Possible effect of draft EU Trade Secrets Directive in Slovakia: two steps forward, one step back

By Ján Lazur

By the intended adoption of the proposed Trade Secrets Directive, the European Commission aims to enhance the protection of undisclosed know-how and business information against their unlawful acquisition, use and disclosure.

While the harmonisation of this field of law is a commendable task, the more the existing national legislation differs from the content of the directive the more significant changes are to be expected in the member states.

In Slovakia, the current statutory regulation of trade secrets is rather scanty and does not adequately reflect the changing market conditions. Slovakian regulation works on the basis that a trade secret is an asset that attaches to a particular business and cannot be commercially exploited in a flexible manner. For example, it cannot be easily licensed. The relevant sections of the Slovakian Commercial Code that deal with trade secrets have remained intact since their adoption in 1991. As a result of this legislative hiatus, particular problems exist, for example with respect to protection of start-up ideas and know-how, especially those that cannot be directly associated with an already established business. In practice, it is very common that early-stage start-ups are formed by a small group of individuals who work on a particular innovative project, and, with their (often) limited financial resources, they try to keep their costs and overheads as low as possible. Therefore, establishment of a limited liability company comes only at a later stage of the project development. However, prior to the incorporation of the company, they do not fall within the ambit of the current wording of the Commercial Code and trade secret protection is not guaranteed. This is one of the most acute problems of a very formalistic approach of the current Slovakian legislation…

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