NON-COMPETITION CLAUSES IN RELATION TO EMPLOYMENT CONTRACTS - A DANISH PERSPECTIVE Advokat Anders Valentin NIR 20 June 2016

page 2 − Overall purpose to reduce the use of employment contract clauses − Applies to salaried employees (modif.: salaried partner in law firm!) − Applies to non-competition, non-solicitation and combination of both etc. − Entered into as of 1 January 2016 and later ACT ON EMPLOYMENT CONTRACT CLAUSES

page 3 NON-COMPETITION CLAUSES (ACT ON EMPLOYMENT CONTRACT CLAUSES) Competition restrictionContentScopeSubjects Based on contractual obligation of loyalty Prohibition against conduct contrary to employer’s commercial interests Comprehensive, but only while employed All salaried personnel + executive management (CEO, CFO, etc.)

page 4 ACT ON FAIR MARKETING PRACTICES Competition restrictionContentScopeSubjects Statutory obligation of loyalty Requirement of fair conduct/marketing practices Protection of ”trade secrets” (obtaining/passing on) ”Trade secrets”not defined During and after term of employment, but only if ”disloyal conduct” (Enforcement Directive does not apply = not IP) All salaried personnel + executive management (CEO, CFO, etc.) and persons with access to business

page 5 Definition of Trade Secrets is “information”, which − is secret (neither generally known nor readily accessible) − has commercial value because it is secret − has been subject to reasonable steps to keep it secret (generally similar to TRIPS Agreement, article 39 (2) THE PROPOSED EU TRADE SECRETS DIRECTIVE

page 6 Two areas (in particular) will require further guidance from CJEU − What is ”commercial value”? − Preamble states that information has “commercial value” when its unauthorized ”acquisition, use or disclosure may harm the interests of the possessor by undermining scientific/technical potential, business/financial interests, strategic positions or ability to compete” What are ”reasonable steps”? − Generally: the more control implemented over access to (and use of) information, the higher the likelihood of protection by law THE PROPOSED EU TRADE SECRETS DIRECTIVE

page 7 Lawful handling of Trade Secrets − Reverse engineering and independent discovery/invention/creation etc. of information otherwise qualifying as Third Party Trade Secret NB! Access to reverse engineering is not mandatory by law but member states may make it mandatory by law. − Freedom of expression and information − Whistleblowing THE PROPOSED EU TRADE SECRETS DIRECTIVE

page 8 Remedies − Similar to those in the IP Enforcement Directive − Courts may grant injunctions (EU-wide?) − Other remedies include damages and accounts of profits − Member states may chose to restrict liability for employees having acted without intent THE PROPOSED EU TRADE SECRETS DIRECTIVE

Horten Advokatpartnerselskab Philip Heymans Allé 7 DK-2900 Hellerup, Copenhagen Tel Fax horten.dk