The new Trade Secret Act 1/2019 has been published today. This new legislation opens a new protection opportunity for companies which most of their valuable information will now enjoy legal recognition equivalent to that of other intellectual property rights. As a result, we shall now analyse some of the most relevant developments included in this regulation.

First of all, this Act sets out a definition of trade secrets in a very broad manner, allowing for this concept to cover all types of information. The subject matter of protection includes any information or know-how that fulfils three requirements:

(i) it is secret;

(ii) it has business value; and

(iii) reasonable measures have been taken to maintain its secrecy.

Thus, practically any kind of know-how generated by a company may be considered a trade secret.

Secondly, the act specifies the types of activities considered to be lawful or unlawful, taking into account the activities trade secret management entails: acquisition, use and disclosure. In this way, said actions may be lawful or unlawful depending on the circumstances described in the Act.

On the one hand, acquisition, and therefore use and disclosure, shall be deemed lawful when resulting from

(i) independent discovery;

(ii) reverse engineering;

(iii) the exercise of workers’ rights; and

(iv) any other action conforming to fair commercial practices.

On the other hand, these same actions (acquisition, use and disclosure of trade secrets) may also be considered unlawful.

This would arise in the event that the trade secret was acquired without the authorisation of the owner, that is, in the case of unlawful acquisition. This manner of acquiring information will affect other conducts since, if its acquisition was unlawful, so will its use and disclosure be.

Furthermore, if the know-how is obtained in a lawful manner, but it is used or disclosed in breach of any contractual or similar obligation, these acts will be considered infringements of trade secrets.

One important development in this new Act is liability for infringement, given that it establishes  objective liability for third parties who have not committed the aforementioned unlawful activities. Thus, the party liable for an infringement will be a party which acquires, uses or discloses the trade secret while being aware, or which should reasonably have been aware, that it was acquired from a party that uses or discloses it unlawfully. This objective liability also extends to those producing, offering or marketing goods that incorporate trade secrets used unlawfully.

The Act goes even further, also establishing a liability regime which could be qualified as being “ultra-objective”, according to which even a bona fide third party is considered liable, although liability is diminished when compared with the cases described above.

Therefore, the Act calls for the utmost diligence from companies when receiving or passing on trade secrets, ensuring that no information acquired unlawfully is handled so as to avoid incurring any penalty.

 

The second part of this article is available here

 

Authors: Javier Fernández-Lasquetty , Cristina Espín and Martín Bello

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