Trade secrets: is civil or criminal protection more effective?
By virtue of articles 623 of the Criminal Code and 98 of Legislative Decree of 10 February 2005, no. 30, the legislator has laid the foundations for the legal protection of industrial secrets specifically with a view to safeguarding all those activities and investments that the holder of the secret keeps confidential insofar as it assures him a competitive advantage within the market.
Firstly, we should start from the well-known definition of “trade secret” found in art. 98 of the Industrial Property Code (henceforth “IPC”) which provides that only information that is secret, economically valuable and subject to strict protection measures may be safeguarded as know-how.
However, it would not be correct to state that civil protection of know-how concerns just information that can be shown to possess the aforesaid three characteristics. Indeed, art. 99 of the IPC, without prejudice to the law on unfair competition, recognizes the existence of trade secrets which, despite not meeting the criteria set out in art. 98 of the IPC, are nevertheless deemed worthy of protection.
In essence it is possible for an entrepreneur to proceed legally with a claim of unfair competition in relation to the unlawful misappropriation of information that is considered objectively confidential, despite the absence of all the appropriate protection measures. However, in this case the entrepreneur must overcome another obstacle, namely the burden of proving that the misappropriated information was understood to be objectively confidential by virtue of its inherent value.
Beside this type of civil protection, national law also offers protection under the criminal law, especially via art. 623 of the Criminal Code. Such provision does not expressly define what is meant by “know-how”, confining itself to stating as follows: “trade secrets or information destined to remain secret, discoveries or scientific inventions”. This is one initial difference that may be found between the civil and criminal provisions that concern the object and the requirements of know-how.
As a result of the extensive amount of criminal case law on the subject-matter of know-how, and in light of what has been said by the greater amount of academics, it is possible to state that what is being protected by article 623 of the Criminal Code is the interest of the holder of the trade secret in avoiding the disclosure of information which concerns the methods and procedures that define the industrial structure of a corporation.
Consequently, the so-called “know-how” – as defined by the case law of the Supreme Court – must be understood to be that knowledge and organisational plan that combined are necessary for the construction, operation and maintenance of an industrial apparatus. Such hypothesis, which has been recently stated by the Supreme Court in the well-known criminal judgment no. 16975/2020, refers therefore not just to a single technique or custom or corporate information, but rather to the entire knowledge of a company, the result of experience accrued as well as research and investments made over the years.
The aforementioned judgment of the Supreme Court reads as follows: “doctrine and case law agree that the protection offered by Article 623 of the Criminal Code goes beyond that provided by the civil law with respect to patentable inventions, and indeed the Supreme Court has repeatedly stated that, for the purposes of protection of industrial secrets under the criminal law, novelty (inherent or external) and originality are not essential requirements of industrial applications, since they are not expressly required by legislative provisions and also because the interest in the protection of confidentiality under the criminal law must not necessarily be inferred from these characteristics applicable to protected information.
This means that, even if the sequence of information – which constitutes a single whole for the implementation of a specific economic phase of the company's activity – is made up of single items of information which are in themselves known, if such entire sequence is not known and is actually considered secret by the company, then it is in itself worthy of protection. In other words, it is not necessary that every single information that makes up the sequence is "unknown"; rather, it is necessary that the organic whole is the result of an elaboration of the company. Indeed, it is through this process that the final information acquires an additional economic value in comparison to the individual elements that make up the cognitive sequence. This is what happens, precisely, in the case of a company that adopts a complex strategy to launch a product on the market: its individual elements are undoubtedly known to operators in the sector, but the whole may have been designed in such a way as to represent something new and original, thus constituting for the creator a real treasure trove from a competitive point of view[1]”.
The aforementioned principles define with greater clarity the contours of the notion of “trade secret” relevant within the field of criminal law, and favour – we believe, rightly so – a wider interpretation that can assure a more meaningful protection of the knowledge and experiences of a company.
It is worth clarifying that the type of conduct that is sanctioned by art. 98 of the IPC may still be qualified as a crime punished by art. 623 of the Criminal Code. Therefore, the person who believes his trade secret has been violated may commence a civil action for the recovery of damages that have been suffered pursuant to art. 98 of the IPC, as well as criminal proceedings with a view to obtaining a conviction of the perpetrator of the violation. However, in the civil action the claimant will have to prove that the violated trade secret was not known, was economically valuable and was protected with adequate security measures, whereas in criminal proceedings the same person will have to prove the dissemination and/or utilization – for personal or another’s gain – of the secret on part of the person who learned of its existence within the scope of his duties. This is a second difference between the two types of protection that concerns, in this case, a different regime applicable to the burden of proof.
Finally, from a procedural standpoint it must be evidenced that within civil proceedings the action may be brought equally against the natural person who reveals the trade secret and/or the company that benefits from such revelation, whereas criminal proceedings – pursuant to article 27 of the Constitution – must be commenced against the person who reveals the secret and against the person who holds a security position within the company thereby using to his own advantage the information that makes up the trade secret. Therefore, an additional difference (this time of a procedural nature) may be found between the legal provisions here being discussed.
In summary, the main differences between protection under the civil and criminal laws on know-how concern:
- the object and requirements of know-how;
- a different regime applicable to the burden of proof of know-how;
- procedural aspects (such as a different legal standing).
[1] Supreme Court, Division V (criminal) - 11/02/2020, no. 16975
