Protection of the trade secret of companies – how to prevent unauthorised disclosure by employees and / or management / supervisory bodies

Protection of trade secrets law (which implements a Directive (ЕU) 2016/943 of the European parliament and of the Council of 8 June 2016 on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure) allows stricter pre-negotiation of engagements with key employees, as well as more effective and timely justice for unauthorised disclosure of trade secrets.

The law highlights the following:

  1. The general concept of “trade secret” is legally defined as any commercial information, know-how or technical information that is at the same time: (i) secret (not commonly known / easily accessible); and (ii) it has a commercial value because it is a secret; and (iii) the person who has control over the information has taken steps to keep her secret.
    For example, a trade secret can be a production know-how, a list of clients, and more.
  2. Infringer of a trade secret is any person (natural or legal) who has unlawfully acquired, used or disclosed trade secret. Therefore, it is enough if only the person has unlawfully acquired the trade secret without using it or disclosing it to anyone yet.
  3. The trade secret holder has the right to bring an action before the court for the establishment of the infringement and for the award of compensation for the suffered damage; discontinue the use of trade secrets; a ban on production, placing on the market, etc. of the goods (that are subject of the infringement); destruction of objects, materials, electronic documents that contain trade secrets.
    Prior to the submission of the claim or during the court proceedings, the trade secret holder may also request the court to take precautionary measures – e.g. seizure and delivery up of the suspected infringing goods; prohibiting the provision of services that are significantly influenced by trade secrets that have been unlawfully acquired, used or disclosed, etc.
  4. Employees and workers are not liable for any damages resulting from the unauthorised acquisition, use or disclosure of trade secrets to their employer when they have not acted intentionally. On the contrary, when they have acted intentionally or in the event of a crime, the liability is complete and is sought by the so-called general civil action order. The provision does not concern managers / members of management / supervisory bodies of companies that are generally and, in most cases, not employees within the meaning of the Labor Code and are therefore liable for damages, regardless of the form of guilt.

What is the takeaway for the business?

Each company shall judge what information can and is considered to be trade secret, designate it as such and implement appropriate measures in its internal rules as well as contracts with employees/management/supervisory bodies. Contractual engagements can also cover key partners and strategic clients of the company. Structuring such protection should be preceded by a detailed IP audit. Contract clauses and trade secret definitions are of great importance for the validity of the arrangements.

Published on Jan 20, 2021

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About the author

Ivana Bliznakova

I am working in the fields of regulatory finance, licensing procedures, private placements, public listings/de-listings, corporate finance, due diligence, energy and M&A transactions. Among my strongest sectors of expertise are compliance advice on regulatory issues (MiFID, PSD, AML inclusive), project finance, and commercial agreements.

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