Trade secret laws and regulations in Portugal

The Directive (EU) 2016/943, of 8 June 2016, was transposed into the Portuguese legal framework into the Industrial Property Code (“CPI”) by the Law no. 65/2018, of 30 November, which establishes the criteria for qualification of trade secrets, the scope of their protection, remedies for damages, and other means of reaction on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure.

The institute of "unfair competition" according to Portuguese law (article 317 CPI) requires the existence of an act of competition, which is contrary to the rules and honest uses of any branch of activity (i.e. unfair).

There are also criminal rules that govern the violation of trade secrets.

Article 195 of the Criminal Code provides for a sentence of imprisonment of up to one year or up to 240 days of fine for anyone who "without consent, reveals a secret of which he or she has become aware because of his or her condition, office, employment, profession or art"; or article 196, which provides for the same punishment for anyone who "without consent, takes advantage of a secret relating to the commercial, industrial, professional or artistic activity of another person, of which he or she has become aware because of his or her condition, office, employment, profession or art, and thereby causes damage to another person or the State".

Law no. 7/2009, of December 2002, last amended by Law no. 93/2019, of April 2009 (Labour Code), also imposes obligations on the employee before the employer "to keep loyalty to the employer, namely not negotiating on their account or behalf of others in competition with them, nor disclosing information regarding their organisation, production methods or business".

According to Article 313 of the CPI, a trade secret is defined as protected information, which fulfils all the following requirements: (i) it is secret in the sense that it is not generally known or easily accessible, in its entirety or the exact configuration and connection of its constituent parts, to persons in the circles normally dealing with the type of information in question; (ii) it has commercial value because it is secret; (iii) it has been subject to reasonable diligence by the person lawfully in control of the information, having regard to the circumstances, to keep it secret.

Although the Portuguese legal framework does not provide any specific measures, under the definition of a trade secret, where only information, which has been the subject of reasonable diligence to keep it secret will be a trade secret, it is understood that the holder of a trade secret (i.e. a natural or legal person legally exercising control of the trade secret) has the right to prevent third parties from obtaining, using or disclosing, without his consent, information subject to a trade secret only when, for example, he applies such measures as the following:

• Definition of a protection plan (e.g. a survey and assessment of the information and classification of those to be protected);
• Definition and implementation of internal policies, procedures, booklets or work aids that define the treatment of business secrets;
• Training and awareness of employees and service providers;
• Classification according to standard labels;
• Definition of confidentiality clauses to avoid misappropriation by employees;
• Definition of non-compete or permanence agreements, avoiding misuse by employees and/or third parties;
• Definition of confidentiality agreements and non-disclosure of information (NDA's) with service providers and/or third parties;
• Logical access control;
• Physical access control to facilities;
• Regulation and implementation of measures for the management of the workplace (e.g. treating waste and seeking controlled destruction of documents containing sensitive information);
• Periodic analysis and audits.

According to Article 315 of the CPI, under the heading "Lawful acquisition, use and disclosure of business secrets", the acquisition of a trade secret can be considered a lawful act when it arises from practices in which, in specific circumstances, are in accordance with honest business practices.

In the definition of a trade secret and the discussion of whether there is an objective level (i.e. a quota) of disclosure beyond which secrecy is no longer considered to exist, according to the doctrine absolute secrecy is not required in the sphere of trade secrets (e.g. cases where secrecy is kept in a company and cannot be disclosed).

Therefore, 'licences' are allowed, whereby there is a selective and confidential sharing of trade secrets; hence, only relative secrecy is required. Therefore, the question of the possibility of allowing the holder to share information with a third party and to demand that the third party does not disclose it to others is an eminently binding right when it arises from contractual provisions.

There are still those who argue that information that is known to many, as long as it is not made available for general knowledge, continues to qualify as a 'secret'. What characterises secrecy in this respect is not the number of people who know it, but the difficulty in accessing it.

The protection of trade secrets requires that the acquisition, use, or disclosure of the trade secret is carried out unfairly.

There may be several aspects in which unfairness manifests itself. The most common will be the violation of contracts or agreements (even if implicit) of confidentiality. Other times, it is not about purchasing but about using or disclosing trade secrets. The principle is that illicitly acquired secrets may not be lawfully used or disclosed and vice versa: lawfully acquired secrets will be freely usable and disclosable. However, there are situations where the secret has been fortuitously acquired (e.g. lawfully acquired) but, after notification by the holder of the trade secret, it will be unlawful to disclose or use it.

There is no legal prohibition in Portugal on joint ownership of trade secrets. Hence, considering potential risks, two parties can freely conclude a contract to this effect. This can occur in the cooperation between companies or when two parties work together to develop trade secret information.

In Portugal, certain universities focused on research studies with companies create the possibility of co-ownership regarding any potential discovery that may occur. Additionally, public universities may dispatch orientations to define the ownership of the potential outcomes.

Pursuant to article 314 of the CPI, the following actions constitute infringement of trade secrets:

• The acquisition of a trade secret without the consent of the trade secret holder will be considered unlawful, whenever carried out by: (a) unauthorised access to, appropriation of, or copying of any documents, objects, materials, substances or electronic files, lawfully under the control of the trade secret holder, containing the trade secret or from which the trade secret can be deduced; (b) any other conduct which, under the circumstances, is considered contrary to honest commercial practices.
• The use or disclosure of a trade secret will be considered unlawful whenever carried out, without the consent of the trade secret holder, by a person who meets any of the following conditions: (a) having acquired the trade secret unlawfully; (b) being in breach of a confidentiality agreement or any other duty not to disclose the trade secret; (c) being in breach of a contractual or any other duty to limit the use of the trade secret.
• The acquisition, use or disclosure of a trade secret will also be considered unlawful whenever a person, at the time of the acquisition, use or disclosure, knew or ought, under the circumstances, to have known that the trade secret had been obtained directly or indirectly from another person who was using or disclosing the trade secret unlawfully.
• The production, offering or placing on the market of infringing goods, or the importation, export or storage of infringing goods for those purposes, will also be considered an unlawful use of a trade secret where the person carrying out such activities knew, or ought, under the circumstances, to have known that the trade secret was used unlawfully.

Pursuant to articles 339 and 340 of the CPI, the following measures, allowing the trade secrets owner to gather and/or preserve evidence of infringement of trade secrets may be requested:

• The owner of the trade secrets may request to the court that the elements of evidence, which are in the possession or under control of the opposing party or third party, be presented, provided that the interested party presents in its claim sufficient evidence of violation of the trade secrets.
• Whenever there is a violation or a well-founded fear that another person will cause serious and hardly repairable damage to the trade secret, the interested party may request urgent and effective provisional measures aimed at preserving evidence of the alleged violation.
• Measures for the preservation of evidence may include a detailed description, with or without sampling, or the effective seizure of assets suspected of violating trade secrets and, where appropriate, materials and instruments used in the production or distribution of these goods, as well as the related documents.

Pursuant to articles 345 and 346 of the CPI, the following interim measures are available:

• Whenever there is a violation or well-founded fear that someone else will cause serious and difficult-to-repair damage to trade secrets, the court may, at the request of the interested party, order the appropriate precautionary measures to: a) Inhibit any imminent violation; or b) Prohibit the continuation of the violation.
• Whenever there is an infringement of trade secrets, the court may, at the request of the interested party, order the seizure of assets suspected of violating those secrets, including imported goods in order to prevent their entry or circulation in the market, or the instruments that can only serve for the practice of the illicit.

Pursuant to articles 347, 348, 349, 350, and 356 of the Portuguese Industrial Property Code, the following final measures are available:

• Financial compensation: Whoever, with intent or mere guilt, unlawfully violates the trade secret of others, is obliged to compensate the injured party for the damages resulting from the violation.
• The judicial decision on the merits may, at the request of the injured party and at the expense of the infringer, determine measures relating to the destination of the assets in which there has been a violation of trade secrets. The measures may include the destruction, recall or definitive exclusion of the commercial channels, without attributing any compensation to the infringer.
• In addition, the court decision may impose on the infringer: a) The termination or, as the case may be, the prohibition on the use or disclosure of trade secrets; b) The prohibition on producing, offering, placing on the market or using infringing goods, or importing, exporting or storing infringing goods for those purposes.
• Moreover, the judicial decision on the merits may also impose on the infringer a measure designed to inhibit the continuation of the verified infraction: a) Temporary interdiction from the exercise of certain activities or professions; b) Deprivation of the right to participate in fairs or markets; c) The temporary or permanent closure of the establishment.
• At the request of the injured party and at the expense of the offender, the court may order the publication of the final decision. The publication must preserve the confidentiality of trade secrets.

According to the applicable Portuguese law, the following remedies are available:

The losing party of a case related to the infringement of trade secrets may file a judicial appeal to the Second Instance Court within 30 days of the notification of the decision of the First Instance Court.

According to the Portuguese Law, the Applicant must bring proceedings for a substantive decision on the merits of the claim within 30 days of the decision res judicata regarding the obtaining of the interim measures.

Pursuant to article 345 (6) of the CPI, and at the request of the requested party, the precautionary measures ordered to inhibit any imminent violation or to prohibit the continuation of the violation, may be replaced by a security deposit, whenever this, after hearing the applicant of the measures, proves to be adequate to ensure the compensation of the holder.

Pursuant to articles 341 and 345 (5) of the CPI, the measure to preserve evidence of infringement of trade secrets, and the precautionary measures, such as the injunctions and the seizure of assets, may be ordered through ex parte hearings, provided that a delay in the order of the measures may cause irreparable damage to the applicant, or if there is a serious risk of destruction or concealment of the evidence.

Pursuant to article 347 of the CPI, the following criteria should be applied in the calculation of the financial compensation:

• unfair profits made by the infringer;
• loss of profits suffered by the injured party;
• the costs of the protection, investigation and termination of the conduct detrimental to their right;
• the moral prejudice to the trade secret holder by the unlawful acquisition, use or disclosure of the trade secret.

Alternatively, the competent judicial authorities may, in appropriate cases, set the damages as a lump sum on the basis, at a minimum, of the amount fees which would have been due had the infringer requested authorisation to use the trade secret in question.

Under Article 353 of the CPI, the limitation period corresponds to five years counting from the moment that the claim can be exercised. The five-year deadline corresponds to the prescription period, which means that after five years of knowing that misappropriation occurs, if no claim is invoked the right to claim ends.

The limitation period begins when the proprietor acknowledges the misappropriation.

Pursuant Article 353 of the CPI, Portuguese Civil Code can be applied alternatively, which means that the limitation period can be interrupted by the service in the courts of any document that expresses, directly or indirectly, an intention to exercise the right, irrespective of the procedure to which the material belongs and even if the court has no jurisdiction; or

In certain circumstances, an interruption may be applied and renders the whole of the previously elapsed time unusable for the prescription. A new period begins to run from the interrupting act.

Under Article 352 of the CPI there are mechanisms for the preservation of the confidentiality of trade secrets in legal proceedings, such as:

1. Any person participating in a judicial proceeding or having access to documents forming part of it is not authorised to use or disclose any commercial secret or alleged trade secret that the court, in response to a duly substantiated request from the interested party, has identified as confidential and has become aware of as a result of this participation or access;
2. The obligation of confidentiality will not be extinguished at the end of the judicial proceedings, except when it is established, by a final decision, that the alleged commercial secret does not fulfil the requirements of Article 313 or that the information in question has come to the knowledge of the persons in the circles normally dealing with that type of information or has become easily accessible to those persons.
3. At the duly substantiated request of one of the parties or on the court's initiative and taking into account at all times the need to safeguard the right to an effective remedy and to a fair trial as well as the interests of the parties or of third parties, specific and proportionate measures may be taken to preserve the confidentiality of any trade secret or alleged trade secret used or disclosed in the course of judicial proceedings, and in particular the following:
   1.  limitation of access to documents containing business secrets or alleged business secrets which have been submitted by the parties or by third parties in whole or in part to a restricted number of persons;
   2.  limiting access to hearings, and to records and transcripts thereof, to a restricted number of persons where there is a possibility of divulging business secrets or alleged business secrets; 
   3. making available to persons not included in the restricted number referred to in the preceding subparagraphs of a non-confidential version of court decisions from which passages containing business secrets have been removed or concealed. 
4.  The number of persons referred to in paragraphs a) and b) of the preceding paragraph will not exceed what is necessary to ensure that the parties' right to an action and to a fair trial is respected, and will include at least one natural person from each of the parties and their representatives or other representatives.

Pursuant Article 351 of the CPI, there are limits and exceptions established:

1. The measures, procedures and remedies provided for in this and the previous section will be rejected by the court where obtaining, using or disclosing a trade secret has occurred in one of the following circumstances: 
   1. the exercise of the right to freedom of expression and information as laid down in the Charter of Fundamental Rights of the European Union, including respect for liberty and pluralism of the media; 
   2. disclosure of misconduct, irregularities or illegal activity, provided that the alleged offender acted in the general public interest; 
   3. disclosure by employees to their representatives in the legitimate exercise of their representative duties, in accordance with the provisions of the law, provided that such disclosure was necessary for the said exercise;
   4. protection of a legally recognised legitimate interest.

The application of the measures, procedures and remedies provided for in this and the previous section must be proportionate and in such a way as to prevent abuse or the creation of obstacles to legitimate trade.

Pursuant Article 343 of the CPI, where the measure to preserve the evidence applied is considered unjustified or ceases to have effect because of an act attributable to the claimant, as well as in cases where it has been requested in an abusive manner or in bad faith, it is found that there has been no violation or unfounded fear that another serious and difficult-to-repair injury to an industrial property right or commercial secret, the court may order the claimant, at the request of the requested party or an injured third party, to pay adequate compensation to repair any injury caused by the application of the measures.

According to Portuguese Industrial Code, there are no separate legal proceedings.

The Trade secrets directive and Portuguese legislation did not specify any particular protection that must be adopted in order to protect “whistleblowers”.

Eventually with the transposition of the “whistleblowers” Directive to the Portuguese jurisdiction, it may occur. However, there is currently no measure to protect employees regarding this particular subject matter.

In general, only the person who misappropriates the secret can be liable for the actions.

However if the claimant proves that the company wins an economic advantage regarding the misappropriation of its employee and the employee acted pursuant to his functions at the company, there is the possibility that the employer can be held liable. This is a matter of proof, but there are no specific provisions in Portuguese legislation.

Non-Compete Agreement – These types of provisions prevent a party from competing with the other party, after the termination of the contract or legal relationship, and can be an effective form of protecting trade secrets, by preventing the spread of relevant information to third parties in direct competition with the holder of the trade secrets.

Despite being more frequently used in the employment field, this provision can be used in commercial law (e.g. an agency contract).

However, they are highly restrictive, particularly in terms of competition, which is why these provisions are subject to tight requirements for validity and effectiveness.

Non-Disclosure Agreement – In Portuguese commercial practice, the NDA is the preferred form of protecting trade secrets during and after the termination of a contract or legal relationship.

These are not subject to the tight requirements of the NCA, but can only be binding if the information legally/ contractually constitutes a trade secret, or at least any relevant information in terms of competition and reputation.

Consequence of breaches – According to the Portuguese Industrial Property Code, the breach of a protected trade secret constitutes a very serious administrative offence. 

No alignment with the law – One of the dangers regarding the protection of trade secrets is to include provisions that are not in alignment with the applicable legislation. It is important to be fully aware of which of the aspects are legally established and to include the appropriate clauses in contracts.

No contingency plan – It is also important that the parties have contingency plans in case of disclosure of trade secrets to mitigate the consequences.

In EU Law, Directive 2016/943 deals with the protection of trade secrets against their unlawful acquisition, use and disclosure. Therefore, it is safe to say that in EU jurisdictions, there is sufficient protection of trade secrets if this Directive was effectively transposed in the member state in question.

It is important to define what law is applicable to a certain legal relationship or contract and to make sure this law adequately protects trade secrets, both from a substantive and procedural law perspective.

Portuguese Law allows the inclusion and enforcement of a penalty for a breach of contract. It is standard practice within commercial and civil law.

The Portuguese Civil Code provides that the parties may agree upon the amount of compensation. Compensation based on agreement has its advantages because proving and quantifying damages can be difficult due to the unlawful acquisition, use and disclosure of trade secrets. A court, however, may reduce the amount of such compensation according to equity if the amount is deemed manifestly excessive.