Tuesday, May 26, 2015

Towards Legalized Corporate Secrecy in the European Union?

How industry, law firms and the European Commission worked together on EU “trade secrets” legislation - a threat to consumers, journalists, whistleblowers, researchers and workers.

Summary:
This report (pdf version) is based on the analysis of hundreds of documents, obtained through an access to documents request, exchanged between the European Commission's DG Internal Market and the main corporate lobby groups involved in the development of the EU's draft legislation on so-called “trade secrets”.

Industry's main message throughout the process has been that trade secret theft is a major threat to the EU economy that demands a legislative initiative to improve and harmonise rules on the matter. Industry's recommended approach for this was to define trade secrets as a form of intellectual property (IP).
From the very beginning the Commission took a strong interest in the idea and went on to collect the evidence it needed to demonstrate that legal "fragmentation" and trade secret theft would, indeed, be a threat.
But it outsourced the research to law firms that have a structural interest in the development of new legal protection tools for their corporate clients. In the end, industry and the Commission acted together, working hand in hand on the methodology of the very evidence collection for the research, jointly organising a “Commission conference on trade secrets”, even coordinating media outreach on one occasion.

Eventually, the Commission followed industry's demands almost completely, stopping short of creating a new IP category for trade secrets in the EU but granting the associated means of legal redress.
The collaboration between DG Internal Market and the lobby groups seems to have extended to lobbying the other DGs, jointly preparing the submission to the Commission's Impact Assessment Board, and lobbying the two other EU legislators, the Council of Ministers (Member States) and the European Parliament.

When asked, the Commission did not dispute much of the above and failed to see how working for three years on a quasi-daily basis with lobby groups could be a problem. Emails show the opposite is actually true: the Commission, once the decision to initiate new legislation was taken, actually needed industry lobby groups' help. The Commission for example did pro-active outreach to business lobby groups to be sure that as many companies as possible participated in the public consultation. Non-industry groups were completely absent from the Commission's drafting process until the public consultation, and no pro-active outreach to them seems to have been undertaken by the Commission.

 Three other important observations should be made about this correspondence:

- Reference was often made to the upcoming TTIP negotiations to justify the action, as comparable legal action was being drafted in the US, and direct lobbying of TTIP negotiators to get trade secrets protected as IP under TTIP was undertaken.

- Lobbying is made easier by the lack of capacity on the public side of the discussion. Between 2010 and June 2012, only one policy officer and his head of unit were in charge of the technical development of the file, and in June 2012 one other policy officer joined them. Other levels of the administration also intervened but at the management level. On the other side, industry sent in teams of consultants, lawyers and executives, background legal research, field examples, and senior academic contacts –all free of charge for the Commission.

- To the Commission's credit, there are at least two moments in the correspondence where the head of unit objected to industry proposals that went too far from a political independence point of view (a meeting proposal from the fragrance industry to discuss a template draft legislation, and angry remarks about suspicious-looking exchanges between the law firm working for the Commission (Baker & McKenzie) and lobby groups active on the file), but his staff never wrote anything of the sort. On the contrary, there are several instances where they actually facilitated the lobbying work of industry by introducing various lobby groups and the consultants working for the Commission to one another. Who doesn't appreciate competent free help for one's work?

Find the rest of the long report here


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