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The Business Secrets Act: at last an effective and safe remedy...

| News | Litigation

José Martínez Enguídanos explains in Valencia Plaza the need for this law in such a complicated and sensitive matter and warns that judges and courts must act with caution, but with forcefulness to prevent that this falls on deaf ears

On 20 February, not without some delay, Law 1/2019 on Business Secrets was passed, transposing into our legal system Directive (EU) 2016/943 of the European Parliament and of the Council of 8 June 2016, which sought to harmonise the regulations of the Member States.

But it was also a question, especially, of establishing safe and effective procedural mechanisms, avoiding that under the appearance of the legitimate exercise of legal actions, these procedures would spuriously serve a purpose of obtaining other people's secrets that their owners keep secret.

Focusing on what our recent law defines as a trade secret, it will be "any information or knowledge, including technological, scientific, industrial, commercial, organizational or financial": (i) is secret, in terms of its general ignorance by persons operating in the field in which such knowledge is used, and its access is not easy; (ii) has real or potential business value due to its secret nature; and (iii) has been the subject of reasonable measures by the owner of the secret.

We will have to focus our attention on the fulfilment of these three conditions both for legal operators and for entrepreneurs who want protection.

For this reason, the measures that the entrepreneur would have previously implemented for the consideration -and maintenance- of a trade secret as such, will be decisive when trying to prevent the illegitimate appropriation by third parties of this knowledge, and to obtain, in the event of its occurrence, the protection of the law.

Therefore, the diligent entrepreneur must adopt measures to maintain what he intends to keep secret, or in the absence thereof, implement those that are within his reach and reasonably required, under proportionality criteria, depending on the importance of the secret.

It is important to point out that this law not only covers technical or scientific knowledge, but also includes "business data relating to customers and suppliers, business plans and market studies or strategies", resolving with the stroke of a pen long doctrinal and jurisprudential struggles.

The law establishes that the obtaining, use or disclosure of industrial secrets may not be pursued if there is a collision with freedom of expression and information, when the secret contains illegal activities related to it, if it prevents the exercise of the rights and protection of workers, or for the management by the Administration of their legitimate interests.

It is determined, by means of lists, cases in which the obtaining, use or disclosure of secrets will be considered as lawful or unlawful, as numerus apertus, although in those cases expressly indicated as unlawful, a presumption as to their unlawfulness will have to be understood.

The industrial secret is regulated as an object of property rights, dealing with aspects such as co-ownership, licenses or transmission in fraud.

But, as we warned, it is the regulation of the judicial actions of defense of the secrets and the procedural norms to the effect where the law acquires special relevance.

This is observed both in the power to sue the infringer and the third party in good faith, as well as in the wide range of actions foreseen, among others, from the classic declaration of violation to the publication of the sentence, the removal of sensitive material and the compensation of damages.

As for the latter, in addition to the loss of profit, the unjust enrichment of the infringer, and the moral damage, the cost of the investigation incurred by the plaintiff to obtain proof of the violation is considered compensable, and a lump sum may alternatively be set as compensation that must be equivalent to the cost of the license that the infringer should have paid to use the secret; a provision that may also be applied to the defendant in good faith.

A coercive compensation in favour of the plaintiff is foreseen, per day elapsed, until the fulfillment of the sentence.

The exercise of such actions corresponds to the owner of the secret or who has a right of license, within three years from the injured party knew the identity of the person who violated his right, before the commercial courts of the place where the defendant's domicile is, or at the choice of the plaintiff, where the infringement takes place or where its effects occur.

In order to prevent the process itself from becoming a tool for the disclosure of secrets, its confidentiality may be declared, imposing a duty of secrecy not only on the parties to the process, but also on lawyers, solicitors, court staff, witnesses, experts, etc., by adopting specific measures to that effect, including limiting the persons who may have access to sensitive information, court hearings or their recordings, or producing "non-confidential" versions of court decisions, always respecting the right to effective judicial protection.

Sanctions may also be imposed on the plaintiff who promotes actions in bad faith, and the publication of the judicial decision in which such a fraudulent nature is found may also be authorised.

Finally, it regulates the use of procedural tools such as fact-finding procedures, access to and securing of sources of evidence, as well as the interposition of precautionary measures.

Finally, we must not forget that the law is a specialized development of the Law of Unfair Competition, which can be used to integrate its shortcomings within the civil sphere, without forgetting that the most serious infractions regarding the disclosure of business secrets can be prosecuted by articles 278 and 279 of the Criminal Code.

We find ourselves before a necessary law in a complicated and sensitive matter, where the interests at stake are joined to the necessary preservation of the rights and procedural guarantees of the parties, with judges and courts having to act with caution but with forcefulness to avoid that this law falls on deaf ears, especially when the businessperson has previously adopted reasonable measures to protect their business secret.

You can read the article in ValenciaPlaza

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