New Business Secrets Law in Spain

The year 2019 opens its doors with the publication in the BOE of the new Law 1/2019 relating to business secrets. Its entry into force on 13 March has meant that Spain has aligned itself with the rest of the EU countries with regard to the protection of innovation and the generation of knowledge, pursuing illegal practices of appropriation, espionage, copying or breach of confidentiality.

This law, which is the transposition of Directive (EU) 2016/943 of 8 June 2016, develops an effective defence system so that a company that sees its business secrets violated illegitimately can act forcefully against the offender.

Until the entry into force of this Law there was not a specific instrument in Spain that was fully dedicated to the protection of business secrets. There was, nevertheless, a certain coverage from different areas (through some individualized precepts of the Criminal Code, the Law of Unfair Competition, as well as in the private area of contractual relations through the inclusion in contracts of specific protection clauses).

Legal Definition of Trade Secrets

The law addresses, as the first important point, what we should understand by business secret. Its definition specifies that it is any information or knowledge, including technological, scientific, industrial, commercial, organisational or financial, which, in any case, meets three essential conditions. Namely:

• It must be a secret, in the sense that it is not generally known or easily accessible to the circles in which it would normally be used.
• It must have business value as a consequence of its secrecy.
• Reasonable measures must be taken by the holder to ensure that it remains secret.

Under this definition, unprotected industrial/intellectual property elements (such as a recent invention not covered by an industrial patent), scientific formulas, working methodologies, lists of customers or suppliers, databases, business strategies, cost policies and other relevant financial information, etc. could constitute business secrets.

It is important to highlight the patrimonial character that the analysed law attributes to business secrets, which means they are elements that can be transferred, assigned, licensed for use, thus considering them in a similar way to traditional intellectual property rights such as trademarks or patents.

Unlawful conduct and exclusions under the new law

As for the conducts that are considered illicit under the perspective of Law, they can be summarized in:

• Obtaining a business secret without the consent of its owner by means of acts of an unfair nature
• The use or disclosure of a business secret when preceded by an unlawful procurement or the breach of an obligation of confidentiality or of a similar nature.

However, although this Law seeks at all times to protect the owner of a possible violation of the business secret, it excludes those cases in which it will not be considered unlawful to obtain, use and disclose it, including such as:

• Independent discovery and creation
• Reverse engineering with no obligation of confidentiality
• The exercise of the right of workers and their representatives to be informed and consulted
• Whatever other action that must be considered loyal.

Actions for the defence of business secrets

With the entry into force of this Law, it is also possible to clearly establish a series of effective measures against infringements in this area. These measures may be exercised against the civil jurisdictional order, highlighting among others the following actions:

• The declaration of the infringement or violation of the business secret
• The cessation or prohibition of violation acts of business secrets
• The apprehension of infringing goods
• The removal
• The delivery to the holder of all or part of the documents, objects, materials, etc., containing the business secret, and where appropriate, their total or partial destruction
• The compensation for damages
• The publications of the judgement.

These actions for the defence of trade secrets -in addition to the other actions set out in Article 9 of this Law- must be exercised within three years from the moment in which the owner became aware of the infringement.

Likewise, the owner of the business secret shall also have the possibility of requesting precautionary measures and fact-checking proceedings, under the terms provided in the Patent Act.

If you wish to obtain more information about the new regulation on business secrets or need additional advice on this matter, do not hesitate to contact us.

Manuel Álvarez-Sala & José María Mesa

For further questions regarding the business secrets law in Spain,