Keeping trade secrets
Written by: Halka Jaklová
Photo by: René Jakl
Do you or your firm have know-how that you’d rather not lose? Under certain conditions trade secrecy can be involved that is protected by the Commercial Code. What follows from it?
According to 17, trade secrecy is all matters of a business, production, or technical nature connected with a company, if such matters have at least potential material or intangible value, are not commonly accessible in relevant business circles, and should be kept secret according to the wishes of the entrepreneur.
Protected facts can be primarily the aforementioned know-how or, for example, knowledge of the overall state of the firm, its customers, etc. Protection of trade secrecy can be invoked both through so-called general protection, as stipulated in §20 of the Commercial Code, and through protection against unfair competition as per §51-55 of the Commercial Code. The protective means are the same (for greater detail see the article on unfair competition in our May issue). The difference is that if unfair competition is involved the protected facts must be usable in competition.
The following criteria must be met to receive recourse for breaching trade secrecy in unfair competition. Information that should be kept confidential must not be normally accessible. The offender must learn the secret in a qualified manner, either based on employment with the competitor, as a result of some other relationship/function with the competitor, or through an inadmissible method or his own or someone else’s illegal actions. This can involve employees or trainees, or persons in contracts on mandates or sales representation. It is recommended that employment contracts contain the obligation to keep trade secrets confidential. Persons in relationships with the competition other than employment can include family members or close friends.
Another criterion assumes that the offender passes a trade secret to a third party without authorization, allows access to it, or uses it for his own or another’s benefit. Acts of either commission or omission can evoke recourse (if the offender failed to properly protect a trade secret), not necessarily intentionally, as negligence suffices. The source of the secret can be an entrepreneur or a licensing contract. But if the source is an employee who makes use of secrets after leaving his employment, a breach of trade secrecy is not involved (unless so stipulated by contract).
This article was prepared in cooperation with attorney-at-law Mgr. Tomáš Krejčí.