- Spain unifies for the first time the protection of trade secrets, until now spread across several laws.
- To be protected, information must be secret, valuable because it is secret, and subject to reasonable measures by its holder.
- It is worth documenting those measures: contracts, access controls, internal policies and staff departures.
The BOE of 21 February 2019 publishes Law 1/2019 of 20 February on Trade Secrets, which will enter into force twenty days later, on 13 March. The law transposes into Spanish law Directive (EU) 2016/943 on the protection of trade secrets against their unlawful acquisition, use and disclosure, and arrives late compared with the deadline set by Brussels.
Until now, protection of a company’s confidential information was spread across the Unfair Competition Act, the Criminal Code, the Patents Act and each company’s contracts. The new law brings together in one text the concept of trade secret, the unlawful conduct and the civil actions available to defend it, and adds procedural rules so that confidential information is not disclosed during a trial.
What counts as a secret
The law protects any information or knowledge, whether technological, scientific, industrial, commercial, organisational or financial, that meets three conditions: it is secret, in the sense of not being known or easily accessible to those who deal with that field; it has commercial value, real or potential, precisely because it is secret; and its holder has taken reasonable steps to keep it secret.
That third condition is the one that can most decide a lawsuit. It is not enough for something to be valuable: the company must be able to show it did what was reasonable to protect it. A customer list, a formula, a cost price or a working method can be a trade secret, but whoever never treated them as confidential will hardly be able to claim when a third party uses them.
What can be claimed
Against the unlawful acquisition, use or disclosure of a secret, the holder can bring civil actions to stop the conduct, to prohibit the manufacture or marketing of products that benefit from the secret, to have the affected materials withdrawn or destroyed and to obtain compensation for the damage suffered.
There are limits worth knowing. Independent discovery or creation and the reverse engineering of a lawfully acquired product are not, in principle, unlawful conduct, nor is the use of the experience and skills an employee honestly acquires during their career. This calls for precision when drafting agreements with employees and suppliers.
What to review
The first step is to identify which information is truly critical and who has access to it. Then check that there are confidentiality clauses in employment, collaboration and service contracts, and that IT and physical access is limited to those who need it. When someone leaves, it is wise to remind them of their obligations in writing and withdraw their access.
In sale, financing or new-partner transactions, information is usually exchanged under confidentiality agreements, and good practice is to give only what is needed at each stage. A legal adviser can help organise this inventory proportionately, and review the contracts before the law becomes applicable. In addition, when negotiating deals with third parties, it is wise to limit access in stages and record what information is handed over and to whom, because that trail will be the best proof of the reasonable measures the law requires if the secret ever has to be defended. Finally, staff training is a cheap and effective measure: a team that knows which information is confidential, how it is shared and what to do when in doubt notably reduces accidental leaks, which are the most frequent source of problems.
In practice, a trade secret is worth only as much as the company’s ability to show it was treated as one.
This article is general information. It is not legal, tax or investment advice, and it does not take anyone’s particular circumstances into account.
