The European Parliament voted last month in favor of a directive that critics warn will have a chilling effect on corporate whistleblowing. Following the approval of the legislature, the European Council is expected to formally adopt the Trade Secrets Protection Directive at its next sitting on 17th May 2016.
On 15 December 2015, European Parliament and European Council negotiating teams reached a preliminary agreement of the text of the Directive. Its intended purpose, according to the European Commission is to protect the “information, knowledge, inventiveness and creativity [that] are the raw materials of the new economy…” This information, a company’s trade secrets, are the source of its competitive advantage. The Directive, it states, is focused on harmonizing the legal framework of nation states regarding unlawful use or disclosure of misappropriated trade secrets for both large and smaller companies in Europe.
The European Commission lists responses to two key questions surrounding the Directive: whether it will impact the freedom of expression and the right to information, and whether companies will be able to hide information on matters of public interest, such as public health, the environment, and consumer safety.
“Journalists will remain free to investigate and publish news on companies’ practices and business affairs, as they are today.”
“The draft directive foresees a specific safeguard in order to preserve the freedom of expression and right to information… The safeguard is operative if the divulgation of the trade secret that was acquired by, or passed to the journalist, was through the use of illicit means such as the breach of law or contract.”
With regard to withholding information in the public interest, the Commission says:
“Companies are subject to legal obligations to disclose information of public interest… which ensure a high level of transparency [and] will not be affected. The draft directive does not provide any grounds for companies to hide information that they are obliged to submit to regulatory authorities or to the public at large.”
“The draft directive expressly safeguards those who, acting in the public interest, disclose a trade secret for the purpose of revealing a misconduct, wrongdoing or illegal activity. This safeguard is operative if the trade secret was acquired or passed to the whistle-blower through the use of illicit means such as the breach of law or contract.”
Despite these assurance, critics have argued that the law will give corporations new powers to prosecute and criminalize whistleblowers, journalists and news organizations that publish leaked internal documents. The campaign group SumOfUs notes that the law “will deter people from speaking out so corporations can keep getting away with things like corporate tax avoidance, human rights breaches, and environmental ruin.”
The group, in alliance with other campaigns across Europe had collected more than 280,000 signatures in opposition to the Directive as well as lobbying MEPs and working hard to raise awareness of the law, which they say “would have otherwise silently slipped through.” While the European Commission cites particular safeguards, Martin Pidgeon, from Corporate Europe Observatory voiced concerns over corporations’ power to define any information they do not want released as a trade secret.
Pidgeon, speaking to the BBC, highlighted the fallout of the Panama Papers leak as a vision of what the Directive will achieve, specifically in light of controversial law firm Mossack Fonseca filing a complaint and sending threatening emails to news outlets that have published articles based on their documents:
“What the Trade Secrets Protection Directive would do would simply give companies… additional means of redress, of legal proceedings, against news organisation [sic] and people who publish this kind of information.”
The figure in charge of the bill’s progress, French conservative MEP Constance Le Grip, has said opponents have misinterpreted its purpose but despite reiterating the safeguards and exemptions for journalists and whistleblowers, when pressed on the matter Le Grip declined to say that it was impossible for journalists to be prosecuted under the terms of the directive.
Although days before the vote it looked like MEPs would postpone it, the Directive was eventually approved. It will still need to be passed into law by the 28 national parliaments of the EU, where there will be considerable scrutiny over the penalties for breaching the law.
The approval of the bill comes at a time when corporate power and secrecy faces widespread criticism in the wake of Greenpeace’s release of secret negotiation documents of the Transatlantic Trade and Investment Partnership (TTIP), the controversial trade agreement between the EU and the US. Since the widening of public awareness and media coverage, the deal has been described as ‘on the rocks’ by outlets across the political spectrum.
Online polling carried out by YouGov for the Bertelsmann Foundation suggested plunging public support for the deal in the US and Germany, with only 17 percent of German respondents believing it was a good thing, down from 55 percent two years ago. In the US, 18 percent of respondents supported the deal compared with 53 percent in 2014 while nearly half said they lacked sufficient information to voice an opinion.
Critics of the Trade Secrets Protection Directive are fearful of this last point. The possibility of finding means to define certain layers of information as trade secrets and their release a challenge to commercial interests may, if critics are heard, lead to more situations where lack of public awareness stifles open debate.
Image: Cédric Puisney