The Supreme Court rules on violation of trade secrets and unfair competition.
The First Civil Section of the Court of Cassation, with order no. 37362 of November 29, 2021, has recently ruled on the subject of violation of trade secrets and unfair competition.
The dispute involved, on one hand, a company active in the creation and production of components for vehicles (the “plaintiff”) and, on the other, a U.S. company producing various mechanical components for bicycles (the “defendant”). The parties had signed an agreement for the manufacture of molds and the production of a hydraulic disc brake for bicycles, alongside a parallel confidentiality agreement. According to the plaintiff, the defendant had breached both agreements, essentially taking away its confidential know-how and, in doing so, committing a breach of trade secrets pursuant to art. 99 of the Italian IP Code and unfair competition pursuant to art. 2598 of the Italian Civil Code.
The plaintiff’s claims for damages were rejected by both the Florence IP Court and the Florence Court of Appeal. According to the latter, the plaintiff had not demonstrated that it had devised original innovations or technical solutions, having limited itself to a mere engineering activity that could easily be replicated by any expert in the field and that was therefore unsuitable for protection under the law. The judge had also observed that the plaintiff, in order to protect its trade secrets pursuant to articles 98 and 99 of the Italian IP Code, was required to provide the court with evidence of the content of the information in question, its economic value and the secrecy measures adopted, which it failed to do. In the absence of such evidence, according to the Court, there was “no possibility whatsoever of deeming such information non-disclosable to third parties”, and there was also no possibility “of recognising in the possible disclosure conduct put in place […] a hypothesis of unfair competition due to an infringement of professional correctness”.
The appellant therefore decided to take its case to the Supreme Court, claiming, among other things, both the invalidity of the judgment due to the failure to hear as expert witness on the existence or otherwise of confidential information pursuant to art. 98 IP Code, and the violation or misapplication of article 2598 no. 3 of the Italian Civil Code regarding unfair competition by the Florence Court of Appeal.
The Court of Cassation rejected the first ground of appeal stating that it the documents produced in court were sufficient to consider the plaintiff’s conduct as a “mere engineering activity” that cannot be protected as know-how pursuant to art. 98 of the Italian IP Code, without the need for an expert witness. Moreover, as further justification for the refusal to hear an expert witness, the Court noted that the appellant had not even indicated what the allegedly confidential information stolen was. As regards the second ground, the Court reiterated that, for the purposes of asserting liability for unfair competition, a party who enforces its confidential information is required to provide proof of conduct that is contrary to the principles of professional correctness and capable to damage it. According to the Judge, such liability on the part of the US company cannot exist, since the plaintiff had not provided evidence of its confidential information and its activity was to be considered a mere engineering activity replicable by any expert.
For the above reasons, the Court rejected the appeal and therefore definitively confirmed the appeal decision.