UNFAIR COMPETITION: EMPLOYEES WHO TAKE TRADE SECRETS. DEFENSIVE STRATEGY IN COURT

We recently began to explain a case of unfair competition led by SNAbogados: two companies with similar and complementary business activities, each one spending years developing its own industrial property, know-how and trade secrets which have been preserved with great care. Upon merging, some employees left taking these secrets and know-how with them.

UNFAIR COMPETITION: EMPLOYEES WHO TAKE TRADE SECRETS. DEFENSIVE STRATEGY IN COURT

However, in cases when this proof cannot be achieved without accessing devices or facilities, it is necessary to apply for legal help.

Preliminary Proceedings

In view of well-founded suspicions, the Court is requested to allow us to examine the contents of computers, electronic devices, documentation and anything else appropriate which can form the basis for a future lawsuit. In the case we are currently discussing it was not necessary, since this work had been carried out independently.

Precautionary measures

The Court is urged to pass an early ruling due to the urgency of the case as a result of damages being caused to the client.

There have to be specific requisites and, above all, they have to be essential to advance the resolution in order to suspend the activity of the infringing company. If you wait for the end of the process, it may be too late to save the situation as the client-company will have already sunk due to the substantial harm being caused.

Lawsuit

Based on the evidence obtained in the investigation or the preliminary hearings, a lawsuit is brought against the offending company to get a judgment so as to prohibit them from continuing with this unfair business activity and to enable the client to recover the damage done.

Legal Strategies regarding Unfair Competition: A Specific Example

We have taken recently on a case of unfair competition, in co-operation with labour lawyers and computer experts. It is about two companies working in a similar and complementary business: laser machinery. Each one has spent years developing itsindustrial property, know-how and trade secrets which have been well-preserved with great care.

As a result of common interests and business decisions, these companies merged. This decisive step launched them internationally so that they became market leaders. Both companies transferred assets relating to intellectual property, know-how and trade secrets. They shared and disclosed them to employees of the other company which had been their competitor for years.

The new company is launched and begins to bear fruit, but after a while, some strange things begin to happen. Some employees, who came from one of the old companies, leave voluntarily. Their departure occurs gradually: an employee every month.

‘Coincidentally’ these employees who voluntarily terminated their contracts began to draw all the employees who worked with them to the new company they have created. The ex-employees had formed a new limited partnership with a very similar name and dedicated to offering the same services as those as the company which they left.

In turn, ’coincidentally’, over the next few months, the company detects that several clients stop working with them, and thanks to some rumours, they find out that these clients have engaged the services of the company which has been established by these former employees.

After analysing the critical situation, it is crucial to define what legal and operational strategy to implement. After a thorough analysis of the electronic media, it was found that the client’s suspicions were not unfounded. A number of indications of unfair competition were discovered. The specialist technician found:

-    Five of the people being investigated who are still working in the company are taking information and know-how from the company to the new company
-    Before leaving, two of these who had already left were making pricing agreements with some clients and they also took the customer database away.

Faced with such evidence, the client asked for advice on what options exist in our legislation to address this through the courts.

Santiago Nadal and Jordi Farré

www.snabogados.com