A new take on know-how and trade secrets: Italian legislative decree No. 63/2018 and its impact on the Industrial Property Code in Italy

Just a couple of days before the June 9th deadline set by the European Parliament and Council, on June 7th 2018, the Official Gazette formally published Italian Legislative Decree No. 63/2018 (the “Decree”), by means of which Italy implemented EU Directive 2016/943 on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure.

The Decree will be effective in Italy as of June 22nd 2018 and provides interesting news, especially with reference to the definition of what falls within the borders of the granted protection on know-how and trade secrets.

Furthermore, the Decree impacts also on the procedural legal frame, bringing light on what is permitted and prohibited in Court and which new tools are offered to the Judges when it comes to lawsuits involving trade secrets.

First of all, art. 3 of the Decree, which amends art. 98 of the Italian Industrial Property Code (“IPC”), sets a clear definition of “trade secrets”, to be intended as both business and technical-industrial information, the latter comprising also commercial information. Although the former version of art. 98 IPC already offered a definition of what is protected under the Italian law, with the new wording, the Italian legislator – in compliance with the European directive – gave an even clearer message on how to identify correctly the type of information worthy to be granted the protection at hand.

But let’s find out what the changes made by the Decree are:

  • Art. 4 of the Decree (that amends art. 99 IPC)

This article provides an interesting addition when it comes to identifying the unlawful nature of the acquisition, use and disclosure of trade secrets. The renewed art. 99 IPC now considers unlawful also the conduct of those who, at the time of the acquisition, use or disclosure, were aware – or, given the circumstances, should have been aware – of the fact that the trade secrets were unlawfully obtained (directly or indirectly) by a third party. Most importantly, art. 99 IPC now provides deeper insight as to how the protection conferred by arts. 98 and 99 IPC effects manufacturing, offering, commercializing, importing, exporting or stocking goods that are in violation of the legislation on trade secrets. Goods that fall within the provision are those of which the conception, characteristic, function, manufacture and commercialization benefit from the unlawfully obtained, used or disclosed trade secrets. The unlawful nature of the conduct refers to cases in which the person doing any of the above actions, was aware – or, again, should have been aware – of the fact that the trade secrets were obtained, disclosed or used in an unlawful manner.

  • Art. 5 of the Decree (that amends art. 121-ter IPC)

This provision brings news also to the Italian Court rooms: with reference to proceedings dealing with trade secret issues, the Judge has now the power to issue an order, by means of which for those identified by the Judge (essentially, any person taking part to these proceedings) it is prohibited to use or disclose the trade secrets subject-matter of the case. The Court-order will then cease its effects if (a) it is ascertained in a definitive way that the trade secrets of the case did not meet the necessary requirements to be considered as such or (b) if the trade secrets subject-matter of the proceedings have subsequently become of general knowledge to those operating in the referred sector. As a fact, the Judge now has explicit powers to control access to the contents of trade secrets throughout proceedings and also to redact parts of his/her Court order which may provide relevant details on the trade secrets involved in the proceedings.

  • Urgency proceedings

Furthermore, the renewed legal frame on trade secrets also deals with issues concerning urgency proceedings. In particular, if requested by the party, the Judge – as an alternative to the measures that may be adopted to protect trade secrets during proceedings – can set a deposit to be paid by the other party, as assurance for the possible compensation for damages which may have been suffered by the requesting party.

  • The Italian Criminal Code

Last, the Decree has also an influence on the Italian Criminal Code, which now punishes with up to two years of prison those who have used or disclosed unlawfully obtained trade secrets in order to obtain (or allow third parties to obtain) profits. In case the crime has been carried out by means of IT instruments, the sentence is increased.

In light of these steps taken by the legislator, it seems clear that know-how and trade secrets are gaining significant importance in the Italian (but also EU) legal system and this should definitely be taken into consideration by companies – of all sizes and sectors – in understanding that they indeed have instruments to react against wrongful conducts that may hinder years of investments.

While waiting to find out how things will change from June 22nd on, we will be more than happy to give you more insight on the topic.