Coca Cola's recipe may be a legitimate 'trade secret'. But what about the environmental impacts of the global Coca Cola empire? How it treats its workers? Land and water grabs? Suppression of trade unions? Interactions with politicians and regulators? Photo: Coca Cola sign on the San Francisco skyline by .freeside. via Flickr (CC BY-NC-ND).
EU's 'trade secret' protection risks health, environment and freedom!
Anne Friel & Anaïs Berthier / ClientEarth
10th June 2015
A new Trade Secrets law to be voted on next week by the European Parliament threatens a massive clampdown on journalists and whistle-blowers, write Anne Friel & Anaïs Berthier, giving corporations the right to sue those who disclose private information even in the public interest to protect health, safety and environment.
The law catches within its scope public authorities, whistleblowers, journalists and scientists who have no economic motive for revealing a business secret, yet do so in the public interest.
In the UK, fracking sharply divides opinions and communities. It is a lesson in the profound impact that industry can have on public health and the environment.
And it underlines our need to access information on the risks posed by business activities to make informed decisions as consumers and voters.
Even so, few obligations are imposed on companies to reveal data to the public, no matter how risky their operations. Since the year 2000, freedom of information laws have been an important tool to access environmental and health information.
For the rest, we rely on journalists and whistleblowers. The draft Trade Secrets Directive, which comes before the European Parliament's Committee on Legal Affairs on 16th June for amendments and a vote, jeopardises these two crucial ways to hold companies to account.
The stated aim of the Directive is protect businesses from industrial espionage and unfair competition. This is a worthy objective. Unfortunately, the legislation will also endanger the public and result in more pollution and health scandals, as it blocks access to almost any information that companies consider valuable secrets.
Good intentions gone too far
The billions of pounds poured into research and development by European businesses should be protected from exploitation by competitors, to encourage greater investment in innovation.
But the law reaches way beyond this, catching within its scope public authorities, whistleblowers, journalists and scientists who have no economic motive for revealing a business secret, yet do so in the public interest.
The draft law defines a 'trade secret' as any information which "has commercial value because it is secret". This definition is so broad that it applies to any undisclosed information, including the negative impact that business activities have on our health and environment.
The clear risk is that much more information will be qualified as 'secret', encouraging industry to continue business as usual instead of shifting to safer, greener production.
In 2009, for example, European governments spent millions stockpiling Tamiflu to treat swine flu. In fact, the drug failed to treat serious influenza complications; it was not fit for purpose.
These shortcomings only came to light because Cochrane Collaboration fought for access to Roche's clinical trial data. By allowing this type of information to be classified as a 'trade secret', the Directive makes it easier for companies to conceal uncomfortable truths.
Doctors, patients and researchers need access to the results of clinical trials by pharmaceutical companies. This data is essential to protect people and allow independent scientists to verify the results. It also prevents public authorities wasting meagre resources on treatments that don't save lives.
The draft law offers a too-broad definition of 'trade secrets', then gives companies a set of detailed sanctions, including compensatory damages. This means anyone disclosing such information without consent could be sued for huge sums of money.
The draft directive ignores the law on access to environmental information
The draft directive ignores the United Nations Aarhus Convention, an international law obliging public authorities to disclose data on emissions and to disseminate sufficient information to let consumers make environmentally informed choices.
Information on hazardous products such as chemicals in plastics, clothes and cleaning products - plus data on any other potentially hazardous activities - should be disclosed. Yet the draft directive does not say anything about this type of information.
By law, the Aarhus Convention should prevail over the Trade Secrets Directive. However, with no reference to the Convention in the draft directive, there is a very real chance public authorities will ignore it.
This will result in more litigation, at great cost, as courts are asked to restore the balance between public access to information and business interests. The process will take years.
What does all this mean in practice?
At present, UK public authorities and European institutions only reveal business information when it would not harm commercial interests, or where there is an overriding public interest. In making this decision, public authorities perform a balancing act, weighing the harm the revelation could cause a business against the public good being served.
Public authorities are already under immense pressure not to reveal business information. The Trade Secrets Directive in its current form will tip the balance overwhelmingly in favour of protecting business secrets, at the expense of the public's right to know.
At the same time, disclosure of business information by journalists and whistleblowers is under threat. Faced with being sued for hefty financial damages, it is hard to imagine an individual brave enough to uncover information that might meet the directive's overly broad definition of a trade secret.
The directive as drafted effectively gags members of the public, stopping them denouncing industry malpractice.
The Commission's misleading denials
Responding to critiques such as this one, the European Commission has recently published new 'Frequently Asked Questions' to assuage public concern. Unfortunately, their claims are vague, simplistic and misleading.
The Commission's FAQ asks: "what about freedom of expression and right to information?" It answers that "the proposal includes express safeguards in order to ensure the respect for freedom of expression, right to information and whistle-blowers."
So that's alright then? No. These 'safeguards' are weak, ineffective, and leave journalists and whistleblowers open to financial penalties for acting in the public interest.
Regarding journalists, states the FAQ, "trade secrets holders will not have the right to damages and other remedies whenever the trade secret was unlawfully acquired, used or disclosed for making legitimate use of the right to freedom of expression and information ..."
The Commission omits that the right to freedom of expression may be limited by laws that aim to protect the rights and reputation of others. This important limitation allows the Trade Secrets Directive to be used to penalize journalists who disclose so-called "business secrets".
A three-pronged test that's very hard to pass
Similarly, with whistleblowers, the Commission states that the Directive's penalties will not be used against people who disclose information "for the purpose of revealing an applicant's misconduct, wrongdoing or illegal activity, provided that the alleged acquisition, use or disclosure of the trade secret was necessary for such revelation and that the respondent acted in the public interest."
This three-pronged test is extremely difficult to satisfy in practice. First, it does not cover the situation where the activity being exposed cannot easily be classified as misconduct, wrongful or illegal.
The very existence of climate change is hotly debated, and therefore information on lawful activities which contribute to climate change cannot clearly be designated as wrongful. This does not mean that the public do not have the right to know and judge for themselves!
Second, it is very hard to know whether secret information held by a company will in fact reveal industry malpractice until it has been acquired. This is why ClientEarth would prefer to see a requirement for whistleblowers to act in good faith.
Public authorities will be forced into a new level of reticence
But most worrying of all, the Commission's answer does even refer to the potential harm to the public's ability to access business information from public authorities.
Public authorities are already under immense pressure from industry not to reveal business information in response to freedom of information requests, even when the UN Aarhus Convention requires them to do so.
The fact that this Directive allows companies to ask for damages against public authorities will tip the balance in favour of withholding any information that can meet the definition of a trade secret. Given that that definition is overly broad, this does not bode well for our right to know about industry practices that affect our health and the environment.
The Commission has, once again, misjudged its audience. EU citizens take transparency seriously! We want considered and honest engagement from policy makers, especially when their actions undermine our rights.
A last chance to stand up for freedom
On 16th June the European Parliament has a chance to amend the draft law to protect freedom of information and safeguard democracy. If our MEPs miss this opportunity, they might not get another.
The USA is in the process of adopting similar legislation, with the aim of including trade secret protection in the Transatlantic Trade and Investment Partnership.
If this happens, it will be almost impossible to repeal the directive. It must be changed now, before it's too late.
Petition: to Members of the European Parliament to 'Stop Trade Secrets!'
Anne Friel and Anaïs Berthier are lawyers with ClientEarth.
Official EU documents on the draft Trade Secrets Directive.
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