13 Jul 2021

Serbia Passes New Protection of Business Secrets Act

The last decade has completely changed the way we do business.  Developments in technology have led to tremendous progress in nearly all sectors, leading to previously unknown issues in the process. One of the questions raised is how to protect business secrets in the knowledge economy. Recognizing the problem, the National Assembly of the Republic of Serbia, after nearly a decade, passed a new Protection of Business Secrets Act (“the Act“).  The Act was passed on May 27, 2021 and entered into force on June 5th this year.  The Act harmonizes Serbian regulations with the regulations of the European Union.

It should be noted that not all confidential information is considered a business secret.  The new Act precisely defines what information enjoys protection as a business secret and under which conditions.  A significant new development is a requirement that the holder of a business secret has taken reasonable measures to protect his business secret.  In other words – if you do not protect your business secret yourself, no protection will be provided by the law.  In that sense, the Act states that the confidentiality agreement is a reasonable measure of protection, whereby it has recognized and institutionalized the long-standing practice of concluding confidentiality agreements in the Serbian economy.  Furthermore, the Act makes a clear distinction between legal and illegal means of acquiring and disposing of information considered a business secret by precisely listing these cases.  It is also interesting that, in addition to the listed cases, it introduces the principle of fair business practices. Specifically, the Act states that any acquisition of information that is not in accordance with fair business practice will be considered illegal, weighted according to the specific circumstances of the case.  It remains to be seen whether such a determination is too broad and whether it will create doubts in practice.

Breach of business secrets committed by a company or a responsible person is still considered an economic offense.  When committed by a natural person, this will be considered a misdemeanor, and this is an innovation in the Act.

Furthermore, the deadline for filing a lawsuit for breach of business secrets has been extended.  The deadline is now one year from the moment of becoming aware that such breach occurred, but it is possible to file this lawsuit within five years from the day of the (last) instance of breach.  Compared to the previous Act, the court procedure initiated by the lawsuit for breach of business secrets is now regulated in more detail, more comprehensively and more precisely, which should be a significant contribution to the better protection of business secrets in the Serbian economy.

The responsibility of intermediaries has also been introduced.  Intermediaries are persons whose services have been used in illegally obtaining, using, or disclosing business secrets if they knew or should have known this.

The obligation of persons that participated in the process of breaching business secrets to provide information on third parties who participated in such actions is prescribed at the request of the court.

Finally, the holder of a business secret may request that the ruling is published in the media.  This measure was also part of the previous legal solution.  This significantly affects the business reputation of a legal entity or a natural person who has acted outside of the “rules of the game” and serves as a discouragement of taking similar actions in the future.

To conclude, following the step of modern times, the new Protection of Business Secrets Act introduced the necessary innovations in the field of protection of business secrets, firstly by better-regulating court proceedings on lawsuits for breaches of business secrets.  It remains to be seen how the new provisions will be applied.  Nevertheless, it is evident that the legislator recognized that business secret is one of the basic institutes of business protection in the modern era.