Netherlands jurisdiction report: A growing problem of trade secrets

On March 20, 2019 the court of The Hague handed down its noteworthy decision on the trade secrets of Future Crops, a Dutch cooperative enterprise, on its method for the vertical cultivation of herbs. The case concerned the infringement of trade secrets by Certhon Build, a Dutch limited liability company, relating to Future Crops’ developed system to vertically cultivate herbs.

A system to cultivate herbs effectively in a vertical manner would be a huge improvement in view of food and land shortage around the world. Imagine the possibilities when you can effectively cultivate herbs within one building at different levels. Key to whoever wants to develop such new sustainable solutions and maintain a priority position and safeguard patentability, etc, is keeping knowhow a secret.

That is exactly what Future Crops tried to do. As Future Crops could not set up everything on its own, it contracted third parties for support in different project phases, one of which was Certhon. Certhon was contracted to develop so-called climate chambers in phase one of the project (the project was in three phases) and for that purpose the parties signed a non-disclosure agreement (NDA).

The breach

In January 2017 a first breach of the NDA was noticed by Future Crops. One of the employees of Certhon was caught taking photographs of phase one of the project. In response Future Crops made Certhon aware of its zero-tolerance policy when it came to trade secrets. On July 4, 2017 Certhon was caught again taking photographs, now in phase two.

After this breach Future Crops held Certhon liable for the breach and requested a signed non-infringement declaration, declaring that it would not use nor share any of the observed knowhow. Certhon denied the request. Subsequently proceedings for infringement of trade secrets were initiated.

"This decision shows that taking reasonable measures to prevent the leak of trade secrets is not sufficient on its own for a successful court case."

Future Crops claimed a declaratory decision that Certhon’s conduct was unlawful and a prohibition of further use of the knowhow.

The court considered that Certhon’s conduct had to be assessed in the light of the EU Trade Secret Directive (Directive 2016/943), which set a few requirements for knowhow to be considered a trade secret within the meaning of the Directive.

First, the confidential information must be a secret, meaning that it is not generally known or easily accessible to those who are normally engaged in such information. Further, the information must have commercial value because it is secret, and the information must be subject to reasonable measures to maintain confidentiality.

The ruling

The court partially ruled in favour of Future Crops. The pictures taken of the vertical cultivation installation were considered to be an unlawful acquisition of knowhow. The court found that Future Crops had sufficiently substantiated that its knowhow was a trade secret, as it concerned unique combinations of techniques.

That knowhow also has commercial value as Future Crops had made huge investments (both monetary and in development time). The court declared that the conduct of Certhon in taking pictures is unlawful. So far Future Crops was successful.

However, the claim for an injunction was turned down. The court found that the injunction can be granted only if a threatened infringement of the trade secrets is sufficiently made clear. It found that this was not the case.

Future Crops’ statement that Certhon is also researching the cultivation of herbs was not sufficient as Future Crops did not substantiate that Certhon had used the trade secret for that purpose or threatened to do so. Also, as Certhon declared that it had removed the pictures taken and Future Crops had not provided any further evidence to the contrary, the court considered the alleged threatened infringement to be sufficiently disputed.

This decision shows that taking reasonable measures to prevent the leak of trade secrets is not sufficient on its own for a successful court case; one needs to be able to establish sufficiently that there is a threat that those leaked-out trade secrets have been used or spread further by the trade secret thief.

It can be imagined that this is a highly unsatisfactory decision for Future Crops. A seizure of evidence prior to initiating proceedings and a request for inspection of seized evidence may have helped Future Crops to substantiate its position in respect of the threatened infringement.

Michiel Rijsdijk is a partner at Arnold + Siedsma. He can be contacted at: mrijsdijk@arnold-siedsma.com

Marlies Wiegerinck is a specialised IP attorney at law and an associate at Arnold + Siedsma since 2008. She can be contacted at: mwiegerinck@arnold-siedsma.com