Most companies know what their trade secrets are only after they have lost one. A key employee leaves for a competitor with the customer list, a supplier reuses a manufacturing method learned during a joint project, or a pricing model circulates outside the company. At that point the question is no longer commercial but evidential: can you show that the information qualified for protection, and that you took reasonable steps to keep it secret?
The legal framework in Sweden
Trade secret protection across the EU is harmonised by the Trade Secrets Directive (EU) 2016/943. Sweden implemented it through the Act on Trade Secrets, lag (2018:558) om företagshemligheter, which came into force on 1 July 2018 and replaced the 1990 Act. The Swedish Act runs to 28 sections and covers the definition of a trade secret, civil liability and damages, injunctions and interim relief, and criminal offences.
Unlike patents or trade marks, trade secret protection requires no registration. That is its great advantage and its great weakness. There is no filing fee and no publication, so the information stays confidential indefinitely – but there is also no certificate to point to in court. Protection depends entirely on how the business has behaved.
What qualifies as a trade secret
Three conditions must be met. The information must relate to the business or operational conditions of the company. It must not be generally known or readily accessible to persons who normally deal with information of that kind. And the holder must have taken reasonable measures to keep it secret, with disclosure being liable to cause competitive harm.
The third condition is where most claims fail. Reasonable measures are assessed objectively and in context: a small consultancy is not expected to run the security programme of a listed manufacturer, but it is expected to have done something deliberate. Information that circulates freely on an open shared drive, is discussed without restriction with suppliers, and is not covered by any confidentiality clause will struggle to qualify however commercially sensitive it feels.
What is not protected
Two exclusions matter in practice. Skills and experience that an employee has acquired in the ordinary course of their work are not trade secrets – an employee is entitled to take their professional competence with them. And information about conduct that constitutes a criminal offence or other serious misconduct is not protected, which connects the Act to whistleblowing protection. An employee who reports wrongdoing through the channels available to them is not misappropriating a trade secret.
Typical categories worth protecting
In our experience the assets that matter most are rarely the ones companies think of first. Customer and prospect data with terms and margins. Pricing models and cost structures. Supplier terms and sourcing arrangements. Source code, algorithms, model weights and training data. Manufacturing processes, formulations and tolerances. Unpublished commercial strategy, including acquisition targets and market entry plans. Results of research that has not yet been filed or published.
Remedies when a trade secret is taken
The Act provides a fuller toolkit than its predecessor. Courts can award damages, and in assessing them may take account of the holder’s lost profit, the infringer’s gain and the interest in the secret not being violated. Injunctions are available, including interim injunctions, typically reinforced by a conditional financial penalty.
Courts can also order corrective measures: surrender of documents or objects containing the trade secret, or where surrender would be disproportionate, recall from the market, destruction or modification. Importantly, these measures extend to infringing goods – products whose design, characteristics, functioning, production process or marketing benefit significantly from a misappropriated trade secret.
There is a criminal dimension as well. Unlawful dealings with trade secrets can carry fines or imprisonment of up to two years, and up to four years where the offence is gross. Court proceedings can be held in camera to prevent the secret being destroyed by the litigation intended to protect it.
Practical example: the departing sales director
A sales director at a Swedish industrial supplier resigns and joins a competitor. In the weeks before departure they export the CRM contact list, historical pricing by customer and the current pipeline to a personal cloud account. Within three months the new employer has approached the ten largest accounts with offers pitched just below the incumbent’s terms.
Whether the supplier has a case turns on unglamorous details. Was there a confidentiality clause in the employment contract, and did it survive termination? Was the CRM access-restricted and were documents marked confidential? Do logs show the export? Was there an exit process that reminded the employee of their obligations and recovered company data? Where these are in place, the claim is strong and interim relief is realistic. Where they are absent, the supplier may find that what it regarded as its most valuable asset was, in law, simply information the employee happened to know.
Common mistakes companies make
Relying on a generic confidentiality clause that never identifies what is confidential. Courts respond better to specificity than to boilerplate covering “all information of any kind”.
Giving every employee access to everything. Broad internal access undermines the argument that reasonable steps were taken, and it is the single most common weakness we see.
Neglecting third parties. Consultants, agencies, contractors and joint development partners often receive the most sensitive material under the thinnest paperwork.
Confusing non-disclosure with non-competition. A confidentiality obligation restricts use of specific information. A non-compete restricts where someone may work, is separately regulated, must be limited in scope and duration, and in Sweden generally requires compensation to be enforceable against employees.
Ignoring AI tools. Pasting confidential specifications or draft agreements into a public AI assistant can be inconsistent with keeping the information secret – a modern route to losing protection that few internal policies address.
Waiting too long. Trade secret disputes reward speed. Evidence degrades, and interim injunctions become harder to justify once the applicant has tolerated the situation for months.
Recommended actions
Begin with an inventory. Identify what genuinely qualifies, where it lives, who can reach it and why. Most organisations find both over-classification of the trivial and under-protection of the critical.
Restrict access on a need-to-know basis and be able to evidence it through access controls and logs. Mark sensitive documents consistently – not everything, which dilutes the signal, but the material that matters.
Review contracts across the whole chain: employment agreements with survival clauses, contractor and consultant terms, supplier and customer agreements, and non-disclosure agreements before any due diligence or joint development discussion.
Build the process discipline. Onboarding that explains confidentiality obligations, an exit procedure that recovers devices and revokes access on the last day, and a documented reminder of continuing duties. Extend your AI use policy to state clearly what may not be entered into external tools.
Finally, prepare for the incident before it happens. Know who investigates, how logs are preserved, and how quickly you can be in front of a court if interim relief is needed.
Frequently asked questions
How long does trade secret protection last?
For as long as the information remains secret and the conditions are met. Unlike a patent there is no fixed term – but protection ends the moment the information becomes generally known, however that happens.
Can we stop a former employee from using what they learned?
You can prevent the use of identifiable trade secrets. You cannot prevent them from using general skills and experience acquired in the ordinary course of their work, which the Act expressly excludes from protection.
Do we need an NDA if the law already protects trade secrets?
Yes. A written agreement defines the scope, evidences that reasonable steps were taken, sets duration and permitted use, and can provide remedies that are quicker to invoke than statutory ones. It also removes arguments about whether the recipient understood the information was confidential.
What about trade secrets shared with a joint venture partner?
Define before disclosure what is being shared, for what purpose, who may access it, what happens to it on termination, and how improvements and jointly developed material are owned. Ambiguity here is the source of a large share of trade secret disputes.
Conclusion
Trade secret protection is earned through everyday practice rather than granted by an authority. The Act on Trade Secrets gives Swedish businesses strong remedies, including injunctions, damages, corrective measures against infringing goods and criminal sanctions – but only for information the business can show it treated as secret. The work of identifying, restricting, documenting and contracting is what converts commercially sensitive information into a legally defensible asset.
Lawgent helps companies map their confidential information, draft and review confidentiality and non-disclosure arrangements, tighten employment and contractor terms, and act quickly when a trade secret has been taken. Get in touch to review how well your most valuable information is protected.
