Shedding Light on Trade Secrets

Author: Ilona Tulokas

To the excitement of many of us, the rather fuzzy concept of a trade secret under Finnish law is becoming clearer. The Pirkanmaa District Court recently gave a detailed decision in which it pondered what constitutes a trade secret. Furthermore, as my colleague Camilla wrote on our blog earlier, the EU Directive on the Protection of Trade Secrets, which shall be adopted by the end of next year, will define and unify the definition of a trade secret across the EU.

Contrary to many other countries, Finland does not have a specific law or act on trade secrets. Currently, the Finnish legislation on trade secrets is fragmented; there are some provisions in the Unfair Business Practices Act, some in the Employment Contracts Act, and some in the Criminal Code. Within the next few weeks, we are expecting to receive some news from a working group appointed by the Ministry of Economic Affairs and Employment regarding how the directive will be implemented in Finland. In the legal field, many are hopeful that Finland will follow Sweden's example and introduce a separate law regarding trade secrets, which would be useful especially in civil law trade secrets cases and which would hopefully clarify the possibilities to claim damages based on misuse of trade secrets.

The district court judgment referred to above has been highly anticipated, since the case is one of the biggest trade secrets cases of all times in Finland. It is a criminal law case where ten former employees of Nokian Tyres plc were sentenced for violation and misuse of trade secrets. The former Nokian Tyres employees had taken tens of thousands of files containing e.g. information on factory technology and product development with them to their new employer Black Donuts Engineering. The defendants admitted to having taken the files but denied that they constituted trade secrets. Thus, the case mainly concentrated on the definition of a trade secret and on what should be considered information that, according to the Criminal Code, shall be regarded a trade secret. In the Nokian Tyres' case the court held that even if some pieces of the information that the defendants had taken with them to their new employer might have been publicly known, the ensemble of information in the defendants' possession fulfilled the Criminal Code's definition of a trade secret. It remains to be seen whether the Pirkanmaa District Court’s view will be shared with higher courts or other district courts resolving criminal charges concerning trade secrets.

The court sentenced the employees to fines, conditional imprisonment, and probation, and ordered Black Donuts to pay a corporate fine (EUR 300k) and to forfeit the proceeds of the crime (EUR 537k) to the state. The court did, however, dismiss Nokian Tyres' EUR 3 million claim for damages, since Nokian Tyres was not, according to the court, able to show that it had suffered damage because of the misuse of its trade secrets. The district court judgment is not yet final and can – and probably will be – appealed by some or all of the parties.

We will keep you posted on how the Trade Secrets Directive will be implemented in Finland as well as on possible higher court views on the Nokian Tyres plc case.