Italian Supreme Court of Cassation, Criminal Section V, 20/10/2023 (filed 26/01/2024), no. 3211.
Corporate know-how, in Italy, is defined by the Court of Cassation as the body of information relating to the methods of design, production, and fine-tuning of the goods produced by a company, referring to the cognitive and organizational assets necessary for the construction, operation, and maintenance of an industrial apparatus (Cass. Crim., Section V, 18/05/2001, no. 25008). In a more recent ruling, the Court of Cassation generally defined corporate know-how as the entire body of knowledge of a company, resulting from experience and research accumulated over the years, capable of ensuring a competitive advantage and, therefore, an expectation of greater economic profit (Cass. Crim., Section V, 04/07/2020, no. 16975). It is therefore one of the company’s main assets, unquestionably deserving of preservation and legal protection. Corporate know-how, in fact, enjoys broad protection both in civil and criminal law.
However, the protections provided under criminal law appear to be far more extensive than those of a civil nature, as the offense of disclosure of scientific or industrial secrets pursuant to Article 623 of the Italian Criminal Code is interpreted broadly by case law, so as to include within the notion of “scientific or industrial secrets” even commercial information that falls outside the regulatory references provided by the Civil Code and the Industrial Property Code.
The issue of corporate know-how was once again addressed by the Court of Cassation with judgment no. 3211/2024, which examines the issue of the configurability of the offense in question also in relation to the technique known as reverse engineering and to corporate liability pursuant to Legislative Decree no. 231/2001. The case brought before the Court of Cassation concerned three individuals charged with the offense under Article 623 of the Criminal Code for having used commercial information of the company where they were employed to prepare commercial offers with another company subsequently established. From the procedural reconstruction of the case, it emerged that the commercial information acquired by the defendants concerned only a minimal part of the company database and not the entire know-how, and that the information was dated.
The Concept of Information Intended to Be Kept Secret
The Court of Cassation clarified that the notion of “commercial secrets” forming the subject matter of the offense under Article 623 of the Criminal Code is not equivalent to that indicated by Article 98 of the Industrial Property Code, which, for the purposes of protection, requires the existence of specific requirements. Pursuant to Article 98 of the IPC, “commercial secrets” are defined as business information and technical-industrial experience, including commercial information, that meet the following characteristics:
a) they are secret, in the sense that they are not, as a whole or in the precise configuration and combination of their elements, generally known or easily accessible to experts and operators in the sector;
b) they have economic value because they are secret;
c) they are subject to reasonable measures to keep them secret.
According to the Court, however, the notion of scientific or industrial secrets also includes all further information on industrial production and commercial programs which, even if they do not meet the above regulatory requirements, are characterized by the existence of a legally appreciable interest in maintaining secrecy.
The Court of Cassation once again emphasizes the principle according to which, “with regard to the disclosure of scientific or industrial secrets, the concept of information intended to be kept secret must be elaborated, from a subjective perspective, with reference to the holder of the right to maintain secrecy (the owner of the company) and, from an objective perspective, with reference to the interest in preventing the disclosure of information relating to the methods (of design, production, and fine-tuning of the goods produced) that characterize the industrial structure and, therefore, the so-called know-how, that is, the cognitive and organizational assets necessary for the construction, operation, and maintenance of an industrial apparatus. Therefore, the object of criminal protection of the offense in question must be deemed to be industrial secrecy in a broad sense, meaning by this the set of confidential knowledge and specific modus operandi capable of ensuring the minimization of design and manufacturing errors and thus the reduction of production times.”
This emphasis is made precisely in light of the need to consider the significant and growing costs that companies must bear for scientific research aimed at developing competitive technologies in increasingly global markets, with the consequence—continues the Court—that the offense under Article 623 of the Criminal Code must be deemed to exist whenever a secret relating even to only a part of the relevant production process is improperly disclosed, without it being necessary for such disclosure to concern all components of the product itself. What is relevant, in defining the concept of information intended to be kept secret, is that it includes the fundamental operations for the creation of the prototypes of a given plant, operations that constitute their “core” and that are the result of knowledge of the organization of the enterprise.
Reverse Engineering
The term, generally translated as “reverse engineering,” refers to the technique by which, starting from the observation of the final product, it is possible to trace back its individual components. Reverse engineering is therefore a process that transforms real objects into computer models through shape acquisition systems capable of reproducing the geometry of a complex object with great precision. With reference to applications in the industrial field, this means that starting from measurements and the digitization of the physical prototype of a product, it is possible to identify the individual components necessary for its production.
The Court of Cassation also clarified that the reverse engineering technique “is an activity falling within the scope of the use of industrial secrets criminally sanctioned by Article 623 of the Criminal Code, as the protection of industrial secrecy would otherwise be easily circumvented by reproducing, even repeatedly, the product of a company that has developed a complex research project for its conception. Indeed, the technique in question is nothing more than a sophisticated method of copying a product.”
Corporate Liability
Article 5 of Legislative Decree no. 231/2001 defines the liability of entities for offenses committed in their interest or to their advantage:
a) by persons who hold representative, administrative, or management functions within the entity or one of its organizational units with financial and functional autonomy, as well as by persons who exercise, even de facto, the management and control thereof;
b) by persons subject to the direction or supervision of one of the persons referred to in letter a).
Liability is excluded if the aforementioned persons acted in their own exclusive interest or in the interest of third parties. The Court of Cassation examined the issue with reference to the meaning to be attributed to the notion, contained in letter a), of persons who exercise, even de facto, the management and control of the entity. On this point, it provided a broad interpretation and stated that “the notion of control referred to in Article 5 of Legislative Decree of 8 June 2001, no. 231, does not coincide with that of corporate control outlined in Article 2359 of the Civil Code, but also includes supervisory activities or, in any case, activities of verification and influence on the economic and financial reality of the company, overlapping with those carried out by statutory auditors or other subjects formally appointed for that purpose, since the objective of the legislator is to strike at the increasingly insidious activity, also from a criminal perspective, carried out by companies through individuals who, in various capacities, operate to achieve the objectives, sometimes unlawful, that the company pursues.”
