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What is know-how and how can we protect it?

Published in: Intellectual Property
by Maria Giulia Carlutti
Home > What is know-how and how can we protect it?

In intellectual property (patents, trademarks, designs, etc.), know-how is one of the intangible assets most attacked by competitors. It is precisely because of its undeniable competitive value that we must properly protect it. In this paper we will address this topic systematically:

  1. How is know-how legally defined?
  2. Know-how as a trade secret
  3. How to defend know-how?
  4. Know-how theft and unfair competition

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1. How is know-how legally defined?

Know-how refers to the wealth of information, knowledge and skills that help a company to run smoothly. While the expression usually indicates technical-industrial skills, it actually designates a set of rules relating to entrepreneurial activity, the marketing of products, sales techniques and, more generally, everything relating to business management. In the Italian legal system, identifying a univocal definition of know-how poses no easy task.

The Italian legislature’s sole contribution relates to franchising, which is defined as a wealth of unpatented practical knowledge that is secret, substantial and identified. The requirements of secrecy and substantiality result in the lack of immediate knowledge of the information and in their even minimal economic consistency.

The ” identifiability” requirement implies the objectification of the information on a material medium that enables the other requirements to be verified. This legislation refers to EC Regulation No. 772/2004.

In its judgement no. 1699/1985, Our Court of Cassation defined know-how as “knowledge, normally intended to remain secret, pertaining to the industrial techniques necessary to produce a good, to implement a manufacturing procedure, or for the appropriate use of a technology, or the conduct rules inferred from studies and experiences of entrepreneurial management, in the field of commercial technique and strictly pertaining to the organisational and commercial sector“.

In short, know-how is a dynamic concept with a perimeter that is not easy to identify.

2. Know-how as a trade secret

Know-how does not have a precise and unequivocal definition in our legal system, but industrial secrecy does. The entrepreneur could however decide to keep his knowledge confidential, provided that it is possible in relation to the type of know-how.

As a matter of fact, Article 98 of the Industrial Property Code regulates ‘trade secrets’ by defining them as business information and technical-industrial experience, including commercial experience, subject to the legitimate control of the owner.

The Code then identifies the conditions necessary for this information to receive effective protection:

  • secrecy: meaning that such information must not be generally known, or easily accessible for experts and operators in the field. These assets must not be traceable in their entirety outside the owner company and must be the product of a significant use of resources, time and means that would require third parties to make a commensurate effort to achieve the same results.
  • economic value: they must possess real economic value due to their secrecy;
  • secrecy measures: the owners of the knowledge must implement appropriate measures to be considered reasonably adequate to keep it confidential.

The reasonable adequacy of such measures to maintain secrecy is assessed by the parameters of “normal diligence” and “state of the art“. When the know-how is kept secret, the rules on secrets apply (Art. 98-99 IPC). Additional protection instruments can be found in the Criminal Code in Articles 622 and 623, concerning the disclosure of professional secrets and the disclosure of scientific or industrial secrets, and in the Civil Code in Article 2105 regarding protection against infringing employees

Know-how may not necessarily be secret in the technical sense; it can also be protected in this case as well. In section 4 (Unfair Competition and Know-how Theft) we will examine how it can be protected.

3. How to defend know-how?

As mentioned, when know-how is kept secret, it is protected as an “industrial secret“, provided that adequate measures of secrecy are applied. To grant protection to secret know-how, the Law identifies two sets of measures:

  • legal measures, such as existing contracts with suppliers and/or employees, corporate regulations and circulars, specific secrecy clauses;
  • physical measures, composed of informational technologies and organisational techniques designed to prevent third parties from gaining actual access to confidential knowledge.

Once such measures are in place and the other conditions required by Art. 98 IPC are met, Art. 99 grants the owner of the know-how real protection of the secret information, to be exercised against anyone who unlawfully gains possession of it. Hence, this excludes:

  • the hypothesis of independent acquisition of information and/or in which access to such data has not led to any illegitimate direct or indirect invasion of the confidentiality sphere of the legitimate owner (e.g. reverse engineering);
  • the cases of purchase of industrial secrets in a particular capacity (e.g. licence).

In the absence of these measures, the protection of that knowledge will be governed by a different discipline, that of unfair competition.

4. Know-how theft and unfair competition

Italian Civil Code requires entrepreneurs to behave correctly and without causing damage to other entrepreneurs (see Art. 2598 CC). From this perspective, the discipline of unfair competition represents a further viewpoint and reinforcement of the protection of know-how.

The Court of Bologna dealt with a case concerning the misappropriation and exploitation of information between competitors for which the protection measures required by Article 98(3) of the CPI had not been implemented. The plaintiff claimed in court the theft of information not previously secured by appropriate means. 

As the protection granted by Articles 98 and 99 cannot be applied due to the absence of the third of the requirements (secrecy measures), the Board has ruled that in such circumstances the case of unfair competition can still be configured as long as <<the use takes place in an improper manner and is potentially a harbinger of competitive damage, whether potential or actual>>.

Article 2598 CC (namely the discipline of unfair competition) intervenes in a complementary way provided, of course, that the subjective and objective requirements it prescribes are met.

More than any other, the case of know-how misappropriation must be subjected to thorough analysis. As already mentioned, it is possible to counteract the wrongdoing of others by a variety of means (and by resorting to a number of protection institutions, both civil and criminal).

To sum up, every company should act on a preventive basis to protect its know-how. However, should the awareness of its value only arise after the theft or misappropriation, there would still be the possibility of pursuing legal action to stop the offence, to seize the misappropriated material and information and to obtain damage compensation.

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Publication date: 26 October 2021
Last update: 7 September 2023
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