Revealing company secrets by former employees
Within the scope of unfair competition, is the disclosure of the so-called “industrial secret” or “ company secret”.
As an example of this conflict, the employee who leaves a company and starts a parallel business that operates in the same sector, using the confidential information obtained in his previous employment to gain market shares.
The same controversy can also arise if the former worker does not become a competing employer, but signs for another company that is, using the confidential information obtained in his previous job for the benefit of the new company for which he works.
The article 13 of the Unfair Competition Law, determines that: “the disclosure or exploitation, without the authorization of the owner, of secrets is considered unfair industrial or any other kind of business secrets to which there has been legitimate access, but with a duty of confidentiality, or illegitimately, as a result of any of the conducts provided for in the following section or in article 14.”
In this office, through our Department of Law Mercantil, we have defended both companies and businessmen who accused or were accused of revealing secrets, and therefore unfair competition. In this article, we will explain the weapons that the company can use to combat the actions of its former workers, who, once they have passed to the competition, use confidential information in an infringing manner.
Definition of Industrial or Company Secret
The judgment of the Provincial Court of León of March 1, 2001, accepting the formulation of GÓMEZ SEGADE, referred to the “industrial secret” as “all knowledge reserved about ideas, products or industrial procedures that the employer, due to their competitive value for the company, wishes to keep hidden”.
They must also be considered unfair conduct, according to art. 13 and 14 of the Unfair Competition Law, the induction of workers, suppliers or clients to violate their contractual obligations and reveal secrets of a third party. Even the induction of third parties to terminate a contract, when the purpose is the dissemination or exploitation of an industrial or business secret.
Revealing company secrets by former employees – Civil actions
Article 32 of the Unfair Competition Law lists the different actions that can be brought in case of unfair conduct. Among them are the action declaring disloyalty, the compensation action and the publication of the sentence in the media.
In the civil jurisdictional sphere, the principle of the burden of proof applies to the person making the claim. Which means that whoever brings legal action through a lawsuit must prove the veracity of what he alleges.
However, the evidentiary requirement is more flexible in the civil field than in the criminal one. Here, unfair conduct can be considered proven by mere indications or even by presumptions, something that is prohibited in the Criminal Jurisdiction.
Going back to the case in question, the fact that the competing company has come to know of ideas confidentially developed in the company where the former worker previously worked can lead to the conviction of the Courts of which was the consequence of an unfair disclosure by the former worker. And it is even possible to invert the burden of proof in civil litigation so that it was the competing company that had to prove, given certain indications or presumptions, that it had no knowledge of those secrets due to the disclosure of the former worker.
It must be taken into account that acts of unfair competition prescribe a year after they are committed or after they are known by the affected party and in any case 3 years after they are carried out. Therefore, the company that considers itself affected by the acts of a former worker must sue within the established deadlines.
Legal actions under the Unfair Competition Law could be directed against both the disloyal former employee and his new company since the art. 34 of the Unfair Competition Law confers passive legitimacy on all those who have carried out or ordered the unfair act or have cooperated in its carrying out.
Although the company for which the former worker now works, alleges that it is unrelated to the breach, in any case it could be considered that it incurs in the assumption prohibited in art. 14.2 LCD. Since even if he had not been the inducer of that contractual violation of the former worker, he would have benefited from that violation of others. In this case, the law includes a final requirement such as the dissemination or exploitation of an industrial or business secret, as we saw previously, or the intention of eliminating a competitor from the market.
Revealing company secrets by former employees – Criminal actions
The Penal Code contemplates the following criminal figures in relation to the disclosure of secrets:
- Article 279: “The diffusion, disclosure or transfer of a company secret carried out by whoever has a legal or contractual obligation to keep confidentiality will be punished with a prison sentence of 2 to 4 years and a fine of 12 to 24 months. ”
- Art. 199.1: “Anyone who reveals other people’s secrets, of which he has knowledge by reason of his trade or his labor relations, will be punished with a prison sentence of 1 to 3 years and a fine of 6 to 12 months.”
Art. 200 of the Criminal Code extends this criminal offense to the discovery, disclosure or transfer of confidential data of legal entities.
If the ex-worker discloses data that he knew confidentially in the company and that can be considered secret, he could be accused of these two crimes: mainly defined in art. 279 for being more specific and qualified.
Judicial action in criminal proceedings will only prosper if the reality of the punishable disclosure of secrets is proven with some forcefulness. In Criminal Law, the accusatory principle and the presumption of innocence govern as constitutional law. In no case will mere indications fit, unless they lead the Courts to the conviction that the defendant really revealed to people linked to his new company or any other the internal secrets of his previous company. The mere knowledge on the part of the company that hired the former worker of these secrets, by itself, could be grounds for a judicial investigation, but foreseeably it would not be enough to obtain a conviction if evidence on the communication of such secrets is not obtained.
The law not only punishes the perpetrator of the criminal acts but also the inducers, accomplices and concealers. Likewise, the Criminal Jurisdiction is competent to sentence the payment of the appropriate compensation to repair the damage caused. A possible criminal action against the former worker could affect his new company (civil liability) and his managers or executives personally (criminal liability).
Our Law also governs the principle of minimum intervention of Criminal Law. By virtue of this principle, which is increasingly applied, there is a tendency towards a restrictive interpretation of the penal system; the Criminal Jurisdiction is reserved for the repression of sufficiently serious behaviors – from the objective or subjective point of view – relegating the repression of other acts to the other jurisdictions.
The advantage of choosing the Criminal Jurisdiction is that the prosecution is not usually ordered to pay costs if the defendant is not sentenced. Although the Criminal Code contemplates the criminal figure of false accusation, the truth is that the jurisprudence, both of the Supreme Court and of the Provincial Courts and specifically of the Court of Madrid, is extremely restrictive when it comes to reprimanding the complainant or denouncer in case of not prospering your complaint or complaint.
The prescription of the crime is 5 years from the moment of its commission (art. 131 C.P.)
