The Milan IP Court on the protection of confidential information and the unlawful solicitation of employees

With a preliminary decision of 26 February 2018, the IP Court of Milan recapped the principles governing unfair competition for the violation of confidential information and the unlawful solicitation of employees (docket no. 53629/18, Judge Mrs Giani). We recently mentioned a decision regarding a similar matter here on this blog.

In this specific case, three agents of the petitioner simultaneously terminated the respective agency agreements and subsequently contacted the petitioner’s customers to offer them products of their new principal, competing with the former. In doing so, according to the petitioner, its former agents and its competitor used the confidential information of the same petitioner, such as contractual documentation, information on the machines installed on customer premises, company development plans, and company and commercial policies. Hence the commencement of the precautionary action against all of these subjects (the “defendants”), to have them enjoined from continuing the actions being challenged.

In the decision under review, the Judge, after having heard some witnesses indicated by the parties, concluded that the petitioner’s claims were grounded and that the misappropriation of its information by the defendants certainly amounted to an act of unfair competition pursuant to Art. 2598 no. 3 Civil Code. Recalling consistent precedents, the decision highlighted in particular that “this rule is applicable even if not all the requirements of Articles 98 and 99 IP code [which protect confidential information] are met, for example because the company information is easily accessible or not adequately protected“. The Judge also pointed out that the confidentiality of the information must be assessed with reference to its entirety and combination, and is therefore not excluded from the fact that individual pieces of information are in the public domain or easily accessible. In the order, however, it was not assessed whether the information at issue actually possessed the confidentiality requirements necessary to make it protectable also pursuant to the aforementioned Articles 98 and 99 IP code.

The order further specified that “there is no doubt that information about company policy, customer lists, contractual conditions applied and in particular sales prices, discounts applicable to customers and the relative percentage of commissions that are paid to agencies, is commercial information with economic value that grant their user a parasitic advantage to the detriment of the legitimate holder“. The decision therefore enjoined the defendants from using and / or disclosing the information in question to third parties and from contacting the customers of the petitioner using this information for a period of twelve months, with a penalty of € 5,000 for each violation of the injunction.

The order then moved on to the assessment of the lawfulness of the solicitation of employees, which was also complained about by the petitioner. In this case, the actions of the defendants were considered lawful, as they consisted in hiring a limited number of employees and agents, which was deemed not sufficient to deconstruct the organisation of the petitioner’s company considering its significant size and the modest incidence of the solicited staff. In this regard, the order specified that “the solicitation is unlawful where the unfair competitor appropriates the human resources of others in ways that put at risk the business continuity of the entrepreneur in its competitive capacity, or provoke alterations beyond the threshold of what can reasonably be foreseen, not susceptible to being absorbed and eliminated through the adequate organisation of the enterprise. The passage of employees to another company, in spite of the inconvenience and damage physiologically connected to it, is in itself lawful and conforms to relevant rules, including constitutional provisions (articles 4, 35 and 41 of the Constitution). Such a passage can acquire connotations of illegality only in the presence of particular indices, such as, for example, the qualitative-quantitative relevance of the passage, the abnormal methods of solicitation or the illicit character of the latter because they are confusing, denigratory or deceptive“. These methods, as mentioned, were however not considered to exist in this case, hence the relevant unfair competition claim was dismissed.