Among the most important assets of businesses are, without a doubt, their business secrets. What would be the value of well-known global business giants (eg Amazon, Apple, Google, Huawei, Samsung, Pfizer, Coca-Cola, etc.) if their business secrets were not sufficiently secured? And yet, what would be the value of the businesses we know (and / or our own business) if their business secrets were well known to all? We all know the consequences of a leak in any business. But those who know said consequences better are those who have suffered them.
It is appropriate, given the (indisputable) value of business secrets, to try to understand some basics -especially the content of business secrecy. This will be a necessary condition for us to better approach, in our next article, the relevant protection provided by our legislation. Also, the consequences for offenders.
Holder and Content of the Right
The holder of the property of a business secret can be any natural or legal person engaged in business activity.
As for the content of a business secret: According to Greek case law, a business secret “… consists of a wide range of information, which incorporate significant economic value for the entity and are related to the conduct of business” (664/2019 Court of Appeal of Thessaloniki, NOMOS).
Provisions for the content (and protection) of business secrets are also found in international legal texts. Specifically: the International TRIPs Agreement (which was ratified by Law 2290/1995 and already constitutes domestic law) attributes to business secrecy the very broad characterization of undisclosed information.
Value and importance
Business secrecy is directly linked to the operation of a business at an organizational, production and / or commercial level. It is, at times, the result of the work, research and / or cooperation of the business’s executives, management and property, and sometimes of its employees. Others are an asset acquired, for a price (often high). Some others are acquired through acquisitions and mergers. The ultimate goal, in any case, is to enhance the development course of the business in the competitive, as a rule, economic environment of its activity.
Business secrets are just a set of important information of a technical, scientific and / or commercial nature. It is easy to understand that the preservation of the secrecy that governs the sensitive and confidential elements of a business is the one that can help, decisively at times, in creating and maintaining a competitive edge. And for this very reason, it has economic value – a very significant one for some businesses.
The value and importance of business confidentiality increases according to the scope and, respectively, the importance of its sensitive and confidential elements: The greater the competitive advantage it gives to the business, the greater its value. This is, however, a complex concept. Following, we will attempt to decode it.
The concept of business confidentiality covers a wide range of information. It contains, in particular, “… more specific categories of confidentiality, such as trade secrets, confidential information, industrial secrets and confidential know-how” (664/2019 Court of Appeal of Thessaloniki, NOMOS). These categories, which are not very clearly distinct, are:
“Trade secret” means information which cumulatively meets the following conditions:
(aa) are confidential, in the sense that, either as a whole or in terms of the exact content and layout of their components, they are not widely known to persons belonging to the circles usually dealing with this type of information or can be directly available these persons,
(bb) have commercial value arising from their confidentiality;
(cc) the person who has legally acquired control over the information in question has made reasonable efforts, taking into account the circumstances, to protect its confidentiality [: article 22A §4 a’ of law 1733/1987-as amended by law 4605/2019 (: which transposed into national law the provisions of Directive 2016/943 on the protection of commercial secrecy) ˙ we must note that the content of the specific provision is identical to the provision of Article 39 §2 of the above International TRIPs Agreement on undisclosed information]
According to Greek case law, which meets the above definition, “… trade secret is any important commercial information that is not widely known and accessible to third parties, it has real or potential value to its holder, because it gives the business a competitive advantage, and its holder takes the appropriate measures to keep it secret. ” (664/2019 Court of Appeal of Thessaloniki, NOMOS).
This concept includes commercial and organizational secrets of the business. Among other things, business organization and management strategies, such as customer statements, network of distributors or suppliers, studies to promote products and services – research and marketing methods, pricing policy design, sales evaluation lists and forecasts for their development, its design or means of promoting the products of a business, etc. (inter: 76/2020 Court of Appeal of Piraeus, 664/2019, Court of First Instance of Athens 1141/2016, 1717/2013 Supreme Court – NOMOS). Also, information regarding data of upcoming bids in tender procedures (1643/2020 Court of Auditors, NOMOS). As well as investment information.
Confidential information is distinguished from trade secrets, as it is not directly (but only indirectly) linked to the business of the entity.
Other confidential information includes information “other than business secrets which may be considered confidential in so far as their disclosure could substantially harm a person or a business” (C-162/2015 ECJ).
The distinction between confidential information and trade secrets is particularly important in relation to the obligation of confidentiality in the context of employment relationships. Specifically, after the termination in any way of the employment relationship, the employee is responsible for the observance of business secrets only. Regarding confidential information, on the other hand, such continue to be safeguarded as long as there is a relevant, explicit, provision for the maintenance of a (post-contractual) obligation of confidentiality.
According to rulings of case law regatding industrial secrets, industrial secrecy is “… any matter relating to a certain undertaking known only to a narrow circle of persons, who are bound by secrecy and whose observance is in accordance with will and financial interests of the owner of the business. Especially the industrial secrets are of technical nature, as designs and methods of construction, product compositions, technical types, standards, designs and models” (7440/1999 Multimember Court of First Instance of Athens, NOMOS). However, it is possible to include studies that led to negative conclusions (regarding, for example, the impossibility of manufacturing a product with a specific methodology). Also, software, computer programs, results of experiments etc, they are also under industrial secrecy.
We find the meaning and content of industrial secrecy, at the legislative level, also in the regulations concerning the technology transfer contract. The framework identifies as possible the “announcement of industrial secrets with drawings, diagrams, models, standards, instructions, proportions, conditions, procedures, specifications and production methods that refer to the production holding. Such industrial secrets are mainly the technical information, data or knowledge concerning methods, experiences or skills, which have a practical application especially in the production of goods and provision of services, as long as they have not become more widely known” (art. 21 §1 law 1733/1987).
The concept of confidential know-how includes knowledge, methodology and technical experience, regarding the kind and the way of construction and marketing, e.g. products and goods (2/1979 Fair Trade Commission). And this information is undoubtedly confidential and plays an important role in the competitiveness of the business.
Confidential know-how, despite its distinction by jurisprudence (inter: 664/2019 Court of Appeal of Thessaloniki, NOMOS) is usually treated as a more specific manifestation of commercial or industrial secrecy (depending on whether it is commercial or industrial know-how, respectively).
The content of business secrecy is extremely extensive. It covers a wide range of information and data, related to the whole business activity. Thus, its value and importance for the business and, much more, the importance of securing it, is easily understood.
The legislator has already taken the relevant provisions for its protection; it has already determined the consequences and sanctions for violators.
It is up to the business to utilize the relevant facilities and up to its legal representatives to facilitate the relevant planning. But about them, see our article to follow.
P.S. A brief version of this article has been published in MAKEDONIA Newspaper (January 23rd, 2022).
Disclaimer: the information provided in this article is not (and is not intended to) constitute legal advice. Legal advice can only be offered by a competent attorney and after the latter takes into consideration all the relevant to your case data that you will provide them with. See here for more details.