Trade Secrets and Know-How
Welcome on the Trade Secrets and Know-how section
To defend the know-how of your company from forgery it is necessary to choose the most efficacious protection with the help of an expert.
Chiara Morbidi, Esq.
Head of the Legal Department
Below there’s a list of the main topics on the subject to help you.
- What’s a trade secret and how to protect it
- Non-disclosureagreements (NDA)
- Assignment or license of trade secrets
- Conditions or agreements to prevent news leaks made by employees or associates
What’s a trade secret and how to protect it
The protection of trade secretsprovided for in the IP Code,asmodified by the decree law no. 63 of May 11, 2018, entered into force on June 22nd, 2018 and effect the EU Directive 2016/943 of June 8th, 2016.
Art. 98 IP Code defines trade secrets as business information and technical-industrial experienceincluding commercialinformation, subject to the legitimate control of the owner, as long as that information is confidential, has an economic value inasmuch as it is confidential and is subject to measures to be considered reasonablyadequate to keep it confidential.
To be granted protection, the trade secret shall:
- Be confidential: the information shall be difficult to know and generally it is not generally known or easily accessible for experts and operators in the field;
- Have an economic value: the information shall have an economic value because subject to bond of secrecy so that the undertaking owning it is in a privileged position in comparison to competitors void of the same information;
- Be subject to measures to be considered reasonablyadequate to keep it confidential.
To adequately protect information and experiences as trade secrets and to make them protectable, it is necessary to follow a number of preliminary steps such as:
- The identification of the information and of the company’s resources:identifying the information that the company may have an interest in protecting as trade secret;
- The description and classification of information and documents: the information has to be described on a device and classified;
- Tools and security measures setting: measures related to employers and their method to access the information and technical and computer measures. It is important to prepare legal measures such as contractual provisions with employers and/or partners and with third parties such as suppliers, carriers, clients, computer consultant, or partners other than those with whom the company shares confidential business information (for instance non-compete agreements, non-disclosure agreements, confidentiality clauses to be entered in the employment agreements).
Trade secrets, when meeting the requirements provided by the law, can be judicially protected in case of violation. The person owning the trade secret has the right, pursuant to article 99 IPC, to prohibit third parties from acquiring, revealing to thirds or using – abusively – these secrets, unless authorized.
Non-disclosure agreements (NDA)
In order to safeguard trade secrets, it is important that each person knowing it for any work-related reason signs a non-disclosure agreement.
It is a very important agreement where the person “receiving” the confidential information undertakes to use it carefully, to not disclose it and to use all possible mean in order to not have it disclosed.
The person signing this type of agreement undertakes also not to use this information to pursue personal aims, different from the task assigned, not to keep a copy of it and cancel every data related to it as soon as the task has been completed.
Non-disclosure agreements often provide fines–which sometimesare high –, as to discourage any unauthorized use and especially any disclosure made against the will of the owner.
Assignment or license of trade secrets
In case the company wants to assign or grant the license of its own know-how, the agreement has to report clearly its object defining the information composing it and associating the assignment or grant of the license to the delivery of the materials (for example drawings, studies, evidences and analysis, business data, etc.).
In lack of a previous non-disclosure agreement prepared during the negotiation phase, the know-how assignment or license agreements may be integrated with a clause of the same content.The license agreement could provide the obligation for the licensor to put into act the necessary measures to an adequate protection of the information (for examples restricted accesses, safety systems, raising awareness among the staff, computer security, etc.)
The undertaking may prepare specific non-compete agreements addressed to other companies or to its employer or associates.
Non-compete agreements addressed to other companies may be related to some specific activities, even if exercised jointly, which fulfilment requires the usage of confidential information. In accordance to art 2596 Italian Civil Code in order to be considered valid, those clauses have to be limited to a precise area or to a precise activity and not exceed the 5-year period.
Moreover, the undertaking may decide to have its employer sign a specific non-compete agreement pursuant to art. 2125 Italian Civil Code. The non-compete agreement is a limitation in the execution of the employee’s activity after the end of his/her employment agreement.To be valid the agreement has to be written, it has to include a compensation for the employer and the commitment has to meet specific requirements in terms of subject, time and place.
In terms of form, this agreement can be included in the employment agreement or included in a specific and separate document other than the agreement of reference. The duration of the commitment shall not exceed five years, in case of managers, and three in the rest of the cases. If a longer period is agreed, the duration will be reduced as indicated above.
Conditions or agreements to prevent news leaks made by employees or associates
To prevent news leaks made by employees or associates, the company may prepare a series of clauses to be inserted in employment and collaboration agreements or specific clauses.
The company may insert in the agreements non-disclosure conditions requiring the employer or associate to keep specific information secret of draw non-disclosure agreements to attach to the employment or collaboration agreements. It may also insert non-compete clauses in the employment or collaboration agreementsto regulate the limitation in the execution of the employer’s or associate task after the end of the agreement. The aim of this is to avoid possible trade secrets to be known and used by competing companies, which could hire the employer, or in another activity by a competitor.
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