TRADE SECRETS ACT

CHAPTER 589

TRADE SECRETS ACT

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.

14th May, 2019

ACT XXIX of 2018, as amended by Act XXXV of 2023.

The short title of this Act is the Trade Secrets 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

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.

The provisions of this Act and of any subsidiary legislation

made thereunder shall also apply, in accordance with the provisions of

the 1982 United Nations Convention on the Law of the Sea as ratified

by the Law of the Sea (Ratification) Act, to an exclusive economic

zone area or an environment protection area as defined in the

Exclusive Economic Zone Act. Any artificial island, installation,

structure, equipment or device therein shall, solely for the purposes of

this Act and any subsidiary legislation made thereunder, be treated as

if they were situated in Malta itself.

(1)

This Act shall not affect

(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 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

the trade secret holder shall be considered unlawful, whenever carried

out by

(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

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 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 adoption of the injunctions and corrective measures provided for in

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

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

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

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 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

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

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

Without prejudice to any provision of this Act granting the

Minister the power to make regulations, the Minister may, subject to

the provisions of the Exclusive Economic Zone Act, from time to time,

make, amend, substitute or repeal regulations for the purpose of

regulating, prescribing or otherwise providing for any matters

regulated by or under this Act or by or under any subsidiary legislation

made thereunder, in respect of an exclusive economic zone area or an

environment protection area as defined in the Exclusive Economic

Zone Act or any activities therein including, but not limited, to the

applicability or otherwise of this Act and, or of any subsidiary

legislation made thereunder.