JURIST >> WORLD LAW >> Lithuania >> Correspondents' Reports >> Failed Attempt... 
JURIST's Lithuania Correspondent is Tadas Klimas, Dean, Vytautas Magnus University School of Law, Kaunas.
Failed Attempt to Protect Trade Secrets in Lithuania

[Kaunas; Special to JURIST] During 1999, when I was acting Chief Legal Counsel to Professor Vytautas Landsbergis, Chairman of the Parliament of Lithuania, I was able to have a number of reform measures passed into law. The following describes one failed attempt.

The Lithuanian statute criminalizing the theft of so-called "industrial" secrets, part of the criminal code, was dysfunctional. Seeking to make Lithuania at least perhaps marginally more amenable to investment and development, I set about to change the law. I rewrote the affected criminal code section and Professor Landsbergis introduced the bill into Parliament. (Bauduiamojo kodekso 25, 35, 317 ir 318 straipsni pakeitimo ir papildymo ir papildymo 317(1) straipsniu チstatymo Projektas (Lietuvos Respublikos Seimas/チstatymo projektas/P-1896/1999.06.11/).

As the bill began to be processed, two problems arose. One: the Law Committee rejected the proposed language and requested I rewrite the bill so that it itself would explain what a trade secret is. This was a pretty good request (I say that with heavy sarcasm: it was not enough to write a good law, but it had to have an educational component, something like a self-expanding zip file). But they were serious: the number two man in the general procuracy (prosecutor's office) complained in testimony before the Parliament's Law Committee that no one in the prosecutor's office had the foggiest notion of what a trade secret might be.

The other problem was that all of the so-called lawyers commenting on the proposed law were of the opinion that any protection of trade secrets would have to take into consideration matters of constitutional freedom of speech issues. One advisor (nice old guy) was of the opinion that the making of theft of a trade secret a criminal act hinged upon having made the perpetrator aware that the information concerned was held confidentially. That is, some sort of publication requirement would be imposed; it was thought some sort of registry of what is confidential information should be made. Indeed, one former prosecutor member of parliament demanded that information as to the number of toilets in a firm not be subjectable to criminalization for its theft.

I realized it would be quite impossible to write a law protecting trade secrets by criminalizing their theft unless I somehow were able to separate non-trade secret confidential information (such as the number let us say of employees, the pricing strategy, the remuneration of employees, the identity of clients) from trade secrets, such as formulas or even non-patented patentable inventions.

Thus I was faced with a necessity of being able to split off trade secrets from what in the commercial law world we would call "confidential information." Either I did that or the existing criminal statute would remain to be a dead letter.

I therefore drafted a law which defined a trade secret narrowly. Only the knowing theft of a trade secret would be a criminal offense. Appropriation of "confidential" non-trade secret information would not be. The criteria to be used in determining the difference between the two was this: a trade secret would have independent, legitimate, commercial value of itself. Like the formula for a well-known soft drink or a famous perfume. Anything else would be handled as a tort (or violation of duty imposed by contract).

I was influenced in making this choice (differentiating between trade secrets-as-things and other confidential information) by the applicable U.S. Code provision, which as you see speaks of trade secrets in relation to products:

18 U.S.C. ァ 1832. Theft of trade secrets. (a) Whoever, with intent to convert a trade secret that is related to or included in a product that is produced for or placed in interstate or foreign commerce, to the economic benefit of anyone other than the owner thereof, and intending or knowing that the offense will, injure any owner of that trade secret knowingly [steals, etc.] .
I also had to include an escape clause in my revised bill: it provided that anyone disclosing a trade secret would not be guilty of the offense as long as it were done in the public interest. I more than had doubts about this one悠 thought it moronic, actually. But "they" wanted to be sure that no prosecutor could "conceivably" proceed against any reporter disclosing unfair competition or corruption. Seems to me that any prosecutor can always initiate a case against anyone for most anything, especially in a system where there is no grand jury. And at any rate, the disclosure of a trade secret, as defined in the statute, really can't be in the public interest, anyway.

Time went on. This bill was not one of our top priorities. I left the position as acting Chief Legal Counsel in Janurary, 2000, without quite having completed the draft revised bill, although the hard part had been done. (I can send it Lithuanian, to anyone who would like to see it.)

Interestingly, about a year after I left, a new civil code was adopted, taking effect on July 1 of 2001. It contains a very simple definition of a trade secret, very similar the one in my first draft (which had been rejected by the committee on law because they didn't understand what a trade secret was).

Why was did the provision in the Civil Code go through without debate and not my proposed bill? Well, partly because my bill concerned not the Civil Code but the Criminal Code. But the main reason, it seems to me, is that the specifics of legal reform in Eastern Europe are more a function of barometric pressure than of any rational civic policy. Even with the backing of the Chairman of the Parliament, who at the moment commanded an absolute majority of votes, getting anything passed was exceeding difficult. Indeed, a regular parliament member stands zero chance of getting anything passed, as laws are written and adopted bythe executive branch, who fight tooth, nail, and prosthesis against anyone in the parliament who dares try anything. "All the dunces rise up in conspiracy" indeed.

So, since the old criminal code provision was not changed, as since the procuracy presumably still doesn't know what a trade secret is, I think there can fairly be said to be no protection in terms of criminal law in this country for the theft of a trade secret.

Tadas Klimas
JURIST Lithuania Correspondent
Vytautas Magnus University School of Law

July 10, 2001


  • responses to be posted...
JURIST and our correspondents welcome your reactions to their reports...
Your Comments:

Your Name:
E-Mail Address: