secret or, where appropriate, the delivery up to the applicant

of all or part of those documents, objects, materials, substances or

electronic files.

(2)

The corrective measures referred to in paragraph (c) of sub-

article (1) shall include

(a)

recall of the infringing goods from the market;

(b) depriving the infringing goods of their infringing

quality; or

(c) destruction of the infringing goods or, where

appropriate, their withdrawal from the market, provided that the

withdrawal does not undermine the protection of the trade secret in

question.

(3) Where the court orders the measures in sub-article 1(c) and (d)

to be carried out, any such measures shall be carried out at the expense

of the infringer, unless there are particular reasons for not doing so.

Those measures shall be without any prejudice to any damages that may

be due to the trade secret holder by reason of the unlawful acquisition,

use or disclosure of the trade secret.

(1) The competent court in considering an application for the Conditions of

adoption of the injunctions and corrective measures provided for in application,

safeguards and

article 12 and in assessing their proportionality, shall take into account alternative

measures.

specific circumstances of the case, including, where appropriate

(a)

the value or other specific features of the trade secret;

(b)

the measures taken to protect the trade secret;

(c) the conduct of the infringer in acquiring, using or

disclosing the trade secret;

(d) the impact of the unlawful use or disclosure of the

trade secret;

(e) the legitimate interests of the parties and the impact

which the granting or rejection of the measures could have on the

parties;

(f)

the legitimate interests of third parties;

(g)

the public interest; and

(h)

the safeguard of fundamental rights.

Provided that where the competent court limits the duration of

the measures referred to in paragraphs (a) and (b) of sub-article (1) of

article 12, such duration shall be sufficient to eliminate any commercial

or economic advantage that the infringer could have derived from the

unlawful acquisition, use or disclosure of the trade secret.

(2) The competent court shall ensure that the measures referred to

in paragraph (a) and (b) of sub-article (1) of article 12 are revoked or

otherwise cease to have effect, upon the request of the respondent, if the

information in question no longer meets the requirements of sub-article

(1) of article 12 for reasons that cannot be attributed directly or

indirectly to the respondent.

(3) The competent court may, at the request of the person liable to

be subject to the measures provided for in article 12, order pecuniary

compensation to be paid to the injured party instead of applying those

measures if all the following conditions are met

(a) the person concerned at the time of use or disclosure

neither knew nor ought, under the circumstances, to have known

that the trade secret was obtained from another person who was

using or disclosing the trade secret unlawfully;

(b) execution of the measures in question would cause that

person disproportionate harm; and

(c) pecuniary compensation to the injured party appears

reasonably satisfactory.

Provided that, where pecuniary compensation is ordered

instead of the measures referred to in paragraphs (a) and (b) of article

12(1), it shall not exceed the amount of royalties or fees which would

have been due, had that person requested authorisation to use the trade

secret in question, for the period of time for which use of the trade secret

could have been prohibited.

(1) The competent court may, upon the request of the injured

party, order an infringer who knew or ought to have known that he, she

or it was engaging in unlawful acquisition, use or disclosure of a trade

secret, to pay the trade secret holder damages appropriate to the actual

prejudice suffered as a result of the unlawful acquisition, use or

disclosure of the trade secret.

(2) When setting the damages referred to in sub-article (1), the

competent court shall take into account all appropriate factors, such as

the negative economic consequences, including lost profits, which the

injured party has suffered, any unfair profits made by the infringer and,

in appropriate cases, elements other than economic factors, such as the

moral prejudice caused to the trade secret holder by the unlawful

acquisition, use or disclosure of the trade secret.

The competent court may, alternatively, in appropriate cases,

set the damages as a lump sum on the basis of elements such as, at a

minimum, the amount of royalties or fees which would have been due

had the infringer requested authorisation to use the trade secret in

question.

(1) In legal proceedings instituted for the unlawful

acquisition, use or disclosure of a trade secret, the competent court may

order, at the request of the applicant and at the expense of the infringer,

appropriate measures for the dissemination of the information

concerning the decision, including publishing it in full or in part.

(2) Any measure referred to in sub-article (1) shall preserve the

confidentiality of trade secrets as provided for in article 9.

(3) In deciding whether to order a measure referred to in sub-article

(1) and when assessing its proportionality, the competent court shall take

into account, where appropriate, the value of the trade secret, the

conduct of the infringer in acquiring, using or disclosing the trade secret,

the impact of the unlawful use or disclosure of the trade secret, and the

likelihood of further unlawful use or disclosure of the trade secret by the

infringer

Provided that, the competent court shall also take into account

whether the information on the infringer would be such as to allow a

natural person to be identified and, if so, whether publication of that

information would be justified, in particular in the light of the possible

harm that such measure may cause to the privacy and reputation of the

infringer.

PART IV - SANCTIONS, RESOURCES, PRESCRIPTION

AND FINAL PROVISIONS

The competent court may impose on any person who fails or Sanctions for

refuses to comply with any measure adopted pursuant to articles 9, 10 non-compliance

with this Act.

and 12 a penalty of not less than five hundred euro (€500) but not more

than one hundred fifty thousand euro (€150,000). The competent court

may additionally impose a daily recurring penalty payment of not less

than fifty euro (€50) but not more than one thousand euro (€1,000) in the

event of non-compliance with a measure adopted pursuant to articles 10

and 12.

(1) The prescriptive period in relation to substantive claims Prescription.

and actions for the measures, procedures and remedies provided for in

this Act shall be of two years.

(2) The prescriptive period referred to in sub-article (1) shall

commence to run from the day, when the trade secret holder knows of or

ought to have known of any unlawful acquisition, use and disclosure of

the trade secrets.

The Minister may make regulations to implement and give Power to make

better effect to the provisions of this Act, and without prejudice to the regulations.

generality of the foregoing, may prescribe anything which shall be done

or may be prescribed and provide for any consequential thing, incidental

to or connected to the provisions of this Act.

Passed by the House of Representatives at Sitting No. 137 of the 4th

July, 2018.

CLAUDETTE BUTTIGIEG

Deputy Speaker

RAYMOND SCICLUNA

Clerk of the House of Representatives

€1.26