Trade secrets and the right to information: A comparative analysis of EU and US approaches to freedom of expression and whistleblowing

With news of whistleblowers, alleged spies and breaches of confidence entering the public consciousness of late, it is important to consider how the public’s right to discover and learn information of importance should be balanced against the interests of governments, businesses and individuals in the confidentiality or secrecy of certain information. There is no dispute that some types of information can and should be handled confidentially in some circumstances, but it is also clear that the disclosure (or sharing) of such information may be needed in the public interest, for instance, as evidence of illegality, including fraud and corruption. Thus, the essential question is: How can these competing interests be evaluated and balanced? Two related questions are: How and when should the balancing occur?

These are questions that both the EU and US must face with respect to its trade secret laws, particularly considering the adoption and implementation of the EU Trade Secret Directive (Dir. (EU) 2016/943) and the EU Whistleblower Directive in the EU and the Defend Trade Secrets Act of 2016 (DTSA) in the US. The questions arise because there is an information dichotomy that exists in law, particularly with respect to trade secret laws. The dichotomy is between the strong public policy that favors and encourages the creation and dissemination of information and knowledge and laws, such as the EU Trade Secret Directive and DTSA, which enable individuals and businesses to protect certain categories of information from acquisition, use, or disclosure by others.

Much has been written about trade secret law and policy from the protection side of the information dichotomy. Much less has been written about the information diffusion side of the dichotomy, particularly as it relates to the human right (and need) to ‘seek, receive and impart information’. In our recent article we highlight the diffusion side of this dichotomy. The main objective of our article is to examine how the freedom of expression and whistleblower provisions of EU and US law can and should be balanced against trade secret rights. We believe that information diffusion is the rule therefore restrictions on information diffusion should be carefully circumscribed.

As the relevant trade secret legislation in the EU has been just recently implemented, there is no case-law at the date of writing that explains the interrelationship between trade secret protection, freedom of expression and whistleblowing. In the US, while some case-law exists related to trade secrets and the First Amendment, the whistleblower provision of the DTSA is new and untested. This article proposes how these provisions should be interpreted when taking into account the relevant human rights doctrines and explains how and why such an interpretation would differ, for example, from the interpretation that the Court of Justice of the European Union (CJEU) has favored under the EU’s copyright regime. The analysis not only covers the explicit rules under the trade secret laws, it also provides an outline of how these principles have been developed under applicable constitutional law doctrine. The EU’s new Whistleblowing Directive and US law governing whistleblowing are also brought into the discussion.

We found that EU rules on freedom of expression and whistleblowing are more explicit and provide broader access to information of public concern when compared to the situation under US law. First, the whistleblowing provisions of the EU Trade Secret and Whistleblower Directives are not as restricted as their counterparts in the US. As a general rule, US whistleblowing laws, such as specified in the DTSA, only allow disclosures to government officials or to courts in specified situations and do not cover disclosures to the general public or to the press. Other legal principles for the protection of freedom of expression, where they exist, must be resorted to in such situations. Thus, the EU rules provide more security and clarity to whistleblowers and, consequently, should ensure more efficient public access to information.

Second, the non-existence of an express freedom of expression provision in US trade secret law may limit the application of this fundamental right in trade secret cases for the simple and practical reason that it is not seen as a critical limitation. However, when First Amendment issues are raised in US trade secret cases, some interpretations of the US Constitution’s rights of free speech and the press resemble the end results that have been reached by the European Court of Human Rights. In contrast, the EU Trade Secret Directive has an explicit rule highlighting freedom of expression as a fundamental right in the trade secret context; a rule that is even stronger than its counterpart under EU copyright law. Additionally, the preamble text of the EU Trade Secret Directive refers to the fundamental rights under the EU Charter of Fundamental Rights, which further emphasizes the need to balance the right to information, and fundamental rights more generally, against trade secret protection.

Despite the varied sources and scope of applicable law, it is clear that freedom of expression and whistleblowing are important values in the EU and US that must be balanced against alleged trade secret rights. Moreover, because they reflect the fundamental right to information as recognized in the UDHR, we believe this balancing process should be conducted as early as possible in all trade secret cases. The flourishing of individuals, society, and democracy depend upon it.

Sharon K Sandeen holds the Robins Kaplan LLP Distinguished Professorship in Intellectual Property Law at the Mitchell Hamline School of Law.

Ulla-Maija Mylly is a postdoctoral researcher at the University of Turku.