Trade Secrets

The business owner often has under his control commercial value information, which he protects by means of secrecy. Examples of such information are chemical formulas, manufacturing and organisational processes, product information or financial information. It is intellectual property in the broad sense, which has specific legal protection and no expiry date, but ceases to be protected when the information is disclosed or becomes public (e.g. when the controlling businessman decides to apply for a patent). Other forms of intellectual and industrial property, such as patents, models, designs, trademarks or trade names, including literary and artistic works, require a prior stage in which the information is secret: the patentable invention, before the application for registration, is a secret; the design, before being registered, if applicable, is a secret; the trademark or trade name, before applying for registration, is a trade secret; etc.

Logically, however, not all information held by an undertaking is a trade secret that can enjoy the protection granted to it by law. For this, certain conditions must be met:

Firstly, it must be secret information. This does not mean that all elements or parts of that information must be secret, but that, as a whole or configuration, the information is secret. Its component parts (how they are assembled) are not generally known to, or readily accessible to, persons within the circles in which the type of information or knowledge in question is normally used. However, secret information (the know-how of the entrepreneur) must be carefully distinguished from the general information of a given business sector, which consists of the knowledge (skills) of employees and collaborators that can be acquired in any company of the sector.

The second condition or requirement is that the information must have a business value, either actual or potential, precisely because it is secret. The latter is a characteristic feature of business secrecy, which implies the reasonable impossibility for third parties to have access to the information, which gives the person who exercises control over it a competitive advantage in the market, which would disappear if the information were disclosed.

The third condition is that the information must have been subject to reasonable measures by the owner to keep it secret. Particularly important are the access controls to the computer system where the secret information is stored, preventing unauthorised persons from gaining access to it. Logically, these measures will be a means of protection for access to the digital information, but they are not sufficient. The same applies to the people who prevent any unauthorised person from entering the facilities where production processes take place. In addition, it is necessary that employees have agreed to appropriate clauses in their contracts of employment, as well as freelancers who, by virtue of the services they have undertaken to perform, must or may have access to secret information. It is therefore necessary that persons who have access In the case of employees, the contract of employment includes this obligation in the contract itself.  In the case of external collaborators who must or may have access to confidential information, it will be necessary to sign the corresponding NDA (non-disclosure undertaking) duly drafted and the consequences of its infringement foreseen.

The protection of trade secrets is implemented in the Criminal Code, the Unfair Competition Law and Law 1/2019 of 20 February 2019 on trade secrets. The Criminal Code criminalises the dissemination, disclosure or transfer of a trade secret by a person under a legal or contractual obligation of confidentiality (Article 278), together with other criminal conduct provided for in the following two articles. The Unfair Competition Law, which in Article 13 considers the violation of business secrets to be unfair. And lastly, the Law on Trade Secrets provides the holder of the information with various actions against the infringer so that the judge may, by means of a judgment: a) declare the existence of the violation; b) order the infringer to cease or, where appropriate, prohibit the acts of violation of the trade secret; c) prohibit the infringer from manufacturing, offering, marketing or using infringing goods or from importing, exporting or storing them for such purposes; d) order the seizure of the infringing goods, including the recovery of those on the market, and of the means intended solely for their production with the nuances provided for by law; e) order the removal, including the delivery to the plaintiff of all or part of the documents, objects, materials, substances, electronic files and any other media containing the trade secret, and, where appropriate, their total or partial destruction; f) order the attribution of ownership of the infringing goods to the plaintiff; g) order the infringer to pay damages; h) order the publication or dissemination of all or part of the judgment.

For more information, see Know How page.