On Focus

Author: Marco Reguzzoni

Intellectual Property and Information Technology

Trade secrets and blockchain

In a recent decision on 11 November 2018, the Court of Turin denied the protection provided for trade secrets under Articles 98 and 99 of the CPI (namely the Italian Industrial Property Code) based on a lack of evidence and allegations with respect to the right invoked by the claimant.

Indeed, in the dispute at hand, the claimant only submitted a hard disk containing about 600,000 files, allegedly stolen and misappropriated by the defendants, only specifying that they consisted in technical drawings and machinery layout. In fact, it had not been highlighted the content these drawings refer to though, their innovative value as well as the improvements they made to the known and standardized state of the art.

In the light of this considerations, the Court of Turin has ruled out the possibility of even claiming the existence of a protectable trade secret, given that the know-how must first of all be punctually identified in its content and also in the "added value" in competitive terms that it embeds.

Though a clear practical problem for enterprises arises from this decision: how can entrepreneurs precisely prove the information that constitutes the know-how developed in connection with their own activity?

Currently, one and perhaps the most effective solution can be found in the innovative technology represented by Blockchain and in particular in the so-called “public blockchain” used, among others, for Bitcoin.

This type of blockchain, as an immutable distributed ledger, can in fact be easily used by companies to prove the existence and ownership of a trade secret at a given time. It should be noted that the essential requirement of secrecy is not compromised: in fact, when registering information on the blockchain, the only information publicly available is the hash and the timestamp that indicates when the chain of blocks operation occurred.

It remains open, however, the problem related to the organization and verification of the very innovative value of the confidential information. This is where the services providing blockchain certificates alike come up, since it provides services not only to register information on Bitcoin’s Blockchain, but also the professional support of specialized lawyers to verify how the information which need to protected as trade secrets must be presented, in particular with reference to the identification of the content and innovative value of these information, with the aim to quickly create an inventory of private trade and industrial secrets capable of being effectively protected and enforced. But in addition, there is something else. The online platform, in fact allows to create a proper dossier to this purpose, with the result that the user can -and should- keep secret on the same platform, avoiding to jeopardising the formal requirement to keep the information secret, but at the same time mantaining all the documentation registered on the Blockchain’s immutable ledger in a structured and organic manner.

Trade secrets have long been neglected in the IP strategy of companies and SMEs, but often the company's wealth is given, more than by patents, trademarks or other assets of intellectual property, by a set of knowledge developed over the years that represents the true core of the company’s business and, thus, cannot be left at the mercy of anyone. This statement is even more true in the current era of digitization, which allows the transfer of confidential knowledge simply through copying entire company servers.

The blockchain (and CreativitySafe) offers now a convenient and effective mean of enforcing rights against employees and unfair competitors.