Business secrecy: the basics

Autor: Francisco Moreno (Abogado, Socio fundador)

 

On March 13, 2009, the Business Secrets Act 1/2019 (the “LSE”) came into force.

However, the protection of secrecy was already required under Article 39 of the Agreement on Trade-Related Aspects of Intellectual Property Rights of 1994 (the “TRIPS”), and the violation of secrets in Spain was punished as an unfair competition offence under Article 13 of the Unfair Competition Act 3/1991 (the “LCD”).

With the entry into force of the LSE, the aforementioned Article 13 of the LCD today merely indicates that the violation of trade secrets will be governed by its specific law.

However, what should be understood by trade secret? What requirements must the information or knowledge meet in order to be protected as a secret?

Respecting the concept of the TRIPS, the LSE refers to any information or knowledge, from any business field (technological, scientific, industrial, commercial, organizational or financial), that meets three cumulative conditions:

a) The information must be secret

In other words, if the information or knowledge is generally known or easily accessible, it will not be of a secret nature and therefore cannot be protected under these regulations.

As an obvious example, the secret character would not be predictable of some models of dresses that have already been introduced in the trade and therefore are already known. This is how the Provincial Court of Barcelona understood it in its Decision 443/2005, of 26 October, concluding that “it would then be a question of an imitation from something that already exists on the market, the imitated element being the already known service itself (the dress), which ceases to constitute a secret once it has been presented on the market”.

(b) The information must have commercial value because it is secret

This means that secrecy, precisely because it is secret, must bring real or potential business value.

As an example, the Provincial Court of Alicante, in its Judgment 297/2013 of 5 July, assessed the existence of commercial value with the following reasoning: “[t]here is therefore the view that keeping this information secret gives the plaintiff an advantage over her competitors by facilitating the rapid dissemination of her products to these health professionals and the greater possibility of making sales”.

(c) Reasonable steps must have been taken to keep the information secret

In other words, the owner of the information or knowledge who has not taken the necessary precautions to safeguard the secret does not deserve the protection provided for in the regulation of trade secrets.

Decision 506/2004 of 26 November of the Provincial Court of Barcelona is illustrative in stating that “the measures adopted must be analyzed and in each case must be appropriate and reasonable to prevent the disclosure of the information, both externally (preventing third parties from having access to this information) and internally (providing for access only by employees and collaborators who, because of their duties, must know or handle it and always subject to a duty of secrecy”.

Once this point has been reached, the holder of a business secret may protect his or her secret from the infringing conduct provided for in the LSE and exercise the legal actions contemplated therein. If necessary, the holder may even resort to criminal jurisdiction. It should not be overlooked that legal entities may also be criminally liable for the commission of secret violation offences.

Finally, the LSE includes important novelties in procedural matters, aimed at ensuring that the judicial process does not serve as a means of ensuring that the information to be protected is disclosed, thus discouraging the holders of secrets from going to court to avoid a greater evil. According to a survey conducted by the European Commission in 2012 of companies that had had business secrets stolen, when asked whether they had taken legal action in the European Union, 59.3% responded negatively.