Confidential information in Italy
January 2019 | SPECIAL REPORT: INTELLECTUAL PROPERTY
Financier Worldwide Magazine
January 2019 Issue
In Italy, technical and commercial confidential information is protected pursuant to article 98 of the IP Code. Under this provision, in order to enjoy protection, the information is required to be secret, in the sense that the pieces of information shall not, altogether or in the precise configuration and combination of their elements, be generally known or readily accessible to experts and operators in the field, have economic value as long as it is kept secret and be subject to measures considered reasonably appropriate to keep it secret.
Where these requirements are met, pursuant to article 99 of the IP Code, the legitimate holder of the information is entitled to prohibit third parties from acquiring, disclosing to third parties or abusively using such information, unless the latter has been obtained by the third party independently.
In addition, based on article 2598 of the Civil Code, the unlawful acquisition, disclosure or use of confidential information by a competitor amounts to unfair competition even if the information was not subject to appropriate security measures, where it was in any case not to be disclosed outside the company. A decision by the IP Court of Brescia in early 2018 confirmed that the unfair competition protection can also be granted to bankrupt companies, even if they are not operating in the market and therefore formally have no competitors.
The Civil Code also provides for a general obligation of confidentiality on the part of the employee under its article 2105. Pursuant to this provision, an employee cannot disclose information pertaining to the organisation, its methods of production or use it in such manner as may be prejudicial to the company itself.
Finally, disclosing confidential information is punishable under articles 621, 622 and 623 of the Criminal Code.
A combination of the above provisions allows companies to respond when rights to their confidential information are infringed.
The likelihood of success in court proceedings against infringers is largely dependent on the measures adopted by the company to keep information secret. This means that a company holding confidential information should keep it secret by adopting technical measures which, taking into account the status of the technology and the nature and value of the information to be protected, appear appropriate to protect it. As a consequence, for example, the simple requirements of username and password to access a laptop would not be enough.
On the other hand, the company should also enter into appropriate non-disclosure agreements with its commercial partners, and use disclaimers to identify its confidential information and oblige any receiving party not to disclose information. In addition, the company should adopt appropriate internal policies. Employees must be aware of the value of the company’s confidential information and the consequences of disclosing it to unauthorised third parties. They must be compelled to follow specific policies on how to manage their company devices, how to use their private emails and devices, where to save their files and how to protect them.
Confidential information is enforced before intellectual property (IP) courts, which are available in any Italian region except Valle d’Aosta. The remedies available vary depending on whether urgent proceedings or ordinary proceedings on the merits are commenced.
Urgent remedies include, first of all, search orders. They authorise the confidential information holder to inspect the premises of a suspected infringer together with a court official, in order to collect evidence of the infringement (e.g., copies of the petitioner’s confidential information unlawfully kept in the infringing company’s server, pictures of goods manufactured using this information and relevant manufacturing tools, copies of technical and commercial documents and copies of accounting records). These orders are often granted ex parte, i.e., without giving prior notice to the counterparty, which makes them extremely effective precisely because the counterparty will not be prepared for the inspection. In many cases, where the inspection enabled collection of significant evidence of infringement, the infringer will be inclined to try and reach a settlement before merits proceedings are commenced.
Other urgent measures available are seizure orders. Also in this case, the confidential information holder is authorised to access the premises of the infringer together with a court official, but here the aim will be to have the infringing goods seized by the court official. These orders can also be granted ex parte.
Finally, the most relevant urgent remedies are preliminary injunction orders, by means of which the infringer is enjoined from any further infringement. These orders, which are rarely granted ex parte, can be assisted by penalty provisions if an injunction is breached or there is a delay in complying with one. In addition, the holder of the confidential information is entitled to request that the infringer is ordered to publish the injunction at his or her cost in one or more newspapers or magazines. However, this request is rarely granted, as most Italian courts tend to grant it only at the end of proceedings.
The above remedies can also be granted in the same proceedings, i.e., all can be requested with the same motion.
Search orders and seizure orders require the subsequent commencement of proceedings within 20 working days or 31 calendar days (whichever expires later), otherwise they will basically expire. On the contrary, preliminary injunction orders will become final if they are not appealed and overturned, with no need for the intellectual property rights (IPR) holder to subsequently commence proceedings on the merits if he or she is not interested in obtaining further remedies available at the end of merits proceedings. Nevertheless, proceedings on the merits might in any case be commenced by the counterparty, including to overturn the preliminary decision.
Remedies available at the end of proceedings on the merits are mainly final injunctions, damages, order of withdrawal of the infringing goods from the market, and orders to destroy the infringing goods and production tools.
Damages are calculated under the IP Code, which sets three main criteria: (i) the right holder’s lost profit and consequential damages; (ii) the reasonable royalty that the infringer would have paid if it had obtained a regular licence to use the confidential information (which criterion constitutes an alternative way to determine the right holder’s lost profit); and (iii) the infringer’s profit, alternatively to the right holder’s lost profit, or insofar as they exceed it.
In order to assess damages, the holder of the confidential information can also request the judge to order the alleged infringer to disclose banking, financial and commercial documentation, including accounting records, so as to quantify the amount of sales and revenues related to the goods commercialised using the information in suit. In addition, the holder of the confidential information can request that the infringer is ordered to disclose information related to the origin and distribution of the infringing goods.
Elena Martini is a partner at Martini Manna Avvocati. She can be contacted on +39 02 4507 4727 or by email: email@example.com.
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Martini Manna Avvocati