1. Introduction

In today’s knowledge-based economy, confidential business information represents one of the most valuable assets of any enterprise. Recognizing the importance of protecting such information, the Cypriot legislator enacted the Protection of Undisclosed Know-How and Business Information (Trade Secrets) from Unlawful Acquisition, Use and Disclosure Law of 2020 (Law 164(I)/2020), which transposed Directive (EU) 2016/943 into domestic law (the “Law”).

The enactment of the Law was a significant development in Cyprus’s legal landscape, aiming to provide an effective legal framework for addressing the unlawful acquisition or misuse of confidential information.

Trade secrets - valued on the same level as traditional intellectual property rights - foster competition and innovation by ensuring that knowledge and technical know-how remain protected when legitimately maintained as confidential.

Economou & Co LLC has extensive experience advising on and litigating trade secret and confidentiality matters. The firm recently secured a springboard injunction on behalf of a client against former employees, restraining them from using confidential information and trade secrets and from soliciting existing clients and associates.

2. Definition of a Trade Secret

Under Section 2 of Law 164(I)/2020, a “trade secret” is defined as information that satisfies all of the following cumulative criteria:

1. The information is not generally known among, or readily accessible to, individuals within circles that usually deal with such information.
2. The information derives commercial value from being secret.
3. The lawful holder of the information has taken reasonable steps, given the circumstances, to keep it confidential.

The scope of a trade secret is intentionally broad and may include commercial data such as client and supplier lists, business strategies, technical know-how, market research, and product development plans.

It is not limited to information that is inherently secret - protection also extends to information kept confidential through reasonable efforts, such as contractual agreements, technological safeguards, or internal policies.

3. Unlawful Acquisition of Trade Secrets

Article 5(2) of the Law outlines two principal forms of unlawful acquisition of trade secrets:

• Unauthorized Access or Copying – Occurs where a person gains access to, appropriates, or copies any documents, materials, or electronic files containing trade secrets without the holder’s consent. This includes any physical or digital misappropriation of information, such as downloading confidential data, taking business documents, or duplicating records without authorization.
• Unfair Conduct – Refers to any behaviour which, under the circumstances, is contrary to honest commercial practices or good faith and results in the acquisition of trade secrets without the holder’s consent.

4. Unlawful Use or Disclosure of Trade Secrets

Under Article 5(3), the use or disclosure of a trade secret without the holder’s consent is unlawful if carried out by a person who:

• Acquired the trade secret unlawfully;
• Breached a confidentiality agreement or non-disclosure duty; or
• Violated a contractual or other obligation restricting use of the information.

Furthermore, Article 5(4) extends liability to anyone who knew or ought reasonably to have known that the trade secret had been unlawfully acquired.

This provision ensures accountability not only for the primary wrongdoer but also for third parties who benefit from the misuse of confidential information.

5. Lawful Acquisition of Trade Secrets

The Law ensures that the protection of confidential information does not hinder legitimate innovation or competition. Under Article 6, the acquisition of a trade secret is considered lawful when it occurs through:

• Independent discovery or creation;
• Observation, study, disassembly, or testing of a product or object that has been made available to the public or lawfully possessed by the acquirer, who is not bound by any confidentiality obligation;
• Exercise of workers’ rights to information and consultation in accordance with EU and Cypriot law; or
• Any practice consistent with honest commercial practices.

These provisions ensure a fair balance between protecting confidential information and encouraging research, innovation, and competitive market behaviour within Cyprus.

6. Judicial Protection and Interim Relief

Recital 26 of Directive (EU) 2016/943 recognises that the loss of confidentiality is irreversible once a trade secret becomes public. For this reason, Cypriot courts are empowered to grant swift and effective provisional measures.

Under Article 10 of the Law, trade secret holders may apply to the Cypriot courts for interim measures to prevent or immediately stop any unlawful use or disclosure of a trade secret.

Upon such application, the Court may order:

• The temporary cessation or prohibition of unlawful use or disclosure;
• The prohibition of production, offering, placing on the market, use or storage of infringing good; and
• The seizure or delivery of goods suspected of incorporating unlawfully obtained trade secrets.

7. Damages and Compensation

Any person who suffers loss as a result of unlawful acquisition, use, or disclosure of a trade secret is entitled to compensation under Cypriot law. When assessing damages, the Court considers the value and uniqueness of the trade secret, the measures taken to protect it, the conduct of the infringer, and the overall impact on the trade secret holder.

8. Confidentiality in Court Proceedings

To prevent the paradox of further disclosure during litigation, the Law empowers Cypriot Courts to maintain confidentiality throughout litigation.

The Court may:

• Limit access to confidential documents;
• Restrict attendance at hearings to a small group of authorised persons; and
• Publish a non-confidential version of its judgment with redacted sensitive content.

9. Criminal Penalties

The Law also introduces criminal penalties for breaches of confidentiality obligations and court orders.

Individuals - including parties, lawyers, witnesses, or court employees - who knowingly disclose or use a trade secret revealed in the course of proceedings may face:

• A fine of up to €35,000;
• Imprisonment of up to three years; or
• Both penalties.

Failure to comply with interim or final court orders protecting trade secrets is likewise a criminal offence.

10. Preventive Strategies: Protecting Trade Secrets Before Litigation

Effective protection of trade secrets under Cyprus law begins long before any dispute arises.

Economou & Co LLC advises clients to adopt comprehensive compliance frameworks that integrate confidentiality and information security at every organisational level.

We recommend a multi-tiered approach that reflects international best practice, including:

• Carefully drafted Non-Disclosure Agreements (NDAs) and confidentiality clauses in all commercial, employment, and consultancy contracts;
• Restrictive covenants, including non-solicitation, non-dealing, and non-compete provisions;
• Internal governance and access-control systems that limit exposure of sensitive information;
• Regular training and awareness initiatives ensuring that employees, consultants, and partners understand their confidentiality obligations under Cyprus trade secrets law.

Such proactive efforts not only strengthen legal protection but also promote a corporate culture of integrity, confidentiality, and sustainable competitiveness.

11. Conclusion

The Trade Secrets Law 164(I)/2020 provides Cyprus with a robust and modern framework for the protection of confidential business information.

When trade secrets are properly identified, documented, and safeguarded, businesses operating in Cyprus benefit from stronger protection, enhanced competitive advantage, and a more resilient commercial environment.

Economou & Co LLC remains at the forefront of trade secret protection and enforcement in Cyprus, providing strategic, pragmatic, and results-oriented advice across the full spectrum of confidentiality and intellectual property matters.