A year on from the publication of the Spanish Trade Secrets Act (Act No. 1/2019), we can say that it is having a significant impact on Spanish business.
Some companies had already sought to manage this intellectual asset, but with the Act’s entry into force, there has been a considerable increase in its use by companies of all sizes from a range of different sectors, since it gives value to certain information which was not previously protected and not regarded as an asset to be taken into consideration.
There are also many companies that are seeking to transition from operating as service providers to selling technological goods, which entails establishing an IP strategy and implementing a robust model for protection of these assets. Under such a strategy and protection model, trade secrets are audited and valued, and they play an increasingly important role, particularly in the data economy we are moving towards.
The application of the Act must be considered from two standpoints. On the one hand, the Act affords a right of protection for a company’s secrets against infringing access, use and disclosure, and it places trade secrets on the same level as other intellectual property rights, making them an object of property with a similar system to patents, providing for assignment or licensing, for example. On the other hand, the Act requires companies to exercise greater diligence when transmitting, receiving or storing trade secrets or confidential information of third parties, in order to avoid potential legal claims.
In this last regard, it is important to keep in mind that, from the criminal law standpoint, trade secrets are protected under articles 278 (corporate espionage) and 279 (trade secret violations) of the Spanish Criminal Code. Article 278 of the Criminal Code applies to any person who uses data, written or electronic documents, computer media or other objects in order to discover a trade secret, and Article 279 applies to persons who, while subject to a legal or contractual obligation to observe confidentiality, carry out the unauthorised dissemination, disclosure or communication of trade secrets.
The aforementioned articles of the Criminal Code are blank criminal law provisions, in which concepts are not defined, and it is likely that the criteria of civil law regulations (Act No. 1/19) will be applicable to criminal proceedings. Moreover, companies or institutions that suffer violations of their trade secrets are likely to resort to criminal proceedings. Therefore, companies, organisations and institutions must include compliance with obligations concerning third-party trade secrets in their compliance policies.
In any case, there is expected to be an increase in litigation concerning secrets as companies become aware of the importance of this intangible asset and implement the necessary measures for their protection and to ensure that the relevant requirements are met.
In preparation for the above, in December 2019 the Competition Law Division of the Barcelona Mercantile Court published a “Protocol for Protection of Trade Secrets in the Mercantile Courts”.
The Protocol was established to address the need to define in detail the procedural security mechanisms for secret or confidential information referred to in Article 15 of Act No. 1/2019 (“Handling of information that may constitute a trade secret”).
The scope of application of this Protocol is broad, given that it is not only intended to cover proceedings involving possible violations of trade secrets, but it also applies to proceedings in which certain information is declared to be a trade secret or confidential information. For example, it can serve as a useful guide for the handling of confidential information in public procurement procedures, in which situations increasingly arise where certain information of a party participating in the tender must be kept confidential from other participants that are competitors of the former.
The Protocol establishes that it is possible to apply specific measures for protection of trade secrets at the different stages of the proceedings: from the beginning of proceedings (for example, by petitioning the measures in the complaint itself or by means of an application for interim relief measures) or, once the proceedings are under way (for example, in the response to the complaint or when submitting evidence). Measures of protection of confidential secret information may be adopted ex officio or at the request of a party to the proceedings, always leaving open the possibility of a challenge or hearing in this regard.
The Protocol sets out what an ex parte request for measures to maintain secrets or confidentiality must contain, including that it must show that the requested measures are specific and comply with the principles of necessity, appropriateness, proportionality, due consideration of the interests of third parties and applying the least onerous measure, and it must indicate the persons making up the “circle of confidentiality”.
Furthermore, the Protocol analyses the different measures that can be applied for the preservation of and access to physical and digital documentation, access to hearings and recordings of hearings and access to confidential and non-confidential versions of court documents.
The court’s decision regarding the measures to be applied to secret or confidential information must be specific with respect to the applicable measures (and to serve the desired purpose, said measures must be appropriate and proportionate), stating the grounds with regard to the confidential nature of the information and with specific reference to the confidential or secret information.
In short, a year on from the enactment of the Act, we can see that trade secrets are becoming an increasingly important intangible asset and that their importance will continue to grow. There is likely to be an increase in litigation in this area, with increasingly sophisticated cases. Perhaps we will not reach the levels in the United States, but there will undoubtedly be a larger number of litigation cases, for which it would be wise to prepare.
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