The National Assembly of the Republic of Serbia has adopted a new Law on the Protection of Business Secrets (Law) on May 27, 2021. By this Law, the legal regulations in subject area became in line with the regulations of the EU.

Up to now we have had the Law on Protection of Business Secrets (“Official Gazette of RS”, No. 72/11). That law was adopted before the Directive 2016/943 came into force, which aimed to harmonize the regulations of EU member states in order to provide adequate legal protection against illegal acquisition, use or disclosure of business secrets on the EU market. By adopting the new Law, Serbia has actually harmonized its regulations in the field of protection of intellectual property and business secret with the EU Directive 2016/943 and at the same time fulfilled its obligations under the Stabilization and Association Agreement.

What is a business secret

A business secret embraced information of legal entities that are not generally known to public and that enjoy a certain degree of protection. Law is to encourage and provide legal protection for the company’s investments in the acquisition, development, knowledge and experience. A business secret protects various types of information, such as data on the production process, business plans, financial plans, advertising strategies, market research results, lists of suppliers and customers, drawings, architectural projects, construction drawings, creative creations etc.

Changing definition of a business secret

Maybe the most important change of the Law is a slightly changed definition of a business secret: information is not generally known or available to third parties, information has a certain commercial value and as such is protected, now the Law no longer requires that the use of this secret can provide economic benefits and harm the holder of a business secret. In this way includes a smaller number of conditions than before.

Limited protection of business secrets of foreign entities

Prior Law on Protection of Business Secrets made no difference in terms of protection of business secrets between foreign and domestic persons. Now, this Law, although still providing for the legal protection of business secrets of foreign legal entities, it now does so only under the condition that such protection arises from international agreements binding Republic of Serbia or from the principle of reciprocity (not an assumed one, though, as in some other institutes), but the burden of proving the existence of reciprocity in each particular case is on a party that invokes its existence.

Protection Measures

Once again, one of the conditions for an information to enjoy the status of a business secret is that such information is protected by its owner. Prior Law on Protection of Business Secrets also prescribed this condition, but it did not elaborate on it any further, leaving fulfilment of this condition to the case law for each individual case, with assessment of risk of illegal acquiring, usage or exploitation of it.

Law now stipulates that protection includes, inter alia, drafting an internal act on handling business secrets and specifying the group of persons and their rights and obligations when handling business secrets.

Practically, in order for anyone’s business secret to get in position to enjoy legal protection, Law suggests that it is necessary firstly to bring in a general act on protection of business secrets, as well as to take other protective measures to prevent third parties from accessing confidential information.

Protection Of Business Secrets

Just as before, Law provides for special provisions regarding the protection of business secrets that can be achieved in both civil proceedings and criminal proceedings for economic offenses. What is different is the deadline for initiating civil proceedings, which has now been extended to one year instead of the previous six months from the day of finding out about the injury and the perpetrator, i.e., 5 (five) years instead of the previous 3 (three) years from the committed injury i.e., from the day of the last committed injury if the violation was committed continuously.

Law also prescribes the types of lawsuits that can be filed. In accordance with the EU Directive, it is prescribed that the holder of a business secret may, in the event of a breach of a business secret, request: cessation of the violation, determination of the violation or prohibition of infringement, i.e. the prohibition of import, export or storage of infringing goods for the purposes of production, offering, placing on the market or use of goods, determining appropriate measures relating to infringing goods, including withdrawal of goods from the market, removal from such goods of the properties that make them a commodity that violated a business secret and destruction of goods, as well as the destruction or surrender of documents, objects, materials, substances or electronic documents that contain a business secret or which in themselves constitute a business secret.

The holder of a business secret and the licensee have active legitimacy for filing a lawsuit if authorized to do so based on a contract or on a law. In terms of damages, an interesting solution is that the court envisages filing a lawsuit against a person who knew or should have known that he was violating a business secret, as well as against a person who gained some benefit due to the said violation, but these claims are not mutually exclusive.

One of the most important novelties is that the holder or license has the right to compensation for material and non-material damage if the person who violated the business secret knew or had to know how to participate in the illegal acquisition, use or disclosure of business secrets.

According to the general regime of compensation for damages prescribed by the Law on Obligations and Torts as well as to the established court practice, legal entities have so far not had the right to compensation for non-pecuniary damage, given that we have not accepted the general but limited number of explicitly prescribed cases when to non-pecuniary damage as well as considering the unilateral position of commercial courts that a legal entity cannot suffer physical and mental pain and therefore cannot suffer non-pecuniary damage.

Law for the first time provides for the circumstances that the court is obliged to take into account when considering the claim, such as: value and other specific characteristics of business secrets, measures taken to protect business secrets, behaviour the perpetrator of the violation in obtaining, using or disclosing a business secret, the consequences of illegal use or disclosure of a business secret, the legitimate interests of the parties and the consequences that the adoption or rejection of claims could have on them, legitimate interests of third parties, public interest and protection of fundamental rights.

As to the fact that this Law explicitly insists that legal entities as a measure of protection of business secrets regulate their protection by their general internal acts whereas the court is obliged to take into account measures taken by legal entities for its protection, practicable advice here is that they should take all necessary steps towards the adoption of their general act on the protection of business secrets, plus to take other measures so to ensure both factual and legal protection of their information.