The aim of these articles is to keep our Clients and Associates updated about developments in the sector of Intellectual Property in general and our firm in particular. In this way, we wish to provide a broader view of the tools that the field of trade marks, domain names, patents, designs and related rights offers to entrepreneurs to enhance and protect their efforts in researching and developing new solutions and ideas.
Trade Secrets: A Recap About the Legal Protection of a Strategic Asset*
In an economy increasingly based on knowledge, a significant part of a company’s value is not necessarily embodied in a patent, a trade mark or another registered intellectual property right. Technologies, production processes, algorithms, formulas, data, commercial information, market strategies and organisational knowledge can represent an equally significant asset, even though they are not intended for disclosure. It is within this context that the protection of trade secrets comes into play.
Directive (EU) 2016/943 provides a broad definition of trade secrets that encompasses information of a technological, commercial and organisational nature.
Unlike patents and trade marks, the protection of trade secrets does not arise from registration, but from the holder’s ability to keep the information confidential. There is therefore no register of trade secrets: protection remains in force for as long as the requirements are met.
The 3 Core Requirements for Information to Constitute a Trade Secret
When it comes to protecting a company's most valuable assets, not just any information qualifies as a trade secret. To hold weight under the law, it has to meet three cumulative requirements:
- Absolute Secrecy: The information must be neither generally known nor easily accessible to people who normally deal with that kind of data. Interestingly, even if individual pieces of information are public knowledge, a unique combination or configuration of them can still be protected if the overall setup remains strictly confidential.
- Commercial Value: The secrecy itself must drive economic value. This could be anything from a proprietary technology, a chemical formula, or an industrial process, to an algorithm, a database, a client list, a business plan, or a sharp commercial strategy.
- Reasonable Steps to Protect It: This carries massive practical implications. You can't just call something a secret; you have to prove you actually treated it like one by taking reasonable steps, appropriate to the circumstances, to safeguard it.
Confidentiality + Reasonable Measures
It is a mistake to regard confidentiality as a purely contractual matter, to be resolved by including a confidentiality clause in an employment contract or a commercial agreement. Confidentiality must be regarded as a business process.
Information does not become a trade secret simply because the company designates it as ‘confidential’: it must be possible to demonstrate that appropriate measures have actually been taken to protect it.
The reasonableness of the measures depends on the nature and value of the information, the structure of the company, the individuals who have access to it, and the ways in which it is stored and shared. Factors such as the classification of information, access restrictions, internal procedures, confidentiality agreements, contractual clauses, IT security systems and physical security measures may all be relevant.
It is not necessary to create an absolute security system. However, it is necessary to be able to demonstrate that the company genuinely regards the information as confidential and recognises its value.
This exact requirement is what sets trade secrets apart from other major intellectual property tools:
- Trade Secrets: Preserve economic value precisely through non-disclosure.
- Patents: Grant an exclusive monopoly for a limited time in exchange for public disclosure of the invention.
- Copyrights: Protect the expressive form of a creative work.
- Trade marks: Safeguard distinctive signs and branding.
The Power of a Hybrid IP Strategy
Despite these differences, these tools can easily coexist within the same IP strategy. A company might choose to patent certain core aspects of a technology while keeping other elements—such as specific manufacturing methods or optimization parameters—strictly confidential as trade secrets.
The right choice always requires a case-by-case evaluation, especially keeping in mind that filing for a patent means your secret is ultimately laid bare for the world to see.
Trade Secrets vs. Know-How
A trade secret is closely linked to—yet not necessarily the exact same thing as—know-how.
Know-how encompasses the technical, operational, and organisational expertise required to develop, manufacture, or market a product or service. When that expertise meets the criteria of secrecy, commercial value, and reasonable protection measures, it crosses the line into the legal definition of a trade secret.
For any business, this shifts the mindset. The question shouldn't just be, "What patents do we own?" but rather, "What do we know that our competitors don't?".
Who Controls the Information?
Another critical puzzle piece revolves around ownership and access.
Employees, executives, consultants, collaborators, developers, suppliers, and business partners may all touch pieces of a company's informational assets. However, granting access should never automatically equal giving away control.
The Power of the "Need-to-Know" Principle
It is vital to distinguish between who needs to know a piece of information and who simply has access to it.
The need-to-know principle lies at the heart of this strategy: restricting and carefully controlling the flow of information also means reducing the risk of losing your secrecy.
Protecting Secrets Without Choking Talent
Special care must be taken when managing employment relationships. Safeguarding trade secrets can never become a blanket restriction on professional mobility.
Under European regulations, companies cannot block workers from using information that fails to qualify as a trade secret, nor can they restrict the general experience and skills honestly acquired during the normal course of their employment.
Trade Secrets as a Business Process
From this perspective, one essential principle emerges: protecting a trade secret is not simply a matter of signing an NDA.
An NDA is an important tool, but it is only one component of a broader protection framework. Effective protection requires companies to identify their strategic information, determine who should have access to it, define how it may be used, control how it is shared and circulated, and document the measures put in place.
Trade secret management should therefore become an integral part of the company’s ordinary processes for IP management, HR, procurement, cybersecurity, compliance, and the management of relationships with customers and business partners.
The New Caveat: AI and the Circulation of Information
This approach has become even more relevant in today’s technological environment. Artificial intelligence is increasing the amount of information that can be collected, processed, and transferred, while also introducing new risks to confidentiality. Proprietary data, technical documentation, source code, models, datasets, and internal processes can enter AI systems through seemingly routine activities, such as employees’ use of generative AI tools.
The EU AI Act also recognizes the need to safeguard confidential business information and trade secrets.
For businesses, therefore, the question can no longer be limited to where information is stored. It must also encompass who is authorized to use it, which tools they may use, and which systems the information may be transferred to.
Ultimately, a trade secret is not simply information that a company chooses not to disclose. It is a strategic asset whose value depends on the company’s ability to govern how that information is accessed, used, and circulated.
Legal protection is the end point of this process. Its effectiveness depends, first and foremost, on the organization’s ability to know what needs to be protected—and to demonstrate that it has actually taken the necessary steps to protect it.
* contributions by Mattia Dalla Costa and Alessia Ferraro Attorneys-at-Law (CBA – www.cbalex.com)