BACKGROUND TO THE DISPUTE

Three directors and senior managers of the insurance company WILLIS IBERIA CORREDURÍA DE SEGUROS Y REASEGUROS S.A., dissatisfied with an international integration project, which finally and subsequently could not be carried out due to the impediment of the American competition authority, decided to set up a new insurance brokerage, DEASTERRA PARTNERS S.L. Finally, after leaving their respective posts, they created the company, which attracted numerous employees and clients of the company where they had previously worked.

WILLIS IBERIA CORREDURÍA DE SEGUROS Y REASEGUROS S.A. filed a lawsuit against DEASTERRA PARTNERS S.L. for various acts of unfair competition, including violation of trade secrets. On June 2022, the lawsuit was dismissed by Madrid Commercial Court No. 2, on the grounds that none of the alleged infringements were found to exist, in addition to finding that the defendant lacked standing to sue and considering the post-contractual non-competition agreement to be null.

WILLIS IBERIA CORREDURÍA DE SEGUROS Y REASEGUROS S.A. decided to appeal the previous decision.

DECISION

In this case, the appeal was upheld in part.

The unfair acts complained of were, in summary, acts contrary to good faith, inducement of employees to breach of contract, violation of trade secrets in the information on customers and employees and violation of rules in relation to the duty of loyalty and the obligation to avoid conflicts of interest.

In relation to the acts contrary to good faith, the Court considered it to be proven that the defendant systematically took advantage of the plaintiff’s workers and clients, altering the competitive structure and the normal functioning of the market, and therefore, despite apparently respecting the non-competition agreements by joining the company after the end of the agreed term, the infringement of the general clause of art. 4 of the Unfair Competition Law was deemed to have been committed. In addition, it considered an infringement of art. 14.1 of the same law, for inducing workers to infringe the basic contractual duties they had undertaken with the plaintiff company.

As regards the violation of trade secrets, the Court states that information relating to customers’ policies, their renewal, premiums and loss ratio, has for the company the status of a trade secret, in so far as such information is not generally known to persons belonging to the circles in which it is normally used, nor is it easily accessible to third parties. Moreover, it is considered to have commercial value, as it puts third parties in a better position to contract. However, the mere existence of a document setting out the company’s privacy policy is not in itself a reasonable measure of secrecy protection. In fact, it was sufficient for the information to be extracted from the company’s computer via a Gmail account. Therefore, it cannot be considered a breach of trade secrets within the meaning of art. 13 UCL, since the third of the cumulative requirements for its assessment, referring to the imposition of reasonable measures by the owner to maintain the secrecy, is not met.

Finally, the Court also found the infringement of the rules of art. 15.1 UCL, as the co-defendants, who at the time were directors of the plaintiff company, had infringed the rules of art. 227. 1 of the Capital Companies Law, not acting in good faith and in the best interests of the company they represented, by devising, in the exercise of their positions, the creation of a company to engage in the same business, with the intention of setting it up at the expense of the plaintiff’s efforts, thereby gaining a significant competitive advantage.

The Court upholds the appeal in part, partially reversing the contested decision.

 [Judgement of the Provincial Court of Madrid 38/2023, 22/09/2023]