Disclosure of Trade Secrets

Disclosure of Trade Secrets involves sharing confidential business information—such as formulas, processes, or algorithmic methods—that grants a competitive edge. This typically occurs under circumstances such as legal obligations, business transactions like mergers, or within joint ventures, usually under confidentiality protections. However, unauthorized disclosure can lead to serious civil liability, injunctions, reputational damage, and even criminal charges.

In today’s interconnected business environment, companies must balance transparency with proprietary protection. Whether compelled by court order or engaging in strategic collaborations, firms disclosing trade secrets should implement strict safeguards—such as NDAs, secure data protocols, and clear internal policies—to mitigate exposure. Ensuring legal compliance and robust documentation is essential to defend against misuse and properly support disclosure when necessary.

Possible sources of disclosure:

– current employee
– former employee
– client (ordering party)
– contractor / service provider

General risks: legal liability, financial losses, reputational damage.
Strategic importance: in a competitive market, protecting confidential information is a core business priority.

Disclosure by an Employee
Legal basis:

Article 100 §2(4) Labour Code – duty to keep employer’s information confidential.
Article 11 Unfair Competition Act (UCA) – protection of confidential business information with economic value.
Employment contract, workplace regulations, NDA.

Forms of disclosure:

Transfer of confidential information (e.g., client databases, trade or technological documentation).
Use of confidential information (e.g., applying company know-how in one’s own business, publishing data online).
Oral disclosure (e.g., in casual conversations with outsiders, even unintentionally).

Consequences:

Civil liability – damages for lost clients, revenue, or competitive advantage.
Criminal liability – fine, restriction of liberty, or up to 2 years’ imprisonment (Art. 23 UCA).
Disciplinary liability – termination without notice for serious breach of duties (Art. 52 Labour Code).

Disclosure by a Former Employee

Obligation continues after termination:

Article 11(1–2) UCA – prohibits unlawful use/disclosure even after employment ends.
Reinforced by NDA or post-employment non-compete agreements.

Forms of disclosure:

Providing client lists to a new employer or competitor.
Using strategic know-how to establish own business.
Sharing internal financial/technological data.
Discussing confidential business details in public or industry settings.

Consequences:

Civil liability – damages or compensation under Civil Code and UCA.
Criminal liability – fine, restriction of liberty, or up to 2 years’ imprisonment (Art. 23 UCA).
Contractual liability – contractual penalties under NDA or non-compete clauses.

Disclosure by a Client / Contractor

Access to confidential information:

– technologies, production processes, pricing, organizational solutions, client data.

Forms of disclosure:

– Passing documentation to competitors.
– Using know-how in other projects without consent.
– Disclosing commercial/contractual data to third parties.
– Publishing fragments of agreements.
– Publishing project materials containing trade secrets.

Consequences:

Civil liability – damages under Civil Code (Art. 471 et seq.) and UCA; contractual penalties under NDA.
Criminal liability – possible if disclosure aimed at gaining personal or financial benefit (Art. 23 UCA).
Reverse situation: contractors may also unlawfully disclose the client’s trade secrets.

Disclosure in Court Proceedings
Special regulation: Article 23(3) UCA.
Context: applies to civil proceedings held in camera (not public).
Scope: liability extends to parties, judges, clerks, experts, translators, attorneys, patent attorneys, etc.
Condition: the person must know that the information is a trade secret and still disclose/use it.
Consequences:

Criminal liability – fine, restriction of liberty, or up to 2 years’ imprisonment.