Protection of Know-How: Search and Seizure Requires Prima Facie Ownership and Infringement of Proper Trade Secrets (Milan IP Court Order of 10/12/2024)
The search and seizure of evidence pursuant to the Italian IP Code, within the framework of know-how litigations, requires prima facie evidence of ownership and infringement of trade secrets in the strict sense. This was confirmed in a recent case brought by an Italian company before the Milan IP Court through a summary judgment application.
The Facts
The claimant, a large company specialising in ICT services and solutions, had been, for nearly 15 years, one of the main IT service providers for an Italian Authority, having repeatedly won contracts for software development through successive public tenders.
This long-standing relationship had allegedly led to the development of significant proprietary know-how concerning the operation of the IT services under the contracts, as well as the related processes and methodologies.
In 2020, however, the service contract was awarded, through a new tender, to a competing company. A handover phase followed, during which a team of specialists with prior experience at the Authority—allegedly in possession of the proprietary know-how—participated on behalf of the claimant.
According to the claimant, during the handover, the new contractor conducted a targeted poaching of personnel to acquire the know-how needed to perform the services—know-how it allegedly lacked—thus misappropriating it.
To support this claim, the claimant stated that, within a few months of the transition phase, five employees from its dedicated team had been hired by the new contractor. Subsequent checks by IT experts on its systems and the former employees’ computers revealed evidence of massive file downloads and the use of external storage devices.
Claiming unfair competition through employee poaching and trade secret misappropriation, the claimant urgently requested the Milan IP Court to grant an ex parte search order against the competitor and its former employees. This search order was intended to target all information traceable to the claimant or its clients, whether digital or paper-based, both at the competitor’s premises and the private homes of the individuals involved.
The claimant further requested that, following the search, the Court (i) order the seizure of misappropriated trade secrets, and (ii) issue an injunction: against the competitor, to prevent further use of the poached employees’ services, and ii) against all respondents to prohibit the use of the trade secrets in question.
The Court initially granted the ex parte order, which was executed by a bailiff and a court appointed expert, through the extraction and copying of files from both corporate and personal devices.
After the search was carried out, the respondents, having appeared in court, argued that the employee transfers at the centre of the litigation were part of normal workers’ mobility. They also contested the claimant’s ownership of the know-how in question, referring to provisions in the tender specifications between the Authority and its suppliers.
The Decision
The judge revoked the previously granted ex parte order and dismissed the application in its entirety, ordering the claimant to pay costs and damages for abuse of process.
Regarding the alleged unfair competition via employee poaching, the judge noted that under EU law, worker mobility is considered a normal aspect of a functioning market and a fundamental freedom. Only in exceptional cases—such as a massive recruitment campaign targeting key personnel of a competitor with no economic rationale—could it constitute unlawful competitive conduct.
According to the judge, merely hiring another company’s employees, even with the intent to acquire specific know-how, does not amount to unfair competition, even if some Italian case law takes a different view. That view, he argued, unduly restricts competition under the guise of professional fairness and fosters protectionist ideology.
Applying these principles, the judge held that the case before him did not constitute unfair employee poaching. He noted that only five employees had been hired (out of more than 5,000 employed by the claimant); the hiring occurred after the contract award and handover; there was no evidence that the former employees had irreplaceable skills; and that dismantling the dedicated team after the contract ended was a natural consequence. The claimant had itself hired twelve of the competitor’s employees during 2023, and the former employees had been assigned to other projects after the loss of the tender.
The judge concluded that the claimant’s service capacity had not been undermined, either during the contract or for future tenders. Consequently, he denied the requested injunction regarding the continued employment of the former employees.
On Trade Secret Misappropriation the rejection of the application was even more decisive.
The respondents had presented evidence that the tender documents stipulated all rights over deliverables—including software and documentation—belonged to the Authority. Additionally, any developed know-how was to be transferred to the new contractor in the event of a supplier change.
The judge invited the claimant to clarify whether it owned any proper trade secrets distinct from the know-how acquired through its work for the Authority. The claimant responded that the massive file copying executed by its former employees inevitably included additional proprietary information, which it tried to list, and argued that the Court should first review the content of the collected material before making a final determination.
The judge rejected this position.
He observed that the Italian IP Code allows the granting of search orders, in cases of confidential information-related litigations, but only for the protection of proper trade secrets, i.e. information that meets the three specific requirements set out in Article 98 of the same Code (that is not known among, or readily accessible to, persons within the circles that normally deal with the kind of information in question; that has commercial value because it is secret; that has been subject to reasonable steps to keep it secret). The remedy could not be extended to cover generally confidential business information, even if such information might be otherwise protected under unfair competition rules.
It follows that, to lawfully obtain a description order, the claimant must present at least a prima facie case of ownership and infringement of proper trade secrets as defined in Article 98 of the IP Code.
In this instance, in the Judge’s view, the claimant had failed to provide sufficient evidence to that effect. Specifically, the judge found that the Authority’s broad reservation of all intellectual property rights likely covered all know-how developed during the contract. The other business information cited by the claimant lacked sufficient evidence of meeting the legal definition of trade secrets and/or of being owned by the claimant.
As a result, the Court not only revoked the ex parte order but also rejected all related interim requests.
Abuse of process
The Court also found that the claimant’s conduct constituted a serious abuse of precautionary procedures: the claimant had requested urgent measures while omitting essential information (the Authority’s IP clause) and had continued to press unfounded claims even after this came to light.
The judge noted that the so-called aggravated liability for abuse of process under the Italian Code of Civil Procedure does not require proof of damages and may be assessed equitably without a predefined limit. Considering the severity of the abuse and the claimant’s size and resources, the judge awarded double the legal costs.
In conclusion, the claimant was ordered to pay each of the six respondents €6,000 in legal costs and €12,000 in aggravated liability damages, plus €5,000 to the State fines fund.
Final Remarks
It is worth noting that the decision commented upon here is appealable; the author is, however, unaware of any appeal outcome.
The most notable aspect of the ruling is its departure from previous case law—including rulings from the same Court—which held that the evidentiary threshold for description orders is minimal, given their main function of preserving evidence.
According to that line of reasoning, courts should focus only on the hypothetical relevance of the evidence seized, not the plausibility of the right claimed, and should conduct only a formal check of the documents obtained during the search; all substantive issues should be addressed during the merits proceedings.
In the present case, however, the Court adopted a stricter legal approach, which, regardless of any appeal, appears more sound in law—if only because the more “formalistic” interpretation opens the door to abuse, allowing parties not owning proper trade secrets to misuse the search procedure.