2. EU-China Workshop on Protection of Trade Secrets
Definition and Scope of Protection
Italy
Alessandra Stabilini
Qingdao, 20 May 2010

3. Table of contents
The scope of protection: the nature of the information
The scope of protection: secrecy
The scope of protection under the law of unfair competition
Trade secrets and ex-employees

4. General
Pursuant to Article 98 of the Industrial Property Code, the law of trade secrets protects a firm’s “undisclosed information and technical-industrial experiences, including those of a commercial nature”
Patentable inventions which the firm decides not to patent
Non-patentable inventions, including:
Discoveries
Formulas
Inventions that do not meet the absolute “novelty” requirement
Know-how
Business methods
The scope of protection: the nature of the information
The scope of protection: secrecy
The scope of protection under the law of unfair competition
Trade secrets and ex-employees

5. Examples
Examples:
Technical information related to the process of production of a specific good (Tribunal of Brescia, 04/29/2004)
Technical information (including software) for the production of a machine (Tribunal of Modena, 07/15/1996)
Chemical formulas (Court of Appeals of Milan, 11/29/2002)
Know-how, defined as “the body of industrial information necessary for the construction, functioning, and maintenance of a plant” (Italian Supreme Court, 05/18/2001, No )
The scope of protection: the nature of the information
The scope of protection: secrecy
The scope of protection under the law of unfair competition
Trade secrets and ex-employees

6. Focus: Know-how
“Know-how means a package of non-patented practical information, resulting from experience and testing, which is:
(i) secret, that is to say, not generally known or easily accessible,
(ii) substantial, that is to say, significant and useful for the production of the contract products, and
(iii) identified, that is to say, described in a sufficiently comprehensive manner so as to make it possible to verify that it fulfils the criteria of secrecy and substantiality”
Commission Regulation No. 772/2004 on technology transfer agreements, Article 1
Note: notion mat be broader for the purposes of trade secret protection
The scope of protection: the nature of the information
The scope of protection: secrecy
The scope of protection under the law of unfair competition
Trade secrets and ex-employees

7. Focus: Know-how
‘Substantial’ means that the know-how includes information which is significant and useful for the production of the products …or the application of the process. This condition is not satisfied where the contract product can be produced on the basis of freely available technology.
‘Identified’ means that it is possible to verify that the licensed know-how fulfils the criteria of secrecy and substantiality. …This condition is satisfied where the licensed know-how is described in manuals or other written form. However, in some cases this may not be reasonably possible. In such cases it is sufficient to describe [in the agreement] the general nature of the know-how and to list the employees that will be or have been involved…
EU Commission’s Guidelines on the application of Article 101 TFEU to technology transfer agreements, 04/27/2004
The scope of protection: the nature of the information
The scope of protection: secrecy
The scope of protection under the law of unfair competition
Trade secrets and ex-employees

8. Focus: Commercial information and business methods
In principle, the Courts agree that commercial information and business methods are protected under Articles of the Industrial Property Code, if they meet the secrecy requirements
However, opinions differ on certain types of commercial information. Examples:
Client lists: generally considered to be protected (see Tribunal of Brescia, 04/29/2004), but the secrecy requirement is interpreted strictly (Tribunal of Venice, 03/08/2006: agent list is not protected because agents disclose their status to clients in normal commercial contacts)
Model contracts and procedures: some Courts have granted protection to model contracts and forms used in the activity of counseling in the area of quality certifications (ISO 9001) (Tribunal of Mantova, 04/12/2002); but others have held that they can’t be considered as generally not known, since they tend to reproduce the guidelines issued by certification organisms (Tribunal of Catania, 10/10/2005)
The scope of protection: the nature of the information
The scope of protection: secrecy
The scope of protection under the law of unfair competition
Trade secrets and ex-employees

9. General remarks
The scope of protection: the nature of the information
The scope of protection: secrecy
The scope of protection under the law of unfair competition
Trade secrets and ex-employees
Pursuant to Article 98 of the Industrial Property Code, information is protected as a trade secret provided that:
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 experts or operators of the industry
has commercial value because it is secret
has been subject to reasonable steps under the circumstances, by the persons lawfully in the control of the information, to keep it secret

10. The secrecy requirement
The scope of protection: the nature of the information
The scope of protection: secrecy
The scope of protection under the law of unfair competition
Trade secrets and ex-employees
The secrecy requirement is relative:
The secrecy requirement is met provided that the information is not generally known or readily accessible as a body or in the precise configuration of its components; therefore, the information may be secret even though its single components are not (Court of Appeals of Milan, 06/13/2007)
The information can be considered as not “generally known” or “readily accessible” even though a competitor may reach it through time-consuming and costly autonomous research (reverse engineering?) (Court of Appeals of Milan, 11/29/2002, unfair competition case)

11. Commercial value
Information must have commercial value because it is secret:
The information must be useful for the activity performed by the firm, having regard to a competitor operating without the information
But it is not required that the information has an actual market price as such
Generally, the firm is not required to prove that the creation of the information implied a specific investment
The scope of protection: the nature of the information
The scope of protection: secrecy
The scope of protection under the law of unfair competition
Trade secrets and ex-employees

12. Steps to keep the information secret
Reasonable steps to keep the information secret:
“Reasonable” implies a cost-benefit analysis: the firm is not required to adopt the maximum level of protection no matter the cost
A certain level of dissemination of the information within the firm’s organization does not impair its secrecy (Tribunal of Verona, 05/04/1996)
The disclosure of the information to employees who deal with the information in their activity does not impair secrecy because employees are bound by the duty of loyalty under the law (Article 2105 of the Italian Civil Code) (Court of Appeals of Milan, 06/13/2007). But for third parties, a contractual confidentiality obligation is generally required (see Italian Supreme Court, 05/30/2007)
The scope of protection: the nature of the information
The scope of protection: secrecy
The scope of protection under the law of unfair competition
Trade secrets and ex-employees

13. The scope of protection under the law of unfair competition
Although the law of unfair competition as applied to the acquisition or use of trade secrets requires the information to be secret, it does not require the secrecy requirements provided by Article 98 of the Industrial Code to be met
The firm does not have to prove that secrecy has been protected by taking appropriate steps under the strict standard of Article 98
Information which is accessible to employees, but clearly not meant to be known out of the firm’s organization, even though the firm has not taken specific steps to protect secrecy (Italian Supreme Court, 05/30/2007; but for a stricter standard see for example Tribunal of Milan, 03/31/2004)
Note: in unfair competition cases, protection is conditional upon the unfairness of the manner of acquisition or use of the information. But if unfairness is proved, the accessibility of the information through reverse engineering does not prevent the protection (Tribunal of Milan, 11/29/2002)
The scope of protection: the nature of the information
The scope of protection: secrecy
The scope of protection under the law of unfair competition
Trade secrets and ex-employees

14. Trade secrets and ex employees
In real life, the majority of cases relate to acquisition and use of secret information by ex employees, either in a competitor’s firm or in their autonomous activity
Principles:
The use of secret information that the ex employee has learnt in his former role to the benefit of a competitor can be an act of unfair competition
However, protected secret information does not include the abilities and professional skills and experience that the employee has developed in the performance of his job
Constitutional relevance of the right to express one’s own personality and the freedom to exercise an economic activity (Articles 2, 41 of the Italian Constitution)
Italian Supreme Court, 10/11/2002, No
The scope of protection: the nature of the information
The scope of protection: secrecy
The scope of protection under the law of unfair competition
Trade secrets and ex-employees

15. Trade secrets and ex employees
Case law:
Chemical formulas cannot be considered as a part of the professional skills and experience of the ex employee, who may not therefore use it in a competitor’s business (Court of Appeals of Milan, 11/29/2002)
The competitor who hires another’s employee with the sole purpose of exploiting the other’s know how commits an act of unfair competition (Tribunal of Orvieto, 07/04/1996: the circumstance was however evident from the facts of the case)
Client lists are not part of the professional skills of the employee (Italian Supreme Court, 03/20/1991, No. 3011)
The systematic attempt by the ex employee to acquire clients of his former employer by virtue of the information acquired during his job may be an act of unfair competition; however, the acquisition of single clients may be physiological (Italian Supreme Court, 05/30/2007)
The scope of protection: the nature of the information
The scope of protection: secrecy
The scope of protection under the law of unfair competition
Trade secrets and ex-employees

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