The Law on Business Secrets

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On February 8, 2018, the Ministry of Justice of Spain published the Draft Law on Business Secrets, a law included in the 2018 Annual Regulatory Plan. This law will transpose EU Directive 2016/943 of the European Parliament and of the Council of 8 June 2016 on the protection of undisclosed know-how and business information.

According to the explanatory memorandum of the draft law, the competitiveness of companies is based on the application and implementation of innovations and the safekeeping of business secrets. Good protection of the latter helps to increase the value of business innovations and reduces the risk of misappropriation. In this context, confidentiality, as a tool for managing business competitiveness and the correct protection of business secrets against illicit procurement, use or disclosure emerge as the spearhead of a country’s competitiveness.

According to Article 1 of the draft law, the purpose of the law is the protection of business secrets, which is broadly defined as “any information relating to any part of the company, including technological, industrial, commercial, organisational or financial information”. This information must comply with the following:

  1. Be secret, i.e. not generally known in the circles where the information is used, nor easily accessible.
  1. To have commercial value due to its secrecy.
  1. The holder of the business secret must have implemented reasonable measures to keep it secret.

Article 2 of the draft law limits the above, indicating the methods of obtaining information that will be considered lawful, indicating:

  1. Independent discovery or creation;
  1. The observation, study, dismantling or testing of a product/object made available to the public or whose possession is lawful;
  1. Obtaining the business secret in the exercise of the right to information from workers and their representatives;
  1. Obtaining the business secret through fair commercial practices.

It also prescribes that civil actions for violation of business secrets are not applicable if the business secret was obtained:

  1. In exercise of the right to freedom of expression and information, including respect for the freedom and pluralism of the media;
  1. With the purpose of discovering any fault, irregularity or illegal activity and in defence of the general interest;
  1. In order to protect a legitimate interest recognised by law.

On the other hand, Article 3 lists the activities which will be considered illegal:

  1. The unauthorised obtaining of documents, objects, materials or substances, on any medium containing any business secret and any other action that, depending on the circumstances, is considered contrary to commercial practices. This point also includes obtaining the above through someone who should have known that he or she was obtaining a business secret directly or indirectly from someone who was using it unlawfully;
  1. The use or disclosure of a business secret obtained unlawfully or in breach of any confidentiality obligation;
  1. The production, supply or marketing of infringing goods or their import, export or storage for such purposes.

Article 5 indicates the civil actions that may be taken in the event of a breach of business secrecy, which can be summarised as follows: the declaration of the violation of business secrecy, the cessation, the seizure of the goods, the removal of the information unlawfully obtained, the attribution of ownership of the infringing goods (to be charged against the amount of compensation for damages, if any), the compensation for damages (in case that fraud or negligence has occurred) and the publication or dissemination of the judgment in full or in part.

Article 7 indicates that the statute of limitations for the above actions expires 3 years after the time when they were committed, and article 9 indicates who has active legitimation to bring an action:

  1. The holder of the business secret.
  1. Those who can prove that they have obtained an exclusive or non-exclusive licence for its exploitation, which expressly authorises them to do so.

Finally, articles 16 to 20 indicate the possible precautionary measures that can be requested, which are based on the actions of article 5 and for which sufficient security must be provided to respond for damages.

Pedro Blanco

For more information, please contact

va@vila.es

20th of April 2018

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