Trade secret laws and regulations in Spain

Yes. Directive (EU) 2016/943 (“Trade Secrets Directive”) was transposed into Spanish national legislation through the Spanish Trade Secrets Act no. 1/2019 (“STSA”).

Yes. Relevant regulation is also provided by the Spanish Criminal Code Act no. 10/1995, as amended, which includes criminal penalties to be imposed under certain circumstances to those who unlawfully acquire or disclose trade secrets.

The STSA defines a trade secret as information or knowledge (including technological, scientific, industrial, commercial, organizational or financial information or knowledge), which meets the following requirements: 

1. it is secret in the sense that it is not, as a body or in the precise configuration and assembly of its components, generally known among or readily accessible to persons within the circles that normally deal with the kind of information or knowledge in question;
2. it has commercial value because it is secret (commercial value may be current or potential); and
3. it has been subject to reasonable steps under the circumstances, by the holder of the trade secret, to keep it secret.

No. No specific measures or protections need to be put in place. The STSA requires for the information to be subject to “reasonable steps under the circumstances” to keep it secret. Thus, reasonable steps must be determined on a case by case basis. 

Yes. According to the STSA trade secrets are transferable and licensable.

Yes. A person who transfers or grants a license over a trade secret in exchange for a price will be liable for any damages caused if it is afterwards declared that he did not have proper ownership or the necessary rights to do so, unless otherwise stated in the transfer/licence agreement. If the transferor or licensor acted in bad faith, he will in any case be found liable for said damages.

Yes. A trade secret may be owned by several owners. In these cases, the relationship will be regulated by the agreement entered into by the parties. 
In the absence of such an agreement, the relationship will be regulated by the provisions of the STSA, according to which any of the co-owners may:

• Commercially exploit the trade secret (prior notification to the other co-owners is required);
• Carry out the necessary steps to preserve the secret nature of the trade secret;
• Exercise the civil and criminal actions in defence of the trade secret, although notification to the other co-owners is required so that those co-owners may join the action.

Granting a license to a third party over a co-owned trade secret should be granted by all co-owners unless a court grants one of the co-owners the power to grant a license in light of the particular circumstances.
Any other aspects of the co-ownership that have not been regulated in the STSA will be regulated by the regulation of the community of goods (“comunidad de bienes”).

According to the STSA, trade secrets may be infringed through their unlawful acquisition, use or disclosure. The definitions of unlawful acquisition, use and disclosure the are very similar to the ones set forth in Article 4 of the Trade Secrets Directive:

• Unlawful acquisition: Acquisition of a trade secret without the consent of the trade secret holder carried out by:
  • unauthorised access to, appropriation of, or copying of any documents, objects, materials, substances, electronic files or other mediums, containing the trade secret or from which the trade secret can be deduced;
  • any other conduct which, under the circumstances, is considered contrary to honest commercial practices.
• Unlawful use or disclosure: 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: (a) acquired the trade secret unlawfully; (b) is in breach of a confidentiality agreement or any other duty not to disclose the trade secret; (c) is in breach of a contractual or any other duty to limit the use of the trade secret.

Furthermore, 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.
As for infringing goods, the production, offering or placing on the market of infringing goods, or the importation, exportation or storage of infringing goods for those purposes, is also considered an unlawful use of a trade secret if the person carrying out such activities knew, or ought, under the circumstances, to have known that the trade secret incorporated therein was used unlawfully.
According to the STSA, infringing goods covers both products and services whose design, characteristics, functioning, production process or marketing significantly benefits from trade secrets unlawfully acquired, used or disclosed.

Yes. The STSA provides that the “Medidas de aseguramiento de la prueba” proceeding provided in Article 297 of the Spanish Civil Proceedings Act no. 1/2000 (“SCPA”) may be used by a plaintiff instituting or looking to institute legal proceedings regarding the defence of trade secrets, in order to request measures to preserve evidence of the potential infringement of trade secrets.
Article 297 of the SCPA provides that any measure may be requested as long as it is useful in order to preserve the evidence. In cases regarding the infringement of trade secrets, said measures may consist of carrying out a detailed description (with or without sample drawing) or the seizure of the infringing goods, and the materials and instruments used in the production or distribution of those infringing goods as well as the related documentation.

Interim measures
The STSA provides that any interim measures able to assure the effectiveness of the decision on the merits of the case may be requested. In particular, the STSA expressly mentions the following interim injunctions:

1. The cessation of or, as the case may be, the prohibition of the use or disclosure of the trade secret;
2. The cessation of or, as the case may be, the prohibition of the production, offering, placing on the market or use of infringing goods, or the importation, export or storage of infringing goods for those purposes;
3. The seizure and storage of the suspected infringing goods; and
4. The seizure of assets in order to assure the eventual compensation for damages.

Final measures and remedies
The final measures and remedies provided in the STSA are:

1. The declaration of the trade secret infringement.
2. The cessation or, as the case may be, the prohibition of the trade secret infringement acts.
3. The prohibition of the production, offering, placing on the market or use of infringing goods, or the importation, export or storage of infringing goods for those purposes.
4. The seizure of the infringing goods, including the recovery of those already in the market and the means exclusively destined to the production of the infringing goods in order to destroy them, modify them in order to stop the infringing of the trade secrets or give them to charities.
5. The withdrawal, which consists of giving to the claimant all or part of the documents, objects, materials, substances, electronic files and any other medium containing the trade secret and, when appropriate, their total or partial destruction.
6. The attribution of the ownership of the infringing goods to the claimant, in which the case the value of the infringing goods will be deducted from the compensation to be paid.
7. Compensation for damages in case of wilful intent or negligence by the infringer with the compensation appropriate to the actual prejudice suffered as a result of the infringement.
8. The publication of the judgment in full or in part, which must in any case preserve the confidentiality of the trade secret.

The STSA has not set forth a specific period by which the applicant must bring proceedings for a substantive decision on the merits of the claim, after being granted with interim measures.
Thus, the general rule of the Spanish Civil Procedural Act applies, according to which the applicant must institute legal proceedings within a period of 20 days following the day after the judicial authority granted the provisional and precautionary measures. After these 20 days without instituting legal proceedings leading to a decision on the merits of the case, the provisional and precautionary measures granted will cease to have effect.

Yes. If the defendant is a third party who acted in good faith, the party may request the judicial authority to order pecuniary compensation to be paid to the injured party instead of applying those measures. In this case the pecuniary compensation to the injured party needs to be reasonably satisfactory and the execution of the substituted measures would have caused that person disproportionate harm.
In these cases, 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 would have been prohibited.

Interim injunctions are available through ex parte proceedings under the Spanish Civil Procedural Act in those cases in which the applicant proves that there are urgency reasons that justify the need for the requested interim injunctions to be granted ex parte or that the hearing could compromise the purpose of the requested interim injunction. 
Final measures are not available through an ex parte hearing.

STSA provides that the financial compensation will be calculated using all appropriate factors, such as the negative economic consequences (including loss of profits) suffered by the injured party, any unfair profits gained by the infringer and, in appropriate cases, factors which are not economic, such as the moral prejudice caused to the trade secret holder by the unlawful acquisition, use or disclosure of the trade secret.
Alternatively, damages may be awarded as a lump sum to be calculated on the basis of elements such as, at a minimum, the amount of royalties or fees that the respondent would have payed to the trade secret holder for the reasonable royalty or fee license which would have allowed him to use the trade secret during the period in which its use could have been prohibited. 

STSA provides a limitation period for claims relating to misappropriation of trade secrets of three years.

The limitation period begins to run from the moment the trade secret holder gains knowledge of the person who has infringed the trade secret.

The limitation period will be interrupted by the general reasons specified in the Spanish Civil Procedural Act and the Spanish Civil Code (SCC), which mainly are the exercise of the legal action before the courts, an extrajudicial claim, or in case of force majeure. (In this case, the limitation period will be resumed at the time when the cause of the interruption has ceased).

Yes. The STSA provides that the competent judicial authorities may on their own initiative or on a duly reasoned application by a third part adopt specific measures which are deemed necessary to preserve the confidentiality of the trade secret. In particular, the STSA lists the following measures (although any measure which is adequate and proportionate may be requested): 

1. restricting access to any document, object, material, substance, electronic file or other medium containing trade secrets or alleged trade secrets, to a limited number of persons;
2. restricting access to hearings, when trade secrets or alleged trade secrets may be disclosed, and the corresponding record or transcript of those hearings to a limited number of persons;
3. making available to any person other than those comprised in the limited number of persons referred to in points (a) and (b) a non-confidential version of any judicial decision, in which the passages containing trade secrets have been removed or redacted.

The limited number of persons referred to in the measures above (a) and (b) of the second subparagraph will be no greater than necessary in order to ensure compliance with the right of the parties to the legal proceedings (i.e. “tuela judicial efectiva”) and to a fair trial, and will include, at least, one natural person from each party and the respective lawyers and court attorneys.

Yes. The STSA lists two examples of what could be considered a legitimate interest; (i) the legal obligation by a trade secret holder to disclose or communicate information to administrative or judicial authorities in the performance of their duties; and (ii) the disclosure by European or Spanish public authorities, by virtue of the obligations or prerogatives conferred on them by European or Spanish law, of the information disclosed by the companies.

In case of a manifestly unfounded action and/or action found to have been initiated abusively or in bad faith, Spanish legislation would enable the defendant to request the following measures:

• Imposing sanctions: The STSA provides a penalty fine, which could be imposed to the applicant. The fine will not exceed a third of the value of the proceeding. The quantity of the fine should be calculated considering, among other criteria, the seriousness of the damage caused, the nature and the importance of the abusive or bad faith conduct, the intention and the number of parties affected.
• Dissemination of information concerning the decision: The STSA provides that the courts may order the dissemination of information concerning the decision and the unfounded nature of the claim.
• A compensation for any damages suffered (in light of the general theory on damages).

The penalty fine and the dissemination of information could be requested in the main proceedings analysing the trade secrets infringement case although the request for a penalty fine to be imposed would be analysed by the same court on a separate proceeding linked to the main proceeding. As for the compensation for damages, it could either be requested in the same legal proceedings by means of a counterclaim or in a posterior separate proceeding.

See answer to question 13 above.

According to articles 5 a) and 20 of the Spanish Workers Statute (“SWS”), employees must fulfil specific duties of their job in accordance with the rules of good faith. Among these rules is the duty of confidentiality and professional secrecy that all employees must follow.

Although the duty of confidentiality and professional secrecy is inherent to the employment relationship, it is not specifically regulated on the SWS, and hence it is advisable that confidentiality agreements be signed or that there be clauses in the employment contract to avoid the breach of trade-secret obligations, in order to specify the extent of the confidentiality obligation. The confidentiality clause is an instrument, which corporations use to protect their interests regarding the misuse of trade secrets by their employees for their own benefit, or for the benefit of another competing company, during the employment relationship, or after its´ termination. It is also possible to agree on penalty clauses in case of infringement of the duty of confidentiality. 

It should be noted that the duty of confidentiality, which includes trade secrets, is an obligation inherent to the employment contract (even after its termination). This means that employees may not disclose secrets they have become aware of as a result of the performance of their work, and that a breach of this obligation constitutes a breach of contractual good faith. This infringement may be punishable by disciplinary dismissal under article 54 of the SWS, without prejudice to possible claims for damages caused to the employer. In this regard, in addition to dismissal, the action of disclosing company secrets would allow the company to take different actions against the implied employees. One of these actions is the indemnity action, which allows the company to demand financial compensation for all the damages that the disclosure of secrets by the employee may have caused, as well as for the benefits that may have been obtained by the party using the company's secrets for its own benefit. This action may be brought if the employee has acted culpably or willfully (i.e. acted with the full intention of disclosing trade secrets to a third party knowing the damage that this would cause, either for personal gain or to help a third party).

Note that former employees of the company may also engage in actions that are considered unfair even though they are no longer employed in the company (e.g. in the case of a former employee disclosing business secrets to the new company he or she works for). Thus, the employee is subject to the obligation to protect company secrets obtained in the course of his employment, even if his employment relationship is terminated.

In this case, the aforementioned actions may apply, minus dismissal. 

Spain has not yet transposed EU Directive 2019/1937 on whistleblower protection. However, the Spanish government has already approved the draft law protecting whistleblowers, and it should probably not require much time for the whistleblower protection law to come into force.

Under Spanish legislation and in particular Article 1903 of the Spanish Civil Code “SCC” (in combination with Article 1902 of the SCC), the employer is liable for the acts of their employees, and therefore is obliged to repair the damage caused not only by one's own acts or omissions, but through those of the persons for whom one is liable.

Without prejudice to the employer's obligation to respond to the acts of their employees, the employer is also entitled to the right to make a claim against the person who was actually responsible, at a later date. This right is stated in article 1904 of the SCC, which states that employers who pay for the damage caused by their employees may make a claim against them for the amounts paid.

The main provisions to be included in supply or similar contracts with respect to trade secrets are those relating to the confidentiality and protection of trade secrets while in possession of the supplier/third party.

In this regard, it is a common practice in Spain to include those obligations directly in the main contract by means of a single clause. Among the provisions that this kind of clause usually foresees, the following are essential for the protection of trade secrets:

1. Definition/description: what is to be considered trade secrets/confidential information and what is disclosed (this is normally detailed in an annex).
2. Obligations: exclusive use of the trade secret/confidential information in connection with the purpose of the contract, limitation of disclosure to those strictly necessary to execute the contract (it is common practice to include a list identifying those persons and to require authorisation to disclose to persons other than those listed), prohibition of analysis or reverse engineering practices, among others.
3. Protection measures to be implemented by the supplier in order to preserve the confidential nature/secrecy of the trade secret.
4. Return and/or destruction of the information when the contract expires.
5. Liability: consequences of breaches of confidentiality obligations. In this kind of contracts, it is quite common to include a penalty clause since proving the extent of damages is a difficult task.

Among the typical pitfalls in contracts regarding protecting trade secrets, there is one that appears most frequently: lack of description of the protection measures to be implemented and control mechanisms.

Parties usually foresee generic provisions regarding the protection measures to be implemented by the receiving party in order to preserve the confidential nature of the trade secret/confidential information. However, due to the commercial significance of trade secrets, it would be advisable to make an effort to define concrete protection measures that will ensure preservation of a trade secret. And even more, to regulate mechanisms that allow the disclosure party to control whether these measures are adequately implemented in order to prevent any breach that could jeopardise the secrecy of the trade secret, thus anticipating potential harm that in many cases, even with monetary compensation, is irreparable.

The most important aspect regarding protecting trade secrets in contracts cross border is choosing an applicable law which ensures adequate protection both from a substantive and procedural law perspective. 

By means of Directive (EU) 2016/943 a homogeneous and – in our opinion – sufficiently protectionist regimen has been established within the EU regarding trade secrets. Hence, there should not be significant differences in regulations between EU jurisdictions. Nevertheless, since this protection regime may not be enough should application of non-EU jurisdiction law be chosen, particular consideration should be given to this aspect.

As already noted above (see Q1), it is quite common in Spain to include penalty clauses in contracts regarding trade secrets. 

The Spanish system accepts the inclusion and enforcement of this kind of provisions and from our experience it is advisable to include this type of clause since proving damages caused by a misappropriation/unlawful use of trade secrets might be particularly difficult.