Intellectual property protection for trade secrets and know-how

• be secret, in the sense that it is not – in its entirety or in the precise configuration and combination of the elements thereof – generally known or easily accessible to those skilled in the art;
• be subjected to measures to be deemed reasonably suitable to keep them secret;
• have an economic value in that it is secret.

The disclosure or unlawful use of secret or confidential information represents an act breaching the principles of professional correctness in compliance with article 2598, n° 3, of the Italian Civil Code.

The Commission Regulation (EC) No 772/2004 explores technology transfer agreements and defines know-how term as a package of non-patented practical information, resulting from experience and testing, and states several conditions for the information to be considered as a know-how:

• is secret (that is to say, not generally know or easily accessible)
• substantial (that is to say, significant and useful for the production of the contract products)
• identified (that is to say, described in a sufficiently comprehensive manner so as to make it possible to verify that it fulfils the criteria of secrecy and substantiality).

Trade Secret Laws, however, do not grant the holder the exclusive right to exploit the secret information like the patent protection does, thus third parties can develop the information independently and exploit it for their advantage.

Trade Secrets and Know-How definition and protection

A trade secret is undisclosed company information that is only known internally by a limited number of authorised personnel which imparts value to its proprietors. Such information as commercial and financial information, technical and scientific information, manufacturing procedures, methods and specification and many more might receive a protection as a trade secret or know-how. Also, such commercial information as customer lists and preferences, pricing information, marketing and business plans, suppliers lists can form a trade secret and be protected.

Importantly, the secret can be applied not only to company’s best practices, but also to less fortunate experiences, like failed manufacturing tests or negative research outcomes and other information potentially useful for a competitor, capable to save him time and money.

Trade secret and know-how cannot be protected by a patent but at the same time they are not supposed to bear “novelty”. Moreover, contrary to a time limited protection guaranteed by a patent in change of a public disclosure of the patent, the trade secret remains undisclosed and, thus, secret, as far as a company is able to successfully maintain confidentiality. Thus, in cases where it is possible to keep the information secret (like a particular manufacturing method or a formula), trade secret protection might be preferred to a limited patent protection.

Often, the unlawful disclosure of confidential business information is performed by outgoing employees of a company who copy CD-Roms, CAD files, projects etc. so as to be able to use them upon being employed by a competitor.

Security Precautions

A trade secret can be protected if the necessary reasonable security precautions were undertaken by the know-how owner in order to avoid its disclosure. It depends, then, on the type of the information and protection method applied for the Court to determine the term “reasonable” precaution.

Based on past cases, one might consider a number of adequate precautions like restricting access to the information physically and electronically to only those individuals having a need to know the information, the documents and the related materials should bear a note that the information is deemed confidential / secret and is protected by law, use non-disclosure or confidentiality agreements with employees etc.

A use of a non-competition agreement to be signed by employees and suppliers might also minimise the chance of secret information disclosure.

How to enforce the know-how protection

The injunctions available in trade secrets are commonly used and might be listed as follows: temporary restraining order, preliminary injunction, final injunction. As soon as in court trials the know-how owner is supposed to disclose confidential information partially or totally, the Court can provide a Protective Order for the return or the destruction of the trade secret upon conclusion of the lawsuit.

Licensing of Know How and Trade Secrets

An exclusive, sole, or non-exclusive license may be granted by a know-how owner and may bear some restrictions like a certain geographic area or market or time limit. The royalty should be corresponded in return for the confidential information and the licensee is obliged to maintain the secret for the information to him conferred by the owner.