How can I protect my company’s intangibles?
A company’s intangible assets, such as trade secrets, employee knowledge, reputation, intellectual property and technology, are among the most valuable assets for companies in the digital business environment. According to estimates, intangible assets account for 90% of the value of the US S&P 500 stock index. In addition, digital transformation confronts companies with emerging risks, such as cybersecurity and data protection.
Given their importance in business, it is important to know how we can protect these intangibles.
I. Business secrets as intangible assets
Trade secrets are one of the most valuable intangible assets of a company. They may include know-how, industrial or manufacturing processes, financial information, business strategies, marketing plans, customer databases and any other information that provides a competitive advantage to the company. In Spain, the protection of trade secrets is regulated by Law 1/2019, of 20 February, on Trade Secrets.
According to the Law, a trade secret is any information that meets the following requirements:
- It must be secret, i.e. it must not be generally known or accessible to persons in the same sector of activity.
- Have a commercial value, either actual or potential, precisely because it is secret.
- The holder must take reasonable measures to keep it secret.
How can I protect my trade secrets?
To adequately protect the company’s confidential information or trade secrets, a number of measures can be taken:
- Non-Disclosure Agreements (In Spanish, Acuerdos de Confidencialidad): are essential legal tools for protecting sensitive information in the business environment. These contracts allow two or more parties to share confidential information for specific purposes, ensuring that such information is not disclosed or used beyond the purposes for which it is shared. Such contracts are usually signed in the context of collaborative relationships between companies, whereby one or both parties share knowledge of high commercial, technological or industrial value.
- Clauses in employment contracts: To prevent the leakage of trade secrets, it is of high importance to include confidentiality and non-competition clauses in employment contracts, especially for key employees who handle strategic information. It is important to check that these clauses are proportionate and comply with applicable labour law, otherwise they may be declared null and void.
- Internal confidentiality policies: It is important to define clear protocols on how sensitive company information should be handled, and to limit access to it only to those employees who strictly need it for the performance of their duties.
- Appropriate technology management and cybersecurity.
Can I authorise third parties to use my trade secrets?
Yes, the trade secret is transferable and can be licensed to third parties. By means of a licence agreement, the trade secret holder may authorise a third party to use or exploit certain confidential information for the purposes specified in the agreement. The specific purpose of the use of the confidential information, the duration of the licence, geographic delimitation, among other aspects, must be agreed in the agreement. For this purpose, it is very important to have the appropriate legal advice.
II. Industrial and intellectual property rights as intangible assets
A company whose intellectual and industrial property assets are well protected attracts investors more easily. Thus, in daily practice, it is observed that the lack of protection of these rights, especially in property-intensive industries such as the technology industry, can negatively affect the valuation of a company in sales transactions.
a) Industrial property rights
Industrial property rights include, inter alia:
- Trademarks confer on their owner the exclusive right to use a distinctive sign to identify goods or services, thus preventing unauthorised use by third parties in the same field of trade.
- Designs protect the external appearance of a product, provided it is novel and has a unique character.
- Patents or utility models grant their holder the exclusive right to exploit a technical invention or functional improvement for a certain period of time, generally 20 years for patents and 10 years for utility models, subject to compliance with a series of requirements.
It is important to note that, with very few exceptions, only valid registration with the competent office grants industrial property rights. This means that only those rights that are duly registered can be licensed or claimed against third parties.
b) Intellectual property rights
However, unlike industrial property rights, they do not need to be registered in order to be recognised and protected. Within the scope of intellectual property we could include, for example, computer programs or software.
However, their registration in the Industrial Property Register may be useful to prove the authorship of the work, which would simplify the resolution of conflicts or facilitate the management of rights or the economic exploitation of rights.
How can I authorise third parties to use my intellectual property rights?
In order to obtain economic benefits from our intellectual and industrial property rights, licences may be granted. These licences allow third parties to use, reproduce or distribute our creations, trademarks, designs or inventions under specific conditions, such as territorial scope, exclusivity and duration of the agreement. To ensure that these licences comply with applicable laws and adequately protect the interests of the owner, it is essential to have the appropriate legal advice.
III. Cybersecurity and data protection
Data protection is mandatory for companies that process personal data in the course of their economic activity, regardless of their sector of activity or turnover.
In accordance with Organic Law 3/2018, of 5 December, on Personal Data Protection and guarantee of digital rights, administrative sanctions for non-compliance with data protection imposed by the Spanish Data Protection Agency (AEPD) can reach up to 20 million euros. According to the report published by the AEPD, the complaints raised most frequently by citizens correspond to unwanted advertising, Internet services, commerce, hotel and catering and video surveillance.
In order to avoid sanctions, it is important to have the appropriate legal advice to ensure compliance with data protection regulations. In addition, it is essential to have internal protocols for the processing of personal data, ensuring the privacy of users and the exercise of their rights. This not only avoids the risk of sanctions, but also strengthens the confidence of customers and users in the responsible management of their personal information.
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