Law 1/2019, of 20 February, on Trade Secrets

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Document BOE-A-2019-2364

Law 1/2019, of 20 February, on Trade Secrets. View consolidated text

Published in:

« BOE » No. 45, of 21 February 2019, pages 16713 to 16727 (15 pages)

Section:

I. General Provisions

Department:

Head of State

Reference:

BOE-A-2019-2364

Permalink ELI:

https://www.boe.es/eli/es/l/2019/02/20/1

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Text

ORIGINAL TEXT

FELIPE VI

KING OF SPAIN

To all who see and understand this.

Know ye: That the General Courts have approved and I hereby sanction the following law:

PREAMBLE

I

Innovation is a significant stimulus for the development of new knowledge and fosters the emergence of business models based on the use of knowledge acquired collectively. Organizations value their trade secrets as much as industrial and intellectual property rights and use confidentiality as a tool for managing business competitiveness, public-private knowledge transfer, and innovation in research, with the aim of protecting information that covers not only technical or scientific knowledge, but also business data relating to customers and suppliers, business plans, and market studies or strategies.

However, innovative entities are increasingly exposed to unfair practices aimed at the misappropriation of trade secrets, such as theft, unauthorized copying, economic espionage, or failure to meet confidentiality requirements. Globalization, increasing outsourcing, longer supply chains, and greater use of information and communication technologies contribute to increasing the risk of such practices.

The unlawful obtaining, use, or disclosure of a trade secret compromises the ability of its legitimate owner to exploit the advantages corresponding to them as a pioneer due to their innovative efforts. The lack of effective and comparable legal instruments for the protection of trade secrets undermines incentives to engage in activities associated with innovation and prevents trade secrets from releasing their potential as stimuli for economic growth and employment. Consequently, innovation and creativity are discouraged, investment decreases, with the corresponding repercussions on the proper functioning of the market and the consequent reduction of its potential as a growth factor.

It is necessary to guarantee that competitiveness, which is based on know-how and undisclosed business information, is adequately protected, and to improve the conditions and framework for the development and exploitation of innovation and knowledge transfer in the market.

Reinforced legal certainty would contribute to increasing the value of innovations that organizations seek to protect as trade secrets, as the risk of misappropriation would be reduced. This would have positive effects on market functioning, as companies, especially small and medium-sized enterprises, public research centers, and researchers could make better use of their innovative ideas, cooperating, which would contribute to increasing private sector investment in research and innovation.

II

The efforts undertaken at the international level within the framework of the World Trade Organization to remedy this problem were reflected in the Agreement on Trade-Related Aspects of Intellectual Property Rights (Annex 1C of the Agreement Establishing the World Trade Organization, Uruguay Round of 1994, commonly known as "TRIPS"). This agreement contains, among others, provisions relating to the protection of trade secrets against their unlawful obtaining, use, or disclosure by third parties, which constitute common international standards. All Member States of the European Union, as well as the Union itself, are bound by this agreement, which was approved by Council Decision 94/800/EC of 22 December 1994 concerning the conclusion on behalf of the European Community, as regards matters within its competence, of the agreements resulting from the multilateral negotiations of the Uruguay Round (1986-1994).

In this context, within the European Union, existing national divergences in the matter of trade secret protection have led to the adoption of Directive (EU) 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, in order to harmonize the legislation of Member States with the objective of establishing a sufficient and comparable level of redress throughout the internal market in the event of misappropriation of trade secrets.

The objective of the European initiative is, on the one hand, to guarantee that the competitiveness of European companies and research organizations based on know-how and undisclosed business information (trade secrets) is adequately protected, and, on the other, to improve the conditions and framework for the development and exploitation of innovation and knowledge transfer in the internal market.

The directive contains rules on protection against the unlawful obtaining, use, and disclosure of trade secrets that cannot be invoked to restrict freedom of establishment, the free movement of workers, or their mobility, and which do not affect the possibility for entrepreneurs and workers to conclude agreements limiting competition between them.

The object of this law is defined as that information which is secret in the sense of not being, as a body or in the precise configuration and assembly of its components, generally known among persons belonging to the circles in which the type of information in question is normally used, nor readily accessible to them; has commercial value because it is secret; and has been subject to reasonable measures, in the circumstances, to keep it secret, taken by the person lawfully in control of it. Consequently, this definition of trade secret does not cover information of little importance, nor the experience and skills acquired by workers during the normal course of their professional career, nor information that is generally known or readily accessible in the circles in which the type of information in question is normally used.

The circumstances in which legal protection is justified are also established, as well as the behaviors and practices that constitute unlawful obtaining, use, or disclosure thereof.

The avenues for civil action against the unlawful obtaining, use, or disclosure of trade secrets must not compromise or undermine fundamental rights and freedoms or the public interest and must be applied in a proportionate manner, avoiding the creation of obstacles to legitimate trade in the internal market and providing safeguard measures against abuses.

In this new legal framework, this law, which, in accordance with Article 25 of Law 50/1997, of 27 November, on the Government, is included in the 2018 Annual Regulatory Plan, addresses the mandate to transpose the aforementioned directive and, in order to incorporate it into our legal system, seeks to improve the effectiveness of legal protection of trade secrets against misappropriation throughout the internal market by completing the regulation of Law 3/1991, of 10 January, on Unfair Competition, and specifically its Article 13, from a substantive and, especially, procedural perspective.

The criteria followed in the transposition have been based on the principles of good regulation, comprising the principle of necessity and efficacy in fulfilling the transposition obligation faithfully to the text of the directive and with the minimum reform of current legislation, so as to avoid dispersion in favor of simplification; as well as the principles of proportionality, by containing the regulation essential to address the need to be covered, and legal certainty, as it is done with the aim of maintaining a stable, predictable, integrated, and clear regulatory framework.

III

The law is structured in twenty-five articles distributed in five chapters, a transitional provision, and six final provisions.

Chapter I begins with the description of the object of the law, that is, the protection of trade secrets, establishing its definition in accordance with the dictates of Directive (EU) 2016/943 of the European Parliament and of the Council of 8 June 2016. This definition constitutes one of the most outstanding novelties of this law, which configures the notion covering any information that is secret, has business value, and has been subject to reasonable measures by its owner to keep it secret.

It has also been considered convenient in any case to preserve the terminology traditionally used in our legal system in cases where the new terms refer to concepts deeply rooted, studied, and treated in legislation, case law, and doctrine. In this sense, for example, it has been preferred to maintain the expressions "trade secrets" to designate the object of protection and "owner" to designate the person who legitimately possesses the trade secret and benefits from its legal protection. The provisions of this law attribute to the owner of the trade secret a subjective right of a patrimonial nature, susceptible to being the object of transmission, in particular, by assignment or transmission for definitive title and by license or authorization of exploitation with the objective, material, territorial, and temporal scope agreed upon in each case.

Chapter II defines, on the one hand, the circumstances in which the obtaining, use, and disclosure of trade secrets are considered lawful in consideration of interests worthy of greater protection and therefore, against which the protective measures provided for in this law will not apply; and, on the other hand, the conduct constituting violation of trade secrets. In this sense, the protection of trade secrets is also extended in a novel way to so-called "infringing goods," including acts of exploitation of these goods among those constituting violation of trade secrets.

Chapter III, without direct origin in the articles of the directive, complements and perfects its content by addressing, through dispositive rules, the patrimonial aspect of the trade secret. These are, in short, provisions that, in the absence of agreement between the parties, briefly order how the potential co-ownership of the trade secret and its transferability develop, particularly if carried out through contractual license.

On the other hand, Chapter IV records an open catalog of defense actions containing the designation and substantive configuration of the most important remedies recognized to the owner of the trade secret to face its violation, with special attention to the regulation of compensation for damages and losses, which extends both to its economic content and to the facilitation of its calculation and liquidation in line with what is already provided for in the matter of patent infringement and by extension of other industrial property rights. Finally, the material regulation of defense actions concludes with a rule on statute of limitations.

Finally, Chapter V regulates those procedural aspects that allow owners of trade secrets to offer effective tools for the judicial protection of their legal position, through a robust system of actions and a fully effective and simple process, respectful of guarantees of justice and equity but devoid of unnecessary formalities and conceived to be processed within a reasonable time, the effectiveness of which is ensured in any case through an adequate catalog of precautionary measures. The defense actions of trade secrets must be applied in a proportionate manner and avoiding both the creation of obstacles to free trade and their exercise in an abusive or bad faith manner. In this regard, the measures that judges and courts may adopt generally for breach of the rules of procedural good faith are aggravated, to prevent that, under the cover of the supposed defense of a trade secret, the actions provided for in this law are used for the purpose of exercising undue pressure on whoever has obtained some type of information whose disclosure might be covered by one of the exceptions contemplated by the directive and transposed here.

Otherwise, the most significant procedural novelties project onto three aspects. First, a series of rules are incorporated with the object of preserving the confidential treatment of information provided or generated in the process that may constitute a trade secret. Second, a regulatory framework is offered for the development of fact-checking diligences, access to evidence sources in the possession of the counterparty or third parties, and, if applicable, securing of evidence. Third, singular rules are incorporated in the matter of precautionary protection, as well as specialities regarding substitute bail, lifting of measures in case that during the pendency of the litigation a sudden disappearance of the trade secret occurs, and for the protection of the legal position of third parties who may be or have been adversely affected by precautionary measures.

In the final part, the modification of Article 13 of Law 3/1991, of 10 January, on Unfair Competition stands out, to, maintaining the attribution of the character of unfair competition to the violation of trade secrets, specify that this shall be governed by what is provided in this norm, which shall act as a special law against the provisions of that disposition, susceptible, as a general law and insofar as it does not oppose the special one, to be used for the integration of gaps. In this way, the fit of the new law within the framework of protection that our legal system provides against the violation of trade secrets is outlined, without prejudice to the consequences, for the most serious cases, resulting from the application of the criminal offenses contemplated in Articles 278 and 279 of the Penal Code.

CHAPTER I

General Provisions

Article 1. Object.

1. The object of this law is the protection of trade secrets.

For the purposes of this law, a trade secret is considered any information or knowledge, including technological, scientific, industrial, commercial, organizational, or financial, that meets the following conditions:

a) Be secret, in the sense that, as a body or in the precise configuration and assembly of its components, it is not generally known among persons belonging to the circles in which the type of information or knowledge in question is normally used, nor readily accessible to them;

b) have business value, whether actual or potential, precisely because it is secret, and

c) have been subject to reasonable measures by its owner to keep it secret.

2. Protection is granted to the owner of a trade secret, who is any natural or legal person who lawfully exercises control over it, and extends against any modality of obtaining, use, or disclosure of the information constituting it that is unlawful or has an unlawful origin in accordance with what is provided in this law.

3. The protection of trade secrets shall not affect the autonomy of social partners or their right to collective bargaining. It shall not restrict worker mobility; in particular, it shall not serve as a basis to justify limitations on the use by workers of experience and skills honestly acquired during the normal course of their professional career or of information that does not meet all the requirements of a trade secret, nor to impose restrictions in employment contracts not provided for by law.

Likewise, what is provided in this law shall be understood without prejudice to what is provided in Title IV of Law 24/2015, of 24 July, on Patents.

CHAPTER II

Obtaining, use, and disclosure of trade secrets

Article 2. Lawful obtaining, use, and disclosure of trade secrets.

1. The obtaining of the information constituting the trade secret is considered lawful when carried out by any of the following means:

a) Independent discovery or creation;

b) Observation, study, disassembly, or testing of a product or object that has been made available to the public or is lawfully in the possession of the person carrying out these actions, not being subject to any obligation that validly prevents them from obtaining the information constituting the trade secret in this way;

c) The exercise of the right of workers and worker representatives to be informed and consulted, in accordance with European or Spanish Law and prevailing practices;

d) Any other action that, according to the circumstances of the case, is in accordance with fair commercial practices, including the transfer or assignment and contractual license of the trade secret, in accordance with Chapter III.

2. The obtaining, use, or disclosure of a trade secret are considered lawful in the cases and terms in which European or Spanish Law requires or permits it.

3. In any case, the actions and measures provided for in this law shall not apply when directed against acts of obtaining, use, or disclosure of a trade secret that have taken place in any of the following circumstances:

a) In the exercise of the right to freedom of expression and information enshrined in the Charter of Fundamental Rights of the European Union, including respect for the freedom and pluralism of the media;

b) With the aim of discovering, in defense of the general interest, any fault, irregularity, or illegal activity that bears a direct relation to said trade secret;

c) When workers have brought it to the knowledge of their representatives, within the framework of the legitimate exercise by these of the functions legally attributed to them by European or Spanish Law, provided that such disclosure was necessary for that exercise;

d) With the aim of protecting a legitimate interest recognized by European or Spanish Law. In particular, the protection granted by this law shall not be invoked to hinder the application of regulations requiring owners of trade secrets to disclose or communicate information to administrative or judicial authorities in the exercise of their functions, nor to prevent the application of regulations providing for disclosure by European or Spanish public authorities, by virtue of obligations or prerogatives conferred upon them by European or Spanish Law, of information presented by companies in the possession of said authorities.

Article 3. Violation of trade secrets.

1. The obtaining of trade secrets without the consent of their owner is considered unlawful when carried out by:

a) Unauthorized access, appropriation, or copying of documents, objects, materials, substances, electronic files, or other media, which contain the trade secret or from which it can be deduced; and

b) Any other action that, in the circumstances of the case, is considered contrary to fair commercial practices.

2. The use or disclosure of a trade secret is considered unlawful when, without the consent of its owner, it is carried out by the person who obtained the trade secret unlawfully, who has breached a confidentiality agreement or any other obligation not to disclose the trade secret, or who has breached a contractual or any other obligation limiting the use of the trade secret.

3. The obtaining, use, or disclosure of a trade secret are also considered unlawful when the person carrying them out, at the time of doing so, knew or, in the circumstances of the case, should have known that they were obtaining the trade secret directly or indirectly from someone who was using or disclosing it unlawfully as provided in the previous paragraph.

4. The production, offer, or marketing of infringing goods or their import, export, or storage for such purposes constitute unlawful uses of a trade secret when the person carrying them out knew or, in the circumstances of the case, should have known that the trade secret incorporated therein had been used unlawfully in the sense of what is provided in paragraph 2.

For the purposes of this law, infringing goods are considered those products and services whose design, characteristics, functioning, production process, or marketing benefit significantly from trade secrets obtained, used, or disclosed unlawfully.

CHAPTER III

Trade secret as an object of property rights

Article 4. Transferability of trade secrets.

Trade secrets are transferable.

In the transfer, the regulations of the European Union relating to the application of Article 101(3) of the Treaty on the Functioning of the European Union to certain categories of technology transfer agreements shall be observed, when applicable by the nature of the trade secret.

Article 5. Co-ownership.

1. The trade secret may belong jointly to several persons. The resulting community shall be governed by what is agreed upon between the parties, in default thereof by what is provided in the following paragraphs, and, ultimately, by the rules of common law on the community of goods.

2. Each of the participants alone may:

a) Exploit the trade secret prior to notification to the other co-owners.

b) Carry out the acts necessary for the conservation of the trade secret as such.

c) Exercise civil and criminal actions in defense of the trade secret, but must notify the other co-owners, so that they may join the same, contributing in such a case to the payment of the expenses incurred. In any case, if the action proves useful to the community, all participants must contribute to the payment of said expenses.

3. The assignment of the trade secret or the granting of a license to a third party to exploit it must be granted jointly by all participants, unless the judicial body for reasons of equity, given the circumstances of the case, authorizes any of them to carry out the assignment or grant