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New Trade Secret Protection Act

New Trade Secret Protection Act

A new Trade Secret Protection Act ("the Act") effective from 9 April 2019 was promulgated in the State Gazette, issue No 28 dated 5 April 2019. The Act implements the requirements of Directive (EU) 2016/943 on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure.

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The Act provides for a definition of the term “trade secret”, governs the different types of infringements involving information considered as trade secret, the means of protection against infringements, as well as the circle of persons entitled to seek such protection.

An infringement within the meaning of the Act shall be committed in case of breach of a confidentiality agreement or non-performance of another legal obligation for non-disclosure of trade secret.

Below is a summary of the more significant provisions of the Act.

Definition of trade secret

The Act introduces a uniform concept of trade secret into the Bulgarian law. In order to maximize the scope of protection, the term is defined by reference to its main features. In this regard, any know-how, business and technological information is considered as trade secret if it meets the additional criteria set out in the Act.

Persons entitled to seek legal protection under the Act

Any holder of information considered as trade secret, i.e. any individual or legal entity which lawfully controls such information, may benefit from the legal protection provided for in the Act.

Types of infringements against which legal protection can be sought

Under the Act, a holder of trade secret is entitled to seek legal protection before the courts against any unlawful acquisition, use and disclosure of the trade secret.

Employers may seek legal protection regarding trade secrets held by them which have been unlawfully disclosed by their employees.

In addition, legal protection can be sought against any third party who has not committed the initial unlawful acquisition, use or disclosure of trade secret. This third party may be held liable provided that it has acquired, used or disclosed the information when it knew or must have known that this information had been the subject of an infringement. Such would be the case where an employee has disclosed a trade secret of their former employer by providing it to their current one. The latter did not commit the initial unlawful disclosure of the information. However, if the current employer uses the information acquired, knowing of the infringement committed, the employer may be held liable under the Act.

Nature of the legal protection

Legal protection against infringements of trade secrets may be sought solely before the competent courts. In the course of the court proceedings, a holder of trade secret, subject of an infringement, may request the court to:

  • establish the fact of the infringement committed
  • award the trade secret holder compensation for the damage suffered as a result of the infringement
  • order the infringer to cease or prohibit them from using and disclosing the information considered as trade secret
  • order the infringer to deliver or destroy the objects which hold information considered as trade secret
  • prohibit the infringer from producing, offering and using goods which have been manufactured using the trade secret unlawfully acquired or disclosed, as well as order the withdrawal of such goods from the market
  • prohibit the infringer from offering and providing services by using the trade secret unlawfully acquired, used or disclosed.

In the course of the court proceedings, some of the above protection measures may be imposed in advance in the form of precautionary measures.

Employees will bear limited liability for damage suffered as a result of unlawful acquisition, use or disclosure of trade secret held by their employer and will owe compensation only to a certain amount, unless they have acted with intent.

The right of trade secret holders to seek legal protection is subject to a five-year prescription period starting from the date the infringement was committed and may only be exercised within that period.

Should you have any inquiries or need assistance, we would be glad to be of help.

© 2021 KPMG Bulgaria EOOD, a Bulgarian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

KPMG International Cooperative (“KPMG International”) is a Swiss entity.  Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.

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