The reasons for which a company may have an interest in keeping its business secrets confidential are numerous.
Law 1/2019, of 20th February, on Business Secrets, which transposes EU Directive 2016/943 of the European Parliament and of the Council, of 8th June 2016 into Spanish law, relative to the protection of undisclosed technical know-how and business information (business secrets) against the obtaining, use and illegal disclosure thereof (hereinafter “BSA” -Business Secrets Act) defines in article 1 a “business secret” as any information or knowledge including technological, industrial, commercial, organisational or financial information, which meet the following conditions:
a) it is a secret, i.e. not generally known in the circles where this type of information is used, nor is it easily accessible.
b) it has commercial value due to its secrecy, whether real or potential.
c) the holder of the business secret must have implemented reasonable measures to keep it secret.
Therefore, a “business secret” is made up of know-how, R+D, inventions (whether patented or not), formulas, materials, discoveries, processes, business plans, marketing channels, marketing techniques, client lists, price policies, etc.
Likewise, article 3 of the BSA determines the acts which constitute an infringement of business secrets, as well as the civil actions which may be executed against such infringements (article 8 and thereafter).
Without prejudice to the legal stipulation, due to its relevance, it is appropriate to explicitly state the confidentiality of all information which is especially sensitive to the company, through the incorporation of specific contractual clauses, both in contracts with other companies (suppliers, business partners, etc.) as well as with employees, with the purpose of clearly defining the limits of the use of business secrets as authorised under the business or labour relationship in question.
The object of the agreement or confidentiality clause is to define the information considered to be confidential, as well as defining the limits of the temporary scope of the prohibition on disclosure to third parties, for the sake of maintaining the secret both during the business or employment relationship as well as once it has finalised (during two years, five years or indefinitely, etc.).
Furthermore, it is recommendable to stipulate in the contract the financial consequences that may derive from the breach of the duty of confidentiality, preferably, by way of a penalty clause; expressly agreeing that the penalty shall not substitute compensation for damages in order to avoid, in accordance with article 1152 of the Spanish Civil Code, the penalty substituting compensation for damages.
This will greatly facilitate the proof of the breach of the duty of confidentiality in court, also avoiding the burden of proving and quantifying the damage actually caused by the application of the penalty clause.
Carla Villavicencio
Vilá Abogados
For more information, please contact:
29th November 2019
