European Commission considers trade secret safeguards in Data Act as exceptions, not the rule

The European Commission considers including trade secret safeguards in the Data Act but as exceptions, not the rule. The Act regulates data access, sharing, and portability, but some fear it may undermine competitiveness by exposing sensitive info. The Commission aims to protect trade secrets while addressing concerns.

 Flag, Architecture, Building, Office Building, City

The European Commission (Commission) is considering including trade secret safeguards in the Data Act as long as they are considered an exception and not a rule. The Data Act aims to enable users of connected devices to access and share the data they generate with third parties. Some industry players, including Siemens and SAP, have opposed the draft law, arguing that it could undermine their competitiveness by requiring them to disclose commercially sensitive information. The EU Council of Ministers introduced the principle that data disclosure can be refused if it causes severe economic damage. The European Parliament views this as giving veto power to data holders, undermining the purpose of the regulation.

The Commission is open to considering safeguards proposed by the Council as long as they align with the Trade Secrets Directive, prevent expansive interpretation or extensive use, and avoid imposing a disproportionate burden on small and medium-sized enterprises (SMEs).

In addition to trade secrets, the next political Trilogue, on 23 May, will address public bodies’ access to privately held data under specific circumstances. The European Parliament seeks to exclude personal data from these provisions, while the EU Council includes personal data with several safeguards. The Commission supports the Council’s text but suggests limiting personal data to the most severe situations. MEPs want to remove the principle that public bodies can request data not only to respond to emergencies but also to recover and mitigate them.

The Trilogue meeting will also address points agreed upon at the technical level. These include extending protection against unfair contractual terms imposed by data holders to all companies, allowing public sector bodies to transmit data to research organizations and statistical bodies for activities in the public interest, and granting data holders the right to complain about further data transmission before the relevant authority. The Commission will develop guidelines for calculating compensation when data is shared between businesses, potentially including a margin for non-SME recipients.