Your former employee took the clients: what you can claim

The case, in five lines

What is brought

The actions in article 32 of the Unfair Competition Act, for a declaration, cessation, removal, rectification, damages and unjust enrichment, joined to the civil actions in article 9 of the Trade Secrets Act.

Before which court

The Commercial Section of the Tribunal de Instancia (the first-instance court). Article 12 of the Trade Secrets Act assigns these disputes to the civil jurisdiction, in whichever form of trial the Ley de Enjuiciamiento Civil provides.

Deadline

One year from the moment the actions could be brought and you knew the person who carried out the unfair act, under article 35 of the Unfair Competition Act. And in any event three years from the end of the conduct, even if you did not know who was behind it.

Who can bring it

Any individual or company taking part in the market whose economic interests are directly harmed or threatened by the unfair conduct, under article 33 of the Unfair Competition Act. The unjust enrichment action lies only with the holder of the infringed legal position.

Financial risk

If the claim is dismissed you may be ordered to pay the other side's costs, having advanced the IT and accounting expert evidence. Interim measures usually require security, and if the case is lost that security answers for the harm caused to the other side.

Leaving and competing is lawful; taking the data is not

It is worth starting with what cannot be claimed, because that is where many cases are lost. Article 1.3 of the Trade Secrets Act states that protection of a secret cannot restrict workers' mobility and, in particular, cannot be used to limit their use of the experience and skills honestly acquired in the normal course of their professional career, nor of information that does not meet all the requirements of a trade secret.

What is unfair is defined by article 14 of the Unfair Competition Act. Its paragraph 1 treats as unfair the inducement of workers, suppliers, customers and other bound parties to breach the basic contractual duties they owe to competitors. Taking staff who are still employed, or pushing a client to break a contract in force, falls squarely within that paragraph.

Paragraph 2 draws the fine line. Inducing the regular termination of a contract, or taking advantage for oneself of someone else's breach of contract, is unfair only where, being known, it aims at the disclosure or exploitation of an industrial or business secret, or comes with circumstances such as deceit, the intention of driving a competitor out of the market, or others of the same kind. That is the point to be proved.

Your database is a secret only if you protected it

Article 1.1 of the Trade Secrets Act requires three cumulative conditions. The information, whether technological, scientific, industrial, commercial, organisational or financial, must be secret, that is, not generally known or readily accessible to those working in that circle; it must have business value, actual or potential, precisely because it is secret; and it must have been subject to reasonable steps by its holder to keep it secret.

The third condition is the one that decides these cases and the one almost never prepared. Reasonable steps mean per-user access credentials, permissions limited by role, signed confidentiality agreements, a security policy communicated to staff and a log of downloads from the system. Without any of that, a client list is hard to defend as a trade secret.

If those steps were in place, the protection is broad. Article 1.2 grants it to the holder who legitimately controls the secret and extends it against any form of unlawful obtaining, use or disclosure, or of unlawful origin. And article 4 recalls that a trade secret is transferable, so whoever bought a business also bought the protection of its confidential information.

Copying the file before leaving is unlawful obtaining

Article 3.1 of the Trade Secrets Act treats as unlawful the obtaining, without the holder's consent, through unauthorised access, appropriation or copying of documents, objects, materials, electronic files or other media containing the secret or from which it can be deduced, as well as through any other conduct contrary to fair commercial practices. Downloading the whole CRM in the final days of the contract is precisely that.

Article 3.2 adds use and disclosure. They are unlawful where carried out without consent by someone who obtained the secret unlawfully, who breached a confidentiality agreement or any other duty not to disclose it, or who breached a contractual or other obligation limiting its use. This is where the clause he signed on his first day at the company carries weight.

And article 3.3 reaches the new company. It also treats as unlawful the obtaining, use or disclosure where the person carrying it out knows, or in the circumstances ought to have known, that the secret was being obtained directly or indirectly from someone using or disclosing it unlawfully. A company incorporated by the salesperson himself weeks before he resigned can hardly plead ignorance.

The first goal is not damages: it is stopping the conduct

Article 32.1 of the Unfair Competition Act offers six actions: a declaration of unfairness, cessation or prohibition of future repetition, removal of the effects produced, rectification of misleading information, damages where there was intent or negligence, and unjust enrichment, which lies only where the conduct harms a position protected by an exclusive right or another of similar economic content.

Article 9.1 of the Trade Secrets Act adds tools that in a case like this are worth more than money: cessation of the infringing acts, prohibition on marketing infringing goods, seizure of those goods and, above all, removal, which includes handing over to the claimant the documents, electronic files and other media containing the secret, and where appropriate their total or partial destruction.

Two further rules in article 9 are worth knowing. The duration of the cessation ordered by the judgment must be long enough to eliminate any competitive or economic advantage drawn from the violation. And its paragraph 6 allows a liquidated coercive payment to be sought for each day until compliance, which is added to what is otherwise recoverable and makes continued use of the information very expensive.

One year from knowing who did it, three from its end

Article 35 of the Unfair Competition Act sets a double time limit. The actions in article 32 prescribe one year after the moment they could be brought and the entitled party knew the person who carried out the unfair act. And, in any event, three years after the moment the conduct ended.

That year is short and usually starts earlier than the business owner thinks, because it does not run from when the loss is quantified, but from when the action could be brought knowing the author. An email from a client saying who called him, or the Companies Register entry naming the former employee as director, are already milestones marking the start.

The three-year period works as an absolute cap and runs from when the conduct ended, not from when it began. In a poaching campaign that continues month after month the conduct has not ended, which works in your favour, but relying on that to delay the claim is risky: every month that passes makes clients harder to win back and the loss more expensive to prove.

How we run the case, step by step

1. 1

   We secure the digital evidence before anything is touched

   We freeze access logs, CRM downloads, corporate email and the devices handed back, with an expert report establishing their integrity. This evidence degrades within weeks, and without it the case rests on suspicion alone.

2. 2

   We check the information really was a trade secret

   We review whether the three conditions in article 1.1 of the Trade Secrets Act are met, and in particular what reasonable protective steps existed: confidentiality agreements, role-based permissions, credentials and a security policy communicated to staff.

3. 3

   We demand cessation and the return of the files

   We send the former employee and his company a demand setting out the evidence gathered, the legal characterisation under article 3 of the Trade Secrets Act and article 14 of the Unfair Competition Act, and the requirement to stop and to return or destroy the information.

4. 4

   We sue and apply for interim measures

   We join the actions in article 32 of the Unfair Competition Act and article 9 of the Trade Secrets Act before the Commercial Section of the Tribunal de Instancia, applying for immediate cessation while the case is decided.

5. 5

   We quantify the loss client by client

   An accounting expert report compares turnover and margin from the lost clients before and after the departure, and isolates the effect of the unfair conduct from other market causes, which is exactly what the other side will dispute.

6. 6

   Judgment, effective removal and coercive payment

   Once judgment is obtained, we require the media to be handed over or destroyed, we make sure the cessation lasts long enough to eliminate the advantage gained, and we claim the daily coercive payment for non-compliance under article 9.6 of the Trade Secrets Act.

The law that applies

• Art. 14 Ley 3/1991 de Competencia Desleal. Treats as unfair the inducement of workers, suppliers and customers to breach basic contractual duties owed to competitors, and treats inducing the regular termination of a contract, or profiting from another's breach, as unfair only where it seeks to disclose or exploit a trade secret or is accompanied by deceit, an intention to drive out a competitor or similar circumstances. BOE-A-1991-628
• Art. 32 Ley 3/1991 de Competencia Desleal. Lists the actions available against unfair competition: declaration, cessation or prohibition, removal of effects, rectification, damages where there was intent or negligence, and unjust enrichment, and allows the court to order publication of the judgment at the defendant's expense. BOE-A-1991-628
• Art. 35 Ley 3/1991 de Competencia Desleal. Subjects the article 32 actions to a one-year prescription from when they could be brought and the entitled party knew the person who carried out the unfair act, and in any event to three years from the end of the conduct. BOE-A-1991-628
• Art. 1 Ley 1/2019 de Secretos Empresariales. Defines a trade secret as information that is secret, has business value because it is secret and has been subject to reasonable protective steps by its holder, and makes clear that the Act does not restrict workers' mobility or their use of honestly acquired experience. BOE-A-2019-2364
• Art. 3 Ley 1/2019 de Secretos Empresariales. Declares unlawful the obtaining of a secret through unauthorised access, appropriation or copying of files and media, as well as its use or disclosure by anyone who obtained it unlawfully or breached a duty of confidentiality, and extends unlawfulness to anyone who knew or ought to have known the secret came from an unlawful source. BOE-A-2019-2364
• Art. 9 Ley 1/2019 de Secretos Empresariales. Lists the civil actions against violation of trade secrets: declaration, cessation and prohibition, seizure of infringing goods, removal with delivery or destruction of the media, damages where there was intent or negligence, and publication of the judgment, and allows a daily coercive payment until compliance. BOE-A-2019-2364

Each article checked against the consolidated text published in the BOE (the Spanish official gazette).

Frequently asked questions