5/03/2018 - Intellectual Property

Draft proposal for a bill on the protection of trade secrets in Spain

Autor: Miguel Vidal-Quadras

On February 8, 2018 the Spanish Ministry of Justice made public a draft proposal for a bill on the protection of trade secrets to adapt the 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. The Directive is dated June 8, 2016 and orders the States of the European Union to adapt their national legislation by June 9, 2018 at the latest to comply with the protection requirements that it establishes.

The national regulation of unfair competition in force is limited to the protection of the holders of business secrets by means of its article 13 without defining what should be understood by secrecy or specifying situations excluded from the protection of secrets or included within the illicit obtaining, except for espionage. Until now, the protection is foreseen with respect to infringements that imply an intention of either obtaining a profit for oneself or for a third party, or harming the holder of the secret.

The Spanish bill proposal regulates in four chapters an exhaustive list of situations for which the legislator guarantees the protection by the Spanish courts of the holders of the information protected by trade secrets. Through the first chapter, it is introduced in the Spanish legal system for the first time a definition of trade secrets, that the Spanish courts already foresaw and that reproduces the requirements that were already contained in Article 39 of the TRIPS Agreement. It also describes who is the holder of a trade secret and excludes from protection any situation such as that relating to the information specific to the technical skills of workers (this last had already been well-established by the Spanish courts) or the right to collective negotiation.

One of the main drawbacks of this proposal is the limitation of protection to the holders of the secrets and not to the possessors of the information, which is what the EU regulation foresees. Possessors can be diverse, such as  licensees,  mere holders of the information to carry out an assessment on their interest in a technology, the companies that collect data from companies to carry out market analysis tasks, etc.

The second chapter regulates one of the main novelties of the European Directive. This novelty is a relationship of the infringing acts of trade secrets (unlawful acquisition, use or disclosure), the activities that are expressly considered lawful (some of them are usually part of typical clauses in technology transfer agreements, such as independent creation) -in which the right to free expression of the media or whistleblowing is introduced as a novelty in situations that affect the general interest-, as well as situations which are expressly understood to constitute an infringement of secrets.

The third chapter also includes novelties in the Spanish law. In addition to the a relationship of the possible actions of defense of trade secrets (many of them already included in the Act of Unfair Competition), it establishes a system for the calculation of damages similar to that provided for in the laws of intelectual property. Likewise, the term of prescription of the legal actions is extended from one to three years from the date the affected party knows of the infringement.

One aspect to be changed however in the proposed draft of bill, is that relating to the responsibility of the offenders, since it is foreseen that those obtaining, using or disclosing the information in good faith will be considered infringers even before they were aware that the information they possess comes from an illicit source. This responsibility goes beyond what the Directive foresees.

The fourth and final chapter of the draft of bill for a new act refers to jurisdiction and procedural rules. Besides legal standing, jurisdiction, seizure of description, measures to preserve evidence and preliminary injunctions, a system of protection of the information in Court proceedings is established entailing a radical novelty in the Spanish legal system. In this regard, and in accordance to the EU Directive, access to both parties as well as to third parties is restricted to documents submitted to the proceeding as trade secrets. Likewise, if the judgment contains information related to this secret information, its publication will be restricted and the parts that cannot be published will be veiled to third parties not involved in the proceedings.

This rule of limitation of the access to information that constitutes trade secrets should be extended, however, to any judicial proceedings and not only be applicable, as it is foreseen in the current wording, to litigation related to the infringement of trade secrets. For this reason, it would be advisable to transfer the current article 11 of the draft of bill proposed to an additional provision that would introduce a new article to the Spanish Civil Procedure Act, applicable to all proceedings where the parties may bring documents or information of a secret nature.

All in all, it is a modern regulation, which improves the protection of corporations in what concerns their confidential information while ensuring to the society the protection of their interests against the abuses of those who may try to avoid giving information under the excuse that it is confidential and a trade secret.