Trade Secret Protection When Sharing Data Under the EU Data Act

The Data Act makes connected-product data available to the user who generated it, and to third parties that user nominates. It does not make trade secrets available. The reconciliation between those two sentences is a graduated set of safeguards in Article 4, and reading them as a single “trade secret exemption” is the mistake that gets a refusal overturned.

The ladder: condition, suspend, refuse

Regulation (EU) 2023/2854 — the Data Act — entered into force on 11 January 2024 and has applied since 12 September 2025. Its Article 4 obliges a data holder to make readily available product and related-service data, plus the metadata needed to interpret it, available to the user without undue delay, in a structured, commonly used, machine-readable format, and free of charge. The trade-secret safeguards sit inside that same article rather than beside it, and they escalate in three steps.

• Condition it. Trade secrets are disclosed, not withheld, provided that all necessary measures are agreed in advance to preserve their confidentiality. The data holder must identify which data it claims as a trade secret. Technical and organisational measures, and contractual ones, are the expected form: confidentiality undertakings, restricted access, watermarking, use limitations.
• Suspend it. If the recipient does not implement the agreed measures, or undermines the confidentiality of the data, the data holder may withhold or suspend the sharing of the specific data identified as trade secrets. That decision has to be notified, in writing, to the recipient and to the national competent authority.
• Refuse it. In exceptional circumstances, the data holder may refuse the request outright for the specific data at issue — but only on a case-by-case basis, only where it can demonstrate that it is highly likely to suffer serious economic damage from disclosure despite the measures, and again with a duly substantiated written notification to the competent authority.

The important structural point is that the default is disclosure with protection, not withholding. Each rung requires the previous one to have failed or to be unavailable. A data holder that jumps straight to refusal has skipped the step where it was supposed to propose confidentiality measures, and that omission is the thing a competent authority will look at first. Read the operative text at EUR-Lex’s consolidated version of Regulation (EU) 2023/2854 rather than a summary: the paragraph numbering of these safeguards changed between the Commission’s 2022 proposal and the adopted text, and older commentary cites the proposal’s numbers.

What counts as a trade secret here

The Data Act does not invent its own definition. It borrows the one in Article 2(1) of Directive (EU) 2016/943, the Trade Secrets Directive, which has three cumulative limbs: the information is secret in the sense that it is not generally known or readily accessible to people who normally deal with that kind of information; it has commercial value because it is secret; and it has been subject to reasonable steps by the person lawfully in control of it to keep it secret. See the Directive at EUR-Lex.

The third limb is the one that fails in practice. A manufacturer that has never treated a telemetry schema as confidential internally — no access control, no marking, no supplier NDAs covering it — will struggle to argue at the point of a Data Act request that it is a trade secret. The reasonable-steps limb is evidenced by what you were already doing, and it cannot be created retroactively by a refusal letter. The second limb is also not automatic: raw sensor readings from one user’s device rarely carry independent commercial value because they are secret. Derived features, calibration curves, thresholds and diagnostic models are much stronger candidates, which is precisely why the argument usually runs over metadata and derived fields rather than over the raw stream.

When the requester wants training data

The route a model provider takes is normally Article 5 rather than Article 4: the user asks the data holder to make the data available to a third party the user nominates. Article 5 carries its own mirror of the trade-secret ladder, so the analysis above repeats one step removed. Two structural features change the answer, though, and both matter for anyone building on connected-product data.

First, the Data Act excludes gatekeepers designated under the Digital Markets Act from being eligible third parties. A user cannot direct data to them under this mechanism at all, and a data holder is not obliged to serve such a request. That is a status question, not a trade-secret question, and it is answered by the Commission’s designation list rather than by anything in your contract — see how DMA designation actually works.

Second, the Regulation restricts what the recipient may do with the data once it has it, and one of those restrictions is aimed squarely at competitive product development. A third party receiving data under Article 5 may not use it to develop a product that competes with the connected product the data came from, nor pass it to someone else for that purpose. The equivalent restriction binds the user directly under Article 4. Whether training a general-purpose model on that data amounts to “developing a competing product” is not settled. The plain reading covers building a rival device or a rival related-service; it is genuinely unclear whether it reaches a foundation model that merely improves in a domain adjacent to the product, and no decision or Commission guidance this page can point to resolves it. Treat it as a term to negotiate explicitly rather than a question with a known answer.

The restrictions that survive disclosure

Disclosure under the confidentiality-measures route is not a licence. Three limits keep running afterwards, and they are the reason a data holder is often better served by agreeing measures than by fighting over refusal.

• Purpose limits. A third party may process the data only for the purposes and under the conditions agreed with the user, and must erase it when it is no longer necessary for that purpose.
• The anti-competitive-use restriction described above, which travels with the data rather than expiring with the confidentiality agreement.
• The trade secret itself. Nothing in the Data Act extinguishes protection under Directive (EU) 2016/943. Data disclosed under confidentiality measures remains a trade secret, and a recipient that leaks or misuses it faces the Directive’s remedies in addition to whatever the contract says.

There is also a symmetric restriction pointing the other way: a data holder may not use non-personal readily available data to derive insights about the user’s economic situation, assets or production methods in a way that could undermine the user’s commercial position. A manufacturer mining fleet telemetry to work out how a customer runs its business is the behaviour that provision is about.

What a data holder has to be able to show

The safeguards are evidentiary. What a competent authority will ask for, if a refusal is challenged, is a file: which specific data items were identified as trade secrets and when; what measures were proposed to the requester and what the requester said; what the claimed serious economic damage is, quantified, and why the proposed measures would not prevent it. “Commercially sensitive” asserted over a whole data category is the weakest possible position, because the Regulation asks for identification of specific data and case-by-case reasoning, and a blanket claim is neither.

Practically, that means the work happens before the first request arrives. Classify the fields in your data model now: which are readily available data you must share, which carry a genuine secrecy claim, which are metadata needed to interpret the rest. Have a standard set of confidentiality measures drafted, so that step one is an offer rather than a delay. And note that the terms you attach cannot be unfair unilaterally imposed terms — the Data Act includes a B2B unfairness test in its contractual-terms chapter that can strike out a clause you thought you had won. Related ground is covered in the connected-device training-data page and in the general AI contract-clause page.