This is the 6th in a series of articles written by members of our International Trade Secrets Group, highlighting points of note regarding the protection of Trade Secrets in various jurisdictions. This article focuses on Italy.
Italian law has provided strong protection for trade secrets since the late '90s following the implementation of the TRIPs Agreement, when secret information was protected according to unfair competition rules, and particularly after the entry into force of the Italian IP Code ("IPC") in 2005, which defined trade secrets as Intellectual Property Rights ("IPR").
Therefore, some provisions of the Trade Secrets Directive (the "Directive") were not implemented by the Italian legislator in 2018, but others are worth noting, in particular since some of them may impact the Italian IPR legal system as a whole.
Unlike in many countries, in Italy trade secrets are included in the definition of IPRs - together with trademarks, designs, patents, etc. Consequently, they enjoyed all the judicial remedies - both in ordinary and precautionary proceedings ("PI") - provided for IPRs: injunction, seizure, penalties, withdrawal from the market, destruction, damages and publication of the decision. PI proceedings were - and still are - a common way to enforce trade secrets in Italy. In particular, as a first step, trade secrets' holders usually start with "descrizione" proceeding, which lead to an evidentiary seizure ordered by the Court, allowing a Bailiff to access the alleged infringer's premises - usually without prior notice - to search and collect evidence of the alleged infringement to be used in PI or ordinary proceedings.
Moreover, Italian law already listed the three requirements to be met by information to be considered trade secret: it is secret, has commercial value and has been subject to reasonable steps to keep it secret.
Unlawful acquisition, use and disclosure of trade secrets were also criminal offences under certain circumstances. However, the Italian Criminal Code did not include specific provisions in this regard and Italian Courts applied rules destined to punish different crimes.
It is also worth pointing out that, since 2015, resident and non-resident taxpayers carrying out R&D in Italy can benefit, under certain conditions, from a tax exemption for income arising from direct use or licensing of intangible assets, including trade secrets (via the so called "Patent Box").
As a result a significant level of attention was paid to trade secrets' regulation, including under transactional and contractual perspectives, by companies operating in Italy.
Proving that the person ought to have known that the acquisition, use and disclosure were unlawful could often be done only by means of presumptions of law. For this purpose, preparatory activities would be very helpful for both sides. For instance:
4. The continuation of the alleged unlawful use of a trade secret subject to a payment or a guarantee
These new options are available in:
These measures do not appear totally in line with the nature of the trade secrets: information are put outside the control of their legitimate holder, who cannot check the implementation of adequate measures and their actual protection; it is unclear whether the infringer authorized to use the information is then allowed to take steps to stop a breach; the spread could impact the economic value of the trade secrets. Therefore, Italian Courts should decide to apply them very strictly.
5. Damages compensation for any injury caused by revoked precautionary measures
The IPC now provides that the holder has to compensate the damage caused by measures obtained to protect trade secrets where they are revoked because: no ordinary proceeding have been started; they lapsed due to any act or omission by the holder; or it is subsequently found that there has been no unlawful acquisition, use or disclosure of the trade secrets.
This is a quite disruptive rule as Italian case law and scholars have debated for a long time whether it is appropriate to provide for compensation in case PI measures are revoked because it is subsequently found that there has been no IPR infringement (apart from cases of intent, gross negligence and lack of prudence, which are punished by Italian law).
Therefore, this provision could be possibly extended to cases involving other IPRs although the peculiar nature of trade secrets could be an argument against it. Trade secrets are unregistered IPRs and their existence, contents and infringement must be proved by the legitimate holder when enforcing them. On the contrary, registered IPRs enjoy a presumption of validity. This is the reason why a higher degree of care and liability can be required of the owners of unregistered IPRs.
6. Criminal rules
a) New scope
The Italian Criminal Code now includes a specific rule punishing the unlawful acquisition, use and disclosure of trade secrets with imprisonment of up to two years. It also definitively clarifies that criminal law protects the same information falling into the trade secrets' definition provided by IPC.
Therefore, criminal and civil relief can be exploited at the same time, even if the acquisition, use and disclosure of trade secrets amount to a crime only in case of intent (while civil liability also occurs in case of gross and non-gross negligence).
The law also sets an increased punishment for crimes committed using "computerised means". The Italian legislator's goal (outlined in the preparatory works to the law implementing the Directive) was to be particularly strict against cyber theft but this change will probably result in a general increase of punishments as acquisition, use and disclosure of trade secrets nearly always involve the use of IT tools nowadays.
b) Punishment for non-compliance with Courts' decisions
The Italian Criminal Code now punishes with imprisonment of up to three years and a fine up to EU 1.032:
The substance of the Italian law remains unaltered after the Directive but the most significant changes - particularly the new liability threshold - show that preparatory activities by both sides still make the difference, impacting both the existence of the trade secrets, the ability to effectively react to a breach and the arguments to be exploited during litigation.