Trade secrets in Italy

  1. General
    1. 1. Has 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 (“Trade Secrets Directive”) been implemented?
    2. 2. Are there any other applicable sources of law related to trade secrets?
    3. 3. How are trade secrets defined? 
    4. 4. Do specific measures or protections need to be put in place for information to benefit from protection as a trade secret?
  2. Dealings in and ownership of Trade Secrets
    1. 1. Are trade secrets transferable and/or licensable?
    2. 2. Are there specific consequences arising from transfer or licensing of trade secrets by a party other than the trade secrets owner?
    3. 3. Is co-ownership of trade secrets permitted?
  3. Enforcement of Trade Secrets
    1. 1. What actions constitute infringement of trade secrets?
    2. 2. Are there any measures allowing the trade secrets' owner to gather and/or preserve evidence of infringement of trade secrets?
    3. 3. What specific interim and final measures and remedies are available in the event of infringement of trade secrets?
    4. 4. Is there a specific period after obtaining interim measures by which the applicant must bring proceedings for a substantive decision on the merits of the claim?
    5. 5. Are there circumstances in which damages or other financial compensation may be available in place of an injunction and other measures?
    6. 6. Are any interim or final measures and remedies available through ex parte hearings?
    7. 7. How is financial compensation to the trade secrets holder calculated?
    8. 8. What is the limitation period for claims relating to misappropriation of trade secrets?
    9. 9. When does the limitation period begin to run?
    10. 10. Are there any circumstances that interrupt or suspend the limitation period?
    11. 11. Are mechanisms available to preserve confidentiality of trade secrets in the course of legal proceedings?
    12. 12. Are there any particular legitimate interests which may be invoked as an exception to the measures, procedures and remedies for trade secrets protection?
    13. 13. Are any measures available where proceedings concerning trade secrets are manifestly unfounded and / or found to have been initiated abusively or in bad faith?
    14. 14. Are separate legal proceedings required for such measures?
  4. Employee / employer liability
    1. 1. Are there any protections for “whistleblowers” or similar rights for employees in relation to infringement of trade secrets?
    2. 2. Can an employer be liable for their employee’s infringement of a third party’s trade secrets?

General

1. Has 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 (“Trade Secrets Directive”) been implemented?

Yes. The Directive (EU) 2016/943 has been implemented in Italy by Legislative Decree 11 May 2018 no. 63 (hereinafter the “Decree”).

The Decree has amended the regulation of trade secrets contained in the Legislative Decree 10 February 2005, no. 30 (hereinafter the “Industrial Property Code”), by modifying the provisions already included therein and by adding new provisions.

Furthermore, the Decree has amended Articles 388 and 623 of the Criminal Code.

In addition to the provisions contained in the Industrial Property Code, trade secrets are protected under Article 623 of the Criminal Code.

Furthermore, in order to seek protection against trade secrets infringements, it is possible to make recourse to the general provisions concerning unfair competition acts contained in Article 2598 of the Civil Code.

3. How are trade secrets defined? 

According to Article 98 of the Industrial Property Code, the following information are considered trade secrets:

  1. Business information;
  2. Technical-industrial expertise, including commercial expertise;
  3. Data relating to tests or other confidential data whose elaboration involves a significant effort and whose submission is a precondition for the authorisation to introduce on the market chemical, pharmaceutical or agricultural products implying the use of new chemical substances.

Nevertheless, according to Article 98, these types of information are protected as trade secrets only as long as they:

  1. Are secret in the sense that they are not, as a whole or in the exact configuration and combination of their components, generally well-known or easily accessible for experts and operators in the field;
  2. Have an economic value due to their being secret;
  3. Are subjected, by the persons who legitimately own them, to measures, which may be deemed reasonably adequate to keep them secret.

4. Do specific measures or protections need to be put in place for information to benefit from protection as a trade secret?

No, any measures can be put in place in order for information to be protected as trade secrets, provided that they are reasonably adequate to keep information secret. The adequacy of the measures adopted is assessed on a case-by-case basis.

Dealings in and ownership of Trade Secrets

1. Are trade secrets transferable and/or licensable?

Yes. Trade secrets can be transferred or licensed.

2. Are there specific consequences arising from transfer or licensing of trade secrets by a party other than the trade secrets owner?

Article 99, paragraph 1 bis, of the Industrial Property Code apply, according to which if the party who received the trade secrets (e.g. by transfer or licence) at the time of the acquisition knew or ought, under the circumstances, to have known that the trade secrets had been obtained unlawfully, then the acquisition of the trade secrets by him constitutes an infringement of their owner’s rights.

3. Is co-ownership of trade secrets permitted?

Yes.

Enforcement of Trade Secrets

1. What actions constitute infringement of trade secrets?

According to Article 99 of the Industrial Property Code, without prejudice to the provisions regulating unfair competition acts contained in Article 2598 of the Civil Code, the following actions constitute infringement of trade secrets:

  1. The unauthorised acquisition, use or disclosure to third parties of trade secrets. The acquisition, use or disclosure of trade secrets are considered unlawful even when the subject who acquired, used or disclosed them, at the time of the acquisition, use or disclosure, knew or ought, under the circumstances, to have known that the trade secrets had been obtained directly or indirectly from another person who was using or disclosing them unlawfully;
  2. The production, offer, marketing, importation, exportation or storage of goods infringing trade secrets, when the person who carried out said activities knew, or ought, under the circumstances, to have known that the trade secrets were used unlawfully.

2. Are there any measures allowing the trade secrets' owner to gather and/or preserve evidence of infringement of trade secrets?

Yes, according to Article 129 of the Industrial Property Code, in order to gather and/or preserve evidence of an infringement, the owner of an industrial property right (including trade secrets) may ask the competent court to order the description or seizure, and also the seizure conditional on the description, of some or all of the items constituting infringement, as well as of the means used for their production and of the elements of proof concerning the reported infringement and the relevant entity.

Subject to the needs of criminal justice, items in which an infringement of an industrial property right (including trade secrets) is recognised will not be seized, but only described, as long as they are within the confines of an exhibition (official or officially recognised), taking place in the territory of the country, or are in transit from or to the same.

Description and seizure proceedings are governed by the provisions concerning proceedings for interim relief. Therefore, in order for the court to grant the description and/or the seizure, the following two requirements must be met: (i) the probable existence of the right enforced (i.e. fumus boni iuris) and (ii) a pending or imminent infringement of the claimant’s rights (i.e. periculum in mora).

3. What specific interim and final measures and remedies are available in the event of infringement of trade secrets?

In the event of infringement of trade secrets, the general remedies provided for by the Industrial Property Code apply.

In particular, according to the rules contained in the Industrial Property Code, in case of IP rights infringements, the IP rights’ owner is entitled to ask the competent court to:

  1. Order to the infringer to refrain from carrying on with acts which infringe or would infringe the claimant’s IP rights and retire the items infringing the claimant’s IP rights from the market (Article 124, paragraph 1);
  2. Order to the infringer to pay penalties for every further infringement (Article 124, paragraph 2);
  3. Order the destruction of the items, which represent infringement of the claimant’s IP rights at the infringer’s cost (Article 124, paragraph 3);
  4. Order the assignment to the claimant of all the items, which represent infringement of his IP rights and of what has been used to make said items (Article 124, paragraph 4);
  5. Order the seizure of all the items, which represent infringement and of what has been used to make them (Article 124, paragraph 5);
  6. Order the publication of the decision in newspapers and/or magazines at the infringer’s cost (Article 126);
  7. Condemn the infringer to compensate the damages suffered by the IP rights' owner (Article 125).

Made exception for the requests under points 3, 4 and 7 (that must be formulated within a merit proceeding), the aforementioned measures can be ordered by the court, at request of the claimant, also as preliminary injunctions (both ante causam and within a procedure on the merits).

Furthermore, as explained above, as preliminary injunction, the IP rights’ owner is also entitled to request the description of the items, which represent infringement and of what has been used to make them.

However, the court is allowed to grant preliminary injunctions only if the following two requirements occur: (i) the probable existence of the right enforced (i.e. fumus boni iuris); (ii) a pending or imminent infringement (i.e. periculum in mora).

4. Is there a specific period after obtaining interim measures by which the applicant must bring proceedings for a substantive decision on the merits of the claim?

According to Article 132 of the Industrial Property Code, following the adoption of interim measures by the court, the parties must commence proceedings on the merits within the deadline set by the court or, if no deadline has been set by the court, within 20 working days (or 31 calendar days, if they represent a longer period). If the proceeding on the merits is not commenced by the parties within the prescribed deadline, the interim measures lose their efficacy.

However, according to the same Article 132, if the interim measures are able to anticipate the effects of the decision on the merits, then there is no obligation for the parties to start the ordinary proceeding. Indeed, even if it can be commenced by either party, the said proceeding is not compulsory.

Article 132 does not clarify in which cases interim measures are able to anticipate the effects of the decision on the merits. Therefore, a case-by-case assessment must precede the decision to start or not the merit proceedings consequent to the urgency phase.

5. Are there circumstances in which damages or other financial compensation may be available in place of an injunction and other measures?

Yes. According to Article 124, paragraph 6 ter, of the Industrial Property Code, in proceedings regarding the acquisition, use or disclosure of trade secrets as per Article 98, at the request of the interested party, the judge, instead of applying the final measures listed in the same Article 124, may order the payment of pecuniary compensation, if all the following conditions are met:

  1. The requesting party, at the time of use or disclosure neither knew nor ought, under the circumstances, to have known that the trade secret was obtained from another person who was using or disclosing the trade secret unlawfully;
  2. The application of the measures in question would cause the requesting party disproportionate harm;
  3. The pecuniary compensation to the injured party appears reasonably satisfactory.

According to Article 124, paragraph 6 quater, the pecuniary compensation will not exceed the amount of royalties or fees, which would have been due, had that person requested authorisation to use the trade secret in question, for the period of time for which use of the trade secret could have been prohibited.

Furthermore, according to Article 132, paragraph 5 bis, of the Industrial Property Code, in the preliminary proceedings relating to the unlawful acquisition, use or disclosure of trade secrets as per Article 98, the judge may, on request of one of the parties, instead of applying interim measures, authorise the interested party to continue the use of the trade secrets by lodging a suitable security intended to ensure the compensation of the damages suffered by the rights’ owner. In any case, the disclosure of a trade secret the use of which is authorised according to the Article at hand is forbidden.

6. Are any interim or final measures and remedies available through ex parte hearings?

According to Italian law, interim measures are available through ex parte proceedings when – due to the seriousness of the periculum in mora – the involvement of the counterparty would jeopardise the claimant’s rights.

In these cases, the judge, taken summary information (if necessary), can issue a motivated decree containing ex parte injunctions. However, with the same decree, the judge will schedule the hearing for the appearance before the court of all the parties within a term no longer than fifteen days and will assign to the claimant a term no longer than eight days for the notification of the claim and the decree to the adverse party. At the hearing, the judge can confirm, modify or revoke the decree.

In the event that the notification must take place abroad, the terms referred to above are trebled.

7. How is financial compensation to the trade secrets holder calculated?

The general rules contained in the Civil Code and those contained in Article 125 of the Industrial Property Code apply.

In particular, according to Articles 1223, 1226 and 1227 of the Civil Code:

  1. Compensation for damages must include both damages and loss of profits, provided that they are an immediate and direct consequence of the breach of contract or the delay in performing the obligations;
  2. If damages cannot be proved in their specific amount, they are determined by the court through an equitable assessment: in other words, the court may quantify damages, but their occurrence must be proved by the interested party;
  3. If the creditor’s conduct contributed to cause damages, the compensation for damages is reduced taking into account the seriousness of the aforementioned conduct, as well as the extent of the arising consequences.

According to Article 2056 of the Civil Code, the above rules, related to contractual liability, apply also in case of torts.

According to Article 125 of the Industrial Property Code:

  1. Damages are assessed according to the aforementioned Articles 1223, 1226 and 1227, by taking into account any related aspect, such as the negative economic consequences, including the loss of profit, suffered by the IP rights’ owner, any unfair profit made by the infringer and, in some cases, other elements such as the moral prejudice;
  2. The court is entitled to quantify the damages in a total amount determined taking into account statements and evidence filed by the parties, as well as the arising assumptions. In such a case, any loss of profit awarded must not be lower than the royalties that the infringer would have paid, if he had obtained a license from the IP rights' owner;
  3. In any case, the IP rights owner can request a refund of the income made by the infringer as an alternative to compensation for loss of profit or if the amount of said income exceeds such compensation.

8. What is the limitation period for claims relating to misappropriation of trade secrets?

According to Article 99, paragraph 1 quater, the limitation period for claims relating to misappropriation of trade secrets is equal to five years.

Article 2935 of the Civil Code applies, according to which the limitation period begins to run from the day in which the relevant right can be enforced.

9. When does the limitation period begin to run?

Articles 2941 and 2942 of the Civil Code provide a long list of suspension cases. Said cases are related to the existence of a specific status of the rights’ owner or to the existence of a specific kind of relationship between the parties (e.g. the limitation period is suspended between legal persons and their administrators, as long as they hold the office, with respect to actions for liability against them).

10. Are there any circumstances that interrupt or suspend the limitation period?

Articles 2943 and 2944 of the Civil Code provide that the limitation period is interrupted:

  1. By the service of the writ by which a juridical proceeding is started;
  2. By requests formulated within judicial proceedings;
  3. By any other act capable of placing the debtor in default;
  4. By a duly served document whereby a party, in the presence of an agreement to arbitrate or an arbitration clause, declares to the other party his intention to start arbitration proceedings, lays down his claim and proceeds with the appointment of the arbitrators;
  5. By the acknowledgment of the right by the person against whom such right can be enforced.

Yes. According to Articles 121, paragraph 3, and 129, paragraph 1, of the Industrial Property Code, in the course of legal proceedings, the judge will take adequate measures for the protection of confidential information.

Moreover, according to Article 121 ter of the Industrial Property Code, in the legal proceedings relating to the unlawful acquisition, use or disclosure of a trade secret as per Article 98, on request of one of the parties, the judge may prohibit subjects, delegated or appointed by him, the parties, their advisors or representatives, the lawyers, the court officials, the witnesses, and any other person who has access to decisions, acts and documents which form part of the legal proceeding, from using or disclosing the trade secret, which the judge has identified as confidential. Such a prohibition will remain in force after the legal proceedings have ended.

Furthermore, on request of one of the parties, the judge may take measures which, in accordance with the principles that regulate the fair trial, seem appropriate to protect the confidentiality of the disputed trade secrets, and specifically the judge may:

  1. Restrict to a limited number of persons the access to hearings and to deeds and documents, which are part of the court’s file;
  2. Provide in the decisions, which define the above proceedings and are made available to persons other than the parties, the darkening or the removal of the passages containing the trade secrets.

12. Are there any particular legitimate interests which may be invoked as an exception to the measures, procedures and remedies for trade secrets protection?

Yes. According to Article 99, paragraph 1, of the Industrial Property Code, the acquisition of a trade secret will be considered lawful when the trade secret is obtained in an independent way.

13. Are any measures available where proceedings concerning trade secrets are manifestly unfounded and / or found to have been initiated abusively or in bad faith?

According to Article 132, paragraph 5 quarter, of the Industrial Property Code, the claimant is obliged to compensate the damage caused by the interim measures adopted by the court for the protection of trade secrets, if it is subsequently found that there has been no unlawful acquisition, use or disclosure of the trade secret.

General provisions contained in the Code of Civil Procedure also apply.

In particular, according to Article 96 of the Code of Civil Procedure, without prejudice of the rules concerning the legal costs, if the losing party acted or resisted in court with bad faith or gross negligence, the judge, at the request of the other party, condemns it to compensate the relevant damages, which are liquidated, also ex officio, in the decision. Furthermore, the judge who ascertained the non-existence of the right on the basis of which an interim measure has been enforced, a claim or a mortgage has been recorded or an enforcement procedure is initiated, if requested by the damaged party, condemns the plaintiff or the creditor, who acted without prudence, to pay the compensation for the caused damages. In any case, the judge is entitled to condemn the losing party to pay a sum determined according to fairness.

The need for a separate legal proceeding depends on the specific circumstances of the case.

Employee / employer liability

1. Are there any protections for “whistleblowers” or similar rights for employees in relation to infringement of trade secrets?

According to Article 3 of the Law 30 November 2017 no. 179, employees of Public Administrations and, under certain conditions, employees of private companies are protected in relation to the disclosure of trade secrets, provided that the disclosure is made to pursue the Administrations’ integrity and/or to prevent or repress embezzlement.

2. Can an employer be liable for their employee’s infringement of a third party’s trade secrets?

Yes. According to Article 2049 of the Civil Code, the employer is liable for the damages caused by the unlawful acts of his employees, provided that said acts are carried out in the exercise of the functions to which the employees are assigned.

Portrait of Paola Nunziata
Paola Nunziata
Partner
Rome