Trade secret laws and regulations in Ukraine

Non-applicable as Ukraine is not a member state of the European Union. 

The list of the sources of law will include the following documents: 

• Civil Code of Ukraine No 435-IV dated 16.01.2003
• Commercial Code of Ukraine No 436-IV dated 16.01.2003
• Code of Ukraine on Administrative Offences No. 8073-X dated 07.12.1984 (Art. 1643)
• Criminal Code of Ukraine No 2341-III dated 05.04.2001 (Art. 231, 232)
• Law of Ukraine “On Information” No 2657-XII dated 02.10.1992
• Law of Ukraine “On Protection against Unfair Competition” No. 236/96-ВР dated 07.06.1996
• Resolution “On Information not Constituting Trade Secret” No 611 adopted by the Cabinet of Ministers of Ukraine dated 09.08.1993 (the “CMU Resolution”)
• Resolution of the Plenum of the High Commercial Court of Ukraine “On Certain Issues in the Practice of Dispute Resolution Related to the Protection of Intellectual Property Rights” No 12 dated 17.10.2012*

*Usually not considered as a source of law, but position of the highest courts is adhered to by the courts of lower instances 

The Civil Code of Ukraine defines a trade secret as “information which is secret in a sense that it is as a whole or in a specific form and in the aggregate of its components is unknown and is not easily accessible by persons who usually deal with the type of information it belongs to and due to this has a commercial value and was a subject of measures reasonable under existing circumstances to preserve its secrecy, undertaken by a person who lawfully controls this information”.
It also establishes that information of technical, organisational, commercial, industrial, and other nature can be considered a trade secret, except for that information, which cannot be regarded as a trade secret pursuant to the law (see the list below).
Under the Commercial Code of Ukraine, information relating to the production, technology, management, financial and other activities of an entity, the disclosure of which may cause damage to the entity (excluding state secret information) can be regarded as a trade secret.
Under the CMU Resolution, the following information cannot be regarded as a trade secret:

• incorporation documents, regulatory documents allowing to be engaged in business activities and in separate kinds of such activities;
• information under all established forms of state reporting;
• data required for verification of tax and other obligatory payments calculation and payment;
• information on the number and composition of employees, their wages as a whole and by occupations and positions, as well as the number of vacant positions;
• documents on payment of taxes and other obligatory payments;
• information on environment pollution, on non-compliance with safe working conditions, on sale of products that are harmful to health, as well as on other infringements of legislation of Ukraine, and on the amount of damages caused;
• solvency documents;
• information on the involvement of company officials in cooperatives, small businesses, unions, associations and other organisations engaged in business activity;
• information subject to disclosure under applicable law.

In order to ensure that specific information is considered a trade secret, the person that lawfully controls the such information must take “reasonable actions under existing circumstances” and to grant access to such information only to a limited group of people and only where it is necessary to do so.
Generally, considering existing court practice, it is recommended to:

• conclude NDAs with persons to whom access to a trade secret is granted;
• develop and implement internal policies (including instructions on handling trade secret information and data, list of information that constitutes trade secret, etc.);
• include non-disclosure clauses in employment contracts, contracts with suppliers and customers, etc.

In addition, certain specific protection requirements may be required, such as the Law of Ukraine On the Main Principles of Ensuring the Cybersecurity in Ukraine No 2163-VIII dated 5 October 2017.

Under Ukrainian law, trade secrets and rights to them can be transferred and licensed.

The specific consequences arising from transfer or licensing of trade secrets by a party other than the trade secrets owner depend on the terms of the initial transfer/license agreement concluded between the owner and such third party.

Co-ownership of trade secrets is not forbidden under Ukrainian law and is possible.

Civil legislation

Trade secrets are assigned to objects of intellectual property. In this case, the Civil Code of Ukraine protects the rights of trade secret`s owner as the owner of intellectual property. Any violation of the intellectual property rights of a trade secret owner listed below constitute trade secret infringement:

• the right to use a trade secret;
• the exclusive right to allow the use of trade secrets;
• the exclusive right to prevent the unauthorised disclosure, collection or use of a trade secret;
• other intellectual property rights envisaged by legislation. 

The infringement of contractual obligations is also possible, in case of failing to comply with obligations regarding trade secrets, set forth by non-disclosure agreements (or clauses). 

Competition legislation

The disclosure of trade secrets may result into the achievement of the competition benefits by a rival in a manner, which contradicts the legislation. According to the Law of Ukraine “On Protection against Unfair Competition”, the following actions will be recognised illegal and, therefore, punishable by the Antimonopoly Committee of Ukraine (the “AMCU”):

• Unlawful collection of a trade secret, namely the unlawful gathering of information, which may be deemed a trade secret, if it has caused or could have caused damage to an entity; 
• Disclosure of a trade secret, namely unauthorised disclosure of a trade secret to a third party by a person who was entrusted or became familiar with trade secret while performing the respective duties, if it has caused or could have caused damage to the entity;
• Inducement to disclosure of a trade secret, which is the prompting of a person, entrusted or aware of the trade secret due to performance of the respective duties, to disclose a trade secret if it has caused or could have caused damage to the entity;
• Misuse (misappropriation) of a trade secret, which is understood to mean the unauthorised usage of trade secret in manufacturing or considering it while planning or conducting business. 

At the same time, the practice of the AMCU regarding trade secrets violations is rather limited. 

Administrative legislation

Under Code of Ukraine on Administrative Offences, a person will be liable for obtaining, using, disclosing trade secrets for the purpose of harming the business reputation or property of another entity. 

Criminal legislation

The Criminal Code of Ukraine recognises as illegal the following: 

• Deliberate actions aimed at obtaining a trade secret for the purpose of disclosure or other use, as well as the unlawful use of such a trade secret, if it has caused significant damage to the subject of economic activity. 
• Deliberate disclosure of a trade secret without the consent of its owner by a person, who knows a trade secret on grounds of the professional or official activities if it is committed for selfish or other personal motives and has caused significant damage to the subject of economic activity.

Only a natural person, not a legal entity, may be liable for such actions. The term “significant damage” has no fixed statutory money value, so is assessed in each case. 

There are no specific measures allowing the trade secrets owner to gather and/or preserve evidence of infringement of trade secrets. However, under general procedural rules, it is possible to file within court proceedings a motion to collect evidence from the other party (provided that there is proof they have the evidence and the party filing the motion doesn’t have any other means to obtain it), or a motion to ensure evidence when it is plausible the evidence might be destroyed or cannot be collected in the future. This can be done by summoning witnesses, seeking expertise, and issuing a prohibition to conduct specific actions related to the evidence or an obligation to conduct actions in relation to the evidence.

At the same time, the trade secret owner may have a chance to trace a leak of trade secrets or gather the evidence of misappropriation with its own resources and the help of internal IT security services, official communication with third parties and the monitoring of the media. In context of application of the Law of Ukraine “On Protection against Unfair Competition”, such information may be helpful to persuade the AMCU to launch the investigation. 

Interim measures:

If the matter is considered by the court, a claimant may file a motion asking the court to apply the following interim measures:

• arresting assets and property of a defendant;
• preliminary injunction regarding disclosure and use of a trade secret;
• prohibition to take any other actions that may complicate enforcement of the decision.

Within any investigation of a violation of the Law of Ukraine “On Protection against Unfair Competition”, the AMCU is entitled to take the following prefinal (i.e. interim) decisions:

• To prohibit taking actions that have signs of violation; 
• To take specific pressing actions to protect the lawful rights and interests of other persons. 

The AMCU may proceed with the prefinal (i.e. interim) decision only on the ground of motion, filed by a complainant. 

Final measures and remedies include:

• reimbursement of damages caused by the infringement;
• injunction prohibiting use of a trade secret by an infringing party;
• removal of goods manufactured or put into civil turnover in violation of intellectual property rights from the civil turnover and destruction of such goods;
• removal of materials and equipment used primarily for manufacturing of goods infringing upon intellectual property rights from the civil turnover or removal and destruction of such materials and equipment;
• publication in media information on infringement of a trade secret and the content of the court decision on such an infringement (excluding secret/confidential information)*;
• a fine up to UAH 3,400 (EUR 116) paid for the benefit of the state along with seizure of illegally manufactured products, equipment and materials intended for its manufacturing for committing an administrative offence by infringing a trade secret;
• a fine up to 5% of the consolidated turnover in the year immediately preceding the year when the fine is imposed for committing violation of antitrust law;
• a fine of between UAH 51,000 (EUR 1,730) and UAH 136,000 (EUR 4,600) for committing a criminal offence, namely the unlawful collection of information related to a trade secret;
• a fine of between UAH 17,000 (EUR 580) and UAH 51,000 (EUR 1,730) with prohibition to hold certain positions or perform certain activity up to three years for committing a criminal offence, namely unlawful disclosure of a trade secret.

*Rarely used in practice due to the nature of trade secrets

The applicant must bring proceedings for a substantive decision on the merits of the claim (i.e. to file a claim) within ten calendar days after the interim measure was approved by a court.

Ukrainian legislation does not provide for a possibility of injunction to be substituted by damages or by other financial compensation.

At the same time, the Civil Code of Ukraine allows for the use of a one-off monetary payment instead of damages for the misuse of an intellectual property object (including trade secrets). However, it also requires that the amount of such payment will be determined (i.e. calculated) in accordance with the law. Since the procedure for such a calculation is not established regarding trade secrets infringements, this financial measure is not applicable in practice.

Ukrainian law does not establish any specific or exceptional interim or final measures and remedies available through ex parte hearings, except for the general measures and remedies described above.

Ukrainian law does not provide for any specific mechanisms for calculation of financial compensation (i.e. damages) to a trade secret’s holder. 

Thus, the calculation of such compensation is at the discretion of the party claiming the damages (to the extent it may be substantiated), and it is at the discretion of court whether to accept, reject, or decrease the claimed amount. In general, Ukrainian courts usually use the amount of profit earned as a result of a trade secret infringement as an acceptable reflection of the amount of damages incurred (i.e. based on the amount of a product manufactured using the trade secret reflected in the accounting documentation of a company).

Civil, commercial proceedings:

The standard statute of limitations applied to claims relating to trade secrets infringement is three years. 

This limitation period begins on the day when a person learned or could have learned of the infringement or the person who committed the infringement.

The limitation period for filing a claim to court is interrupted (for the time of existence of the respective circumstances):

• if the claim’s submission was prevented by an extraordinary or inevitable event (i.e. force majeure);
• in case of termination of the law or another legal act regulating the respective relations;
• if a plaintiff or a defendant is in the Armed Forces of Ukraine or in other military units established in accordance with the law that have been placed into to the martial law regime.

When these circumstances cease to exist the statute of limitations continues to run.

The statute of limitations is suspended when:

• an infringing party commits an act, which evidence proves to be an infringement;
• the plaintiff has filed a claim within the statute of limitations; however, it does not include all the events of infringement by one party or does not cover all of the damages (i.e. rights) lawfully attributed to the plaintiff.

After interruption, the limitation period begins anew.

Antitrust proceedings 

The limitation period for claims to be filed to the AMCU under the Law of Ukraine “On Protection against Unfair Competition” is six months. This period starts to run from the day when a person has learned or could have learned of the infringement or of the person who committed the infringement. The expiration of the limitation period is a reason for rejection of a complaint unless the AMCU considers that the omission of the period happened for valid reasons. 

Also, there is a limitation period for the AMCU to launch an investigation against a violator, which is three years from the day of committing a violation or from the day when the violation was stopped (for continuous actions). This limitation period may be interrupted by the launch of the relevant proceedings by the AMCU. 

Criminal proceedings: 

A person will be exempted from criminal liability if more than five years has passed between the commission of the crime and the final court sentence. This period may be interrupted if such a person takes an action to avoid criminal prosecution. In this case, the new limitation period is 15 years. The limitation period is suspended and starts running again in case a person committed a new crime of medium gravity. 

In order to preserve confidentiality of trade secrets during legal proceedings, it is possible to file a motion to hold closed court hearings within consideration of trade secrets infringements. Courts usually satisfy such motions and do not allow non-participants of the case to be present during the hearings (except experts, interpreters, witnesses, etc. where necessary). A closed hearing can also be held at the discretion of a judge in the event that the parties filed no motions seeking the application of such measures.

Information that served as the grounds to hold a closed hearing (i.e. the trade secret) is not included in the court decisions (i.e. its other rulings) when published in the court decisions registry that is open to the public.

The AMCU is also obliged to keep the secrecy of confidential information, which is obtained while requesting such information from entities. If an AMCU official discloses a trade secret, this official will be liable for this action. 

Trade secrets will be revealed under requests issued by law enforcement bodies. The obligation to provide information, which is deemed to be a trade secret, will be clearly stated in legislation as well as powers of the law-enforcement bodies to request it. 

For example, the AMCU has the right to request all information, including confidential information and trade secrets. Consequently, AMCU officials are obliged not to disclose this information. 

There are no measures available where proceedings under claims that are unfounded and/or found to have been initiated abusively or in bad faith that specifically relate to trade secrets.

However, under general provisions, the filing of a knowingly unsubstantiated claim, a claim in the absence of the subject matter of the dispute or in a dispute that is obviously unfounded constitutes an abuse of procedural rights. If the filing of a claim, statement, motion, etc. is recognised by court as an abuse of procedural rights, the court has the right to leave the claim without consideration or to return the claim, statement, motion, etc.

In this case, the court may also fine the claimant who is abusing procedural rights for the following amounts:

• In civil and administrative proceedings – UAH 630 and UAH 6 306 (USD 23 and USD 234). In the event the abuse of procedural rights occurs again, the fine is between UAH 2,102 and UAH 21,020 (USD 78 and USD 779);
• In commercial proceedings – UAH 2,102 and UAH 21,020 (USD 78 and USD 779). In the event the abuse of procedural rights occurs again, the fine is between UAH 10,510 and UAH 105,100 (USD 389 and USD 3,890).

No separate legal proceedings are required for such measures.

Other procedures (e.g. filing a claim to the AMCU) do not cite any limitations or measures for actions taken deliberately that are abusive or in bad faith.

Employers should clearly document the information defined as trade secrets and procedure of its using by the employees in its internal documentation such as:

• regulations on the regime of access to information that constitutes a trade secret of the company (including the procedure for providing information to the state and other bodies at their request that constitutes a trade secret of the company); 
• orders on approval of the list of information constituting a trade secret, or on appointment of persons responsible for the regime of keeping trade secrets; 
• job descriptions with the section on non-disclosure of trade secret, etc. 

Additionally, the employer can conclude an employee employment agreement with a section on the protection of trade secrets and the responsibility for its disclosure for those employees who work with information that constitutes a trade secret and agreement on non-disclosure of trade secrets.

Ukrainian legislation does not oblige the employee to sign a non-disclosure agreement. However, if the employee's obligation not to disclose a trade secret is stipulated in internal labour regulations (e.g. employment agreements, job descriptions, etc.) and work with specific information is the employee's responsibility, the employee must comply with the employer's instructions to protect trade secrets. 

The employee should acknowledge by its signature adherence to the relevant local acts of the company on protection of trade secrets, which contain a list of information defined as trade secrets, provide for the rights and obligations of employees to non-disclosure, and the responsibility for disclosing information defined as a trade secret of the company.

The employer may claim damages from its employees regarding misuse of trade secrets, provided that the employer can prove the employee’s fault or omission. This may have a place even without availability of internal company documentation on protection of trade secrets and/or NDAs with employees.  

The Labour Code of Ukraine allows for employment agreements to provide a condition on non-disclosure of trade secrets during employment relations and within the period specified by the parties after their termination.

In addition to any (post-contractual) confidentiality obligations, an employer may consider the following:

• Establishing the obligation to keep trade secrets confidential in internal documentation (e.g. Code of Conduct),
• Prohibition to use work e-mail, internal resources of the company after termination of the employment relations;
• Prohibition to download information defined as a trade secret to personal devices of the employee;
• Providing the employee with a laptop and phone for work. Access to work files and internal systems will be permitted only with these authorised devices;
• Conducting training with employees on the means of protection of trade secrets and confidential information. 

However, the employer cannot charge fines for breaching labour-related obligations. 

Ukrainian legislation does not provide specific regulations aimed at additional protection of “whistleblowers”, except for the protections provided for the whistleblowers of corruption. The whistleblowers of corruption are allowed to share information with limited access through special channels explicitly designed for reporting corruption-related matters. Such a person will not be liable for disclosure and has the additional protection of his/her personal safety and labour rights from any actions made by the employer for preventing reporting or sabotaging the investigation of the matter that was raised.

The other exception is established by the Criminal Code of Ukraine, based on which a person will be exempted from criminal liability if she or he publicly discloses information about committing a criminal offence or any other violation. Such a disclosure will be conducted in compliance with the requirements provided by law.
 
At the same time, protection for “whistleblowers” may be covered by the company`s internal compliance policies.

An employer can be held liable for an employee’s infringement of a third party’s trade secrets either if it is provided for in an agreement concluded between a third party and the employer, where such an agreement is in place, or if the employee was acting under the employers instructions and/or for the employer’s benefit.

The employer may then claim for damages to be compensated by the infringing employee. However, under the general rule, an employee is only liable for damages caused by infringement under the employment agreement in the amount of his average monthly salary, unless exceptions to specific categories of employees apply.

The employer cannot be held liable for an administrative or criminal offence committed by its employee.

Civil laws of Ukraine, which establishes the framework for contractual obligations, are flexible and provide that the parties to the contract are free to define the terms of cooperation unless otherwise provided by law. 

The main important points the parties should agree on are as follows:

• subject of the contract (i.e. the definition of the trade secret);
• the terms and conditions that define the permissible use of the trade secret;
• rights and obligations of the parties regarding the trade secrets;
• rules of law and jurisdiction according to which the relations under the contract are regulated;
• dispute resolution procedure, arbitration clause;
• liability of the parties for breach of contract.

Parties may include clauses related to the protection of trade secrets into the main contract or conclude an ancillary contract with a separate set of rules to balance the use and protection of the trade secret.  

The most acute problem is including into the contract the regulations that are in conflict with the applicable provisions of Ukrainian law (if the parties to the contract determine Ukrainian law as the governing law). Absence of sufficient levels of detail for the procedures of the transfer and return of trade secrets, deletion of any copies, and limiting access to the trade secrets also cause problems for the protection of trade secrets. 

If it is possible to choose the governing law, it is advisable to make a choice in favour of a jurisdiction that provides a stronger protection of trade secrets. This relates to enforcement of the trade secrets protection by the state authorities and courts. 

Parties are free to determine the liability for prevention of the breach of contract. According to the Civil Code of Ukraine, the parties to the contract may establish a penalty (fine) for failure to fulfil an obligation or in any other form, unless otherwise provided for by Ukrainian law.