New Threat to Openness in the EU: Trade Secrets Directive

This blog has been charting the inexorable rise not just of open source, but of openness in general, encompassing open content, open data, open access, open science and open innovation. That's an indication of a broad recognition that openness is simply a better way of doing things, and results in greater benefits for a broader range of society. Against that background, plans for an EU Directive on protecting "trade secrets" are worrying.

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This blog has been charting the inexorable rise not just of open source, but of openness in general, encompassing open content, open data, open access, open science and open innovation. That's an indication of a broad recognition that openness is simply a better way of doing things, and results in greater benefits for a broader range of society. Against that background, plans for an EU Directive on protecting "trade secrets" [.pdf] are worrying.

The explanatory memorandum of the draft proposal begins by invoking today's new openness:

The drastically reduced transaction costs in the digital economy have led to new forms of cooperation with open science and open innovation, often leading to new business models for using co-created knowledge.

But it then goes on:

Nevertheless, intellectual property rights (IPRs) are an essential part of an innovation policy. IPRs provide innovators and creators with means of appropriation of the outputs of their efforts, which are intangible in nature, thus providing the necessary incentives for investment in new solutions, inventions and know-how.

It claims that ordinary intellectual monopolies are not enough:

When securing such assets and attracting financing and investment requires IP to be kept secret, companies, laboratories, universities, as well as the individual inventors and creators, use the most relied upon and long-standing form of appropriation over valuable information: confidentiality.

It then uses this claim as a springboard for justifying a new Directive strengthening protection of trade secrets. But the logic here is faulty. After admitting that the digital economy has made collaboration so easy that it is natural to use it, the document then tries to put trade secrets - anti-openness - back in the equation by claiming that secrecy is necessary if the results of science are to be exploited fully. But no evidence is presented for that assumption: it is simply the dogma that has prevailed hitherto until open source and all the other applications of its ideas came along.

Moreover, we do have evidence of the contrary. One of the most important open science endeavours is the Human Genome Project (HGP), which put all of its results into the public domain immediately. Research published in 2013 seeks to quantify the knock-on economic benefits of making the results of the HGP freely available, with no licensing requirements [.pdf]:

The economic impacts generated by the sequencing of the human genome are large and widespread.

Between 1988 and 2012 , the human genome sequencing projects, associated research and industry activity -- directly and indirectly -- generated an economic (output) impact of $965 billion, personal income exceeding $293 billion and more than 4.3 million job-years of employment.

...

The growth of genetics and genomics science and applications in the U.S. has been a true public-private partnership, with private sector en tities supporting and benefiting from federal research and generating significant tax revenue s.

The genomics-enabled industry sector generated and stimulated nearly $3.9 billion in federal taxes and $2.1 billion in U.S. state and local taxes in 2012 . Thus in one year, revenues returned to government s equaled the entir e 13-year investment in the HGP.

Now, this is only one, albeit very large-scale, case, and some may quibble with the details. But it gives the lie to the idea that ideas and inventions must be kept secret for society - and business - to benefit. Indeed, it strongly suggests that opening up generates a far greater benefit, although it would be good to have more detailed research into this.

The planned Directive is particularly troubling for the world of free software, which is naturally based on not keeping anything secret. The problem is that enhanced protection for trade secrets would hand companies using proprietary licensing another weapon with which to attack open source projects. Just as they already use patents and copyright to claim that free software has "stolen" their ideas, so trade secrets could also be invoked.

As we know from things like SCO's attack on Linux, just the existence of lawsuits, irrespective of their merits or eventual outcome, can sow doubts in some people's minds about the legality of free software code, and cast a chill over open source development. Introducing yet another "right" for companies would inevitably lead to more attacks on openness, and slow progress.

There are other serious problems with the proposed Directive. A group of NGOs in a wide range of sectors have written an open letter warning of the dangers of the draft Directive:

We strongly oppose the hasty push by the European Commission and Council for a new European Union (EU) directive on trade secrets, which contains overly-broad protection and inadequate safeguards. This unbalanced piece of legislation will result in legal uncertainty and endanger freedom of expression and information, corporate accountability, information sharing and, possibly, innovation, rather than create a competitive and sound business environment in the EU, as the Commission claims.

If the draft directive, which the Commission published in November 2013, is passed, consumers, workers, researchers, journalists and whistleblowers in the EU will be at risk. The definition of ‘trade secrets’ in the draft directive is unreasonably broad, enabling almost anything within a company to be deemed as such. Unsurprisingly, the draft directive text is strongly supported by multinational companies because it would enable them to sue anyone who “unlawfully acquires, uses or discloses” their so-called trade secrets. Instead, the right to freely use and disseminate information should be the rule, and trade secret protection the exception.

As that points out, the very broad definition of "trade secrets" would allow practically everything to be claimed as such, which would make the already-difficult life of whistleblowers even worse, since there is no public interest defence included in the current text. It would also allow journalists to be sued for publishing embarrassing information they had received from whistleblowers or elsewhere. It might even apply to open source coders that use ideas that they come across online to write free software, unaware that these were "trade secrets".

What's also troubling is that the EU proposal is not an isolated action. In the US, there are a pair of bills -- the "Defend Trade Secrets Act of 2014″ [.pdf] and the "Trade Secrets Protection Act of 2014″ [.pdf] -- that aim "to provide Federal jurisdiction for the theft of trade secrets, and for other purposes." We also know that the TransPacific Partnership agreement (TPP) includes a section requiring signatories to bring in strong protection for trade secrets, possibly including criminal sanctions. And for the Transatlantic Trade and Investment Partnership (TTIP), there is a document from last year in which the European Commission notes that trade secrets are a "clear priority for the US". Given that it is working on its own Directive, we can assume that trade secrets will also be a "clear priority" for the European Commission, too, making the inclusion of trade secrets in TTIP a near-certainty.

Putting all that together, and it's hard not to see these moves as part of a concerted, global action to make the protection of trade secrets much stronger, and to create new "rights" for companies, which can be used against openness in all its forms. That's worrying, and swims against the prevailing historical current for more, not less, openness. We must resist it wherever it appears, lest it starts to roll back some of the hard-won gains of recent years - not just for areas like open data and open science, but even for open source itself.

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