The recent release of a technical analysis that supposedly makes it possible to reproduce the Coca-Cola formula has reignited a legal debate that is as recurring as it is timely: How far does the protection of trade secrets extend? Beyond the media appeal of “revealing” a legendary recipe, the case offers an opportunity to reflect on one of the key instruments of industrial property and on the actual limits of its protection in an increasingly sophisticated technological environment.

What Is Protected by Trade Secrets?

Trade secrets protect information of any kind (technical, commercial, organizational, etc.) that is not generally known or readily accessible within its sector, that has economic value precisely because of its confidential nature, and that has been subject to reasonable measures to maintain its confidentiality.

Unlike a patent, which grants an exclusive right for a limited time in exchange for the public disclosure of the invention, a trade secret does not require registration, and its protection relies on confidentiality. However, that protection is not automatic: it depends on active and structured management by the owner.

Reverse engineering: a structural limitation of the system

One of the aspects that causes the most confusion is the relationship between trade secrets and reverse engineering.

Is it illegal to analyze, using available tools, a product legally purchased on the market and arrive at a similar formulation? In and of itself, this does not constitute a violation of trade secret.

Most legal systems recognize reverse engineering as a legitimate means of obtaining information, provided that there is no unauthorized access to confidential documentation, no breach of security measures, and no violation of contractual agreements. Trade secrets provide protection against espionage or the unfair appropriation of confidential information, but not against the technical analysis of a product that is on the market.

The burden of proof in the event of a dispute

In any legal proceedings involving a breach of trade secrets, it is not sufficient to simply prove the similarity between products. The owner must demonstrate that the protected information was obtained unlawfully and that reasonable measures were in place to preserve its confidentiality.

Furthermore, this type of litigation poses an additional challenge: at times, in order to defend a trade secret, it is necessary to describe which specific part of the information under review constitutes the protected secret. In mass-market consumer products, where value lies as much in the brand as in the overall experience, that litigation strategy is not always desirable.

Is trade secret protection losing its effectiveness?

The growing accessibility of analytical tools and the democratization of technical knowledge have lowered the barriers to unraveling certain processes or compositions. However, interpreting this reality as the “end” of trade secrets would be a mistaken and dangerous conclusion.

In sectors such as industrial chemistry, software, biotechnology, and complex manufacturing processes, much of the competitive advantage is not always patentable or should not be disclosed publicly. In these cases, trade secrets remain an essential tool in the strategy for protecting intangible assets.

What does change, however, is the level of demand: the greater the technical capabilities of third parties, the more rigorous internal knowledge management must be.

Combined Strategies in Industrial Property

No single intellectual property tool is self-sufficient. In an environment where reverse engineering is lawful, effective protection of knowledge often requires a layered strategy: combining trade secrets with selective patents, strengthening differentiation through branding, innovating continuously, and accepting that certain technical advantages will have a limited lifespan. Legal protection does not replace business strategy; it complements it.

A patent offers temporary exclusivity but requires disclosure. A trade secret allows for potentially indefinite protection, although it is vulnerable to independent discovery. The choice between one or the other (or a combination of both) should be based on strategic criteria.

Conclusion

The potential technical reproduction of an iconic formula does not call into question the validity of trade secrets, but rather highlights their legal limits. In a context of increasing technological transparency, understanding these boundaries and designing appropriate internal policies is essential for any company that bases its competitiveness on knowledge.

At Elzaburu, we have extensive experience in advising on industrial property, protecting trade secrets, and designing legal strategies for managing intangible assets, offering a rigorous approach that keeps pace with regulatory and technological developments.

Cristina Espín, Senior Associate in the Legal Department at Elzaburu.

In an increasingly competitive and globalized market, protecting strategic information and a company’s know-how is essential. In this context, trade secrets have become a key tool for safeguarding companies’ competitive advantage.

In this article, we explain what trade secrets are, their close relationship with patents, how they are protected, and where they are regulated.

What is a trade secret?

A trade secret is any type of information, knowledge, or know-how of any nature (financial, strategic, R&D, marketing, organizational, among others) that meets the requirements established in the Trade Secrets Act (Law 1/2019, of February 20), which are:

• Confidentiality: The information must not be known or easily accessible.
• Business value: It must provide a competitive or economic advantage over third parties, whether current or potential.
• Reasonable protective measures: The data controller must implement appropriate and reasonable measures to safeguard confidentiality, taking into account the specific circumstances of each case.

Trade Secrets and Patents: Alternative and Complementary Forms of Protection.

The protection of an invention can be addressed through various legal mechanisms, the most notable of which are patents and trade secrets. These forms of protection can be used as alternatives or in a complementary manner, depending on the protection strategy adopted by the company.

In many cases, it may be advisable to protect an invention through both means. For example, before filing a patent application, it is essential to keep the technical information related to the invention confidential, since its disclosure could compromise the novelty requirement necessary to obtain the patent. To avoid this risk, one can resort to protection through trade secrets.

Once a patent application has been filed, there may be additional information that, while not part of the patent, constitutes valuable know-how, such as methods of use, improvement processes, or recommendations for achieving optimal results. This information can also be protected as a trade secret, thereby expanding the scope of protection.

In other cases, trade secrets and patents may be considered alternatives, which makes it necessary to analyze their main characteristics before choosing one over the other. 

1. Registration and Cost

There is no official registration process for the protection of trade secrets, so there are no associated official fees. However, it is essential to produce evidence proving their existence and to demonstrate that reasonable measures have been taken to maintain their confidentiality, in accordance with Law 1/2019 on Trade Secrets.

Patent protection requires a formal registration process, which must be completed in each jurisdiction where protection is sought.

2. Advertising and Confidentiality

A trade secret is protected only as long as it remains confidential. It has no defined time limit, so it can remain protected indefinitely, provided it is not disclosed. If it is disclosed—whether intentionally or accidentally—it loses its status as a trade secret and, with it, its legal protection.

A patent grants an exclusive right to exploit the invention for a period of twenty years, in exchange for its public disclosure. This information may be accessed by third parties, and once the term of protection has expired, it may be used freely.

3. Protection Class and Testing

A trade secret does not confer a right to prohibit. Protection is limited to cases of unlawful acquisition, use, or disclosure. To establish its existence and protection, it is necessary to comply with legal requirements and provide evidence demonstrating these facts.

A patent does grant an exclusive right that prevents third parties from exploiting the invention during its term. Its existence and content are supported by the corresponding official registration, which facilitates its proof and legal defense.

4. Transmissibility

Both trade secrets and patents are intangible assets that can be transferred or licensed to third parties.

The decision to protect an invention through a trade secret, a patent, or a combination of both forms of protection will depend on multiple factors, such as the nature of the invention, its life cycle, the ease of maintaining confidentiality, business strategy, and the competitive environment. An appropriate combination can provide stronger and more lasting protection, maximizing the strategic value of the company’s intangible assets.

How to Protect a Trade Secret

Proper management of intangible assets is essential, especially when it comes to trade secrets. To protect them, the owner must take a proactive and committed approach. This approach manifests itself in two key areas: the protection of information or knowledge and the development of a clear internal strategy.

Protecting trade secrets requires that the rights holder carefully identify and document all information or knowledge that could constitute a trade secret, classify it, and take reasonable measures to ensure that the information remains confidential.

And finally, it is necessary to avoid infringing on third parties’ trade secret rights by conducting proper due diligence.

Regulation of Trade Secrets

At the European level, trade secrets are primarily regulated by Directive (EU) 2016/943 of the European Parliament and of the Council of June 8 on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use, and disclosure(hereinafter “the Directive”). In addition to harmonizing the various laws across the EU, the Directive aims to act as a deterrent against all conduct constituting unfair competition, provided that the trade secret holder has properly protected their trade secret and can prove it.

In addition, the Directive defines trade secrets very broadly, encompassing both commercial and technical information, and defines the concepts of acquisition, use, and disclosure of trade secrets, devoting a chapter to exceptions and establishing a set of rules to ensure the availability of civil remedies for infringements.

At the national level, following the transposition of the Directive into Spanish law, trade secrets in Spain are governed by Law 1/2019, dated February 20, 2019, on Trade Secrets.

At Elzaburu, we offer specialized services for implementing plans to identify, protect, manage, and maximize the value of trade secrets.

We conduct due diligence on trade secrets, perform valuations, and provide advice on licenses and agreements related to these intangible assets. In addition, we assist our clients with pre-litigation and litigation matters related to the defense and protection of their trade secrets, ensuring comprehensive and strategic protection of their confidential information.

Cristina Espín, Senior Associate in the Legal, Business, and Contracts Department at Elzaburu.

Violating the trade secrets of U.S. companies could land you in U.S. court  

The U.S. Court of Appeals for the Seventh Circuit recently issued a ruling in a case involving the misappropriation of trade secrets under the Defend Trade Secrets Act (DTSA), which will have implications for transatlantic trade relations.

The case involves the U.S. company Motorola, which sued the Chinese company Hytera, alleging that Hytera misappropriated trade secrets through illegal means to develop products nearly identical to Motorola's.

Much of the misappropriation of these trade secrets took place between 2010 and 2014, but after the DTSA went into effect in 2017, Motorola filed a lawsuit against Hytera for that misappropriation, seeking substantial damages.

The extraterritorial application of the DTSA extends its legal reach beyond the United States

So far, this case is not very different from other cases that have been and continue to be brought in the United States regarding trade secrets. But what is significant about this case is that the court has awarded damages not only for those incurred in the U.S., but also—and primarily—for infringing activities carried out outside the country.

The court finds that there is a possibility of extraterritorial application of the DTSA, which extends its legal reach beyond U.S. borders. It interprets the statute as leaving this possibility open in several scenarios, such as “acts in furtherance,” which are acts that contribute to the commission of other unlawful acts and are considered a single offense.

Once an “act in furtherance” has been performed in the United States, all acts related to and directed toward the same purpose—even if performed outside the United States—have an effect within that territory and give rise to the jurisdiction of its courts.

A ruling that could affect Spanish companies

This ruling is crucial for Spanish companies that do business with U.S. companies or operate in global markets. From now on, there is a risk that, in the event of disputes over trade secrets or business secrets, U.S. companies may prefer to litigate in their own courts. By arguing that there is a connection between activities carried out both inside and outside the United States, they could attempt to extend their jurisdiction globally.

The United States has a robust and sophisticated legal framework for the protection of trade secrets and business secrets, supported by extensive case law and regulations at both the state and federal levels. Therefore, facing litigation in a U.S. court is not a particularly desirable situation for a Spanish company.

Is the ruling appropriate? To reach a conclusion on this matter, one must consider the circumstances of the case; however, if there is a breach of trade secrets with global implications, is it necessary to travel to different countries and file lawsuits in as many courts to seek a declaration of infringement and claim damages? It may not be necessary; the court finds sufficient grounds in the text of the DTSA to establish jurisdiction.

A ruling that sets an important precedent

Will this be an isolated case? I don't think so. Once the extraterritorial effect of the DTSA is established, there will be new cases, as U.S. companies will find it more appealing to play on their home turf than to have to venture onto other fields. In fact, there are already law firms recommending that this possibility be considered.

Will this affect Spanish companies? Without a doubt—you don’t have to be Chinese for an American company to sue you. This will happen when the same circumstances as in the Motorola case arise, but even in less serious and blatant situations. The ruling sets a precedent that will extend to other cases; reading it gives a glimpse of this possible future.

How to Manage Trade Secrets: Prevention Is the Best Defense

For Spanish companies, this ruling underscores the importance of handling any trade secrets or business secrets received from international partners—especially U.S. companies—with the utmost care. Even if the acquisition of these secrets is legal, mishandling or improper management could result in serious legal consequences under the DTSA.

The best defense is prevention: implement a robust trade secret management plan and follow it meticulously. This approach not only protects the company from potential litigation but also strengthens its position in the global market.

With the recent ruling in the Motorola v. Hytera case, the legal landscape is changing. Companies must be prepared for an environment in which the protection of tradesecrets and business secrets requires greater attention and care than ever before. Adapting to these new legal realities will be key to avoiding disputes and maintaining healthy and productive business relationships on the international stage.

Javier Fernández-Lasquetty, Partner in the Business and Contracts Practice at ELZABURU  

One year after the enactment of the Trade Secrets Act (Law 1/2019), we can say that the law is having a significant impact on the Spanish business community.

Some companies had already been managing this intellectual asset, but with the law’s entry into force, its use has increased considerably among organizations of all sizes and across a wide range of sectors, as it adds value to certain information that was previously neither protected nor considered an asset worth taking into account.

There are also many companies that want to transition from being service providers to sellers of technology products, and this requires establishing an IP strategy and implementing a robust model for protecting these assets. Within that strategy and model, trade secrets are audited, evaluated, and play an increasingly important role, especially in this data-driven economy toward which we are moving.

The application of the Law has a two-pronged approach, and both aspects must be taken into account. On the one hand, the Law grants a right to protect trade secrets against unauthorized access, use, and disclosure; it elevates trade secrets to the same category as other intellectual property rights and treats them as property under a regime very similar to that of patents, providing, for example, for their assignment or licensing. On the other hand, however, the Act requires companies to exercise great diligence when transmitting, receiving, or storing trade secrets or confidential information from third parties to avoid becoming the subject of legal claims.

In this regard, it is important to remember that trade secrets are protected under criminal law by Articles 278 (corporate espionage) and 279 (breach of trade secret) of the Penal Code. Article 278 of the Penal Code applies to any person who uses data, written or electronic documents, computer media, or objects to uncover trade secrets, and Article 279 of the Penal Code applies to persons who, having a legal or contractual obligation of confidentiality, engage in acts of unauthorized dissemination, disclosure, or transfer of trade secrets.

The preceding articles of the Penal Code are open-ended criminal provisions in which concepts are not defined, and it is highly likely that the criteria of civil law (Law 1/19) will apply to criminal proceedings. Likewise, it is likely that companies or institutions whose trade secrets are breached will pursue criminal proceedings. Therefore, companies, organizations, and institutions must include compliance with obligations related to third-party trade secrets in their compliance policies.

In any case, an increase in litigation regarding trade secrets is expected as companies become more aware of the importance of this intangible asset and implement the necessary measures to protect it and demonstrate compliance with the required standards.

In anticipation of this, the Competition Law Section of the Barcelona Commercial Court published a “Protocol for the Protection of Trade Secrets in Commercial Courts” in December 2019 .

The rationale for the Protocol lies in the need to specify in detail the procedural security mechanisms for secret or confidential information, as set forth in Article 15 of Law 1/2019 (“Handling of Information That May Constitute a Trade Secret”).

The scope of this Protocol is broad, as it is intended not only to cover proceedings involving alleged breaches of trade secrets but also to apply to all proceedings in which certain information is declared to be a trade secret or confidential information. For example, it can serve as a useful guide for handling confidential information in public procurement processes, where situations are increasingly arising in which certain information about a bidder must be protected from its competitors.

The Protocol provides that specific measures to protect trade secrets may be applied at various stages of the proceedings: from the outset of the proceedings (for example, by requesting them in the complaint or motion for preliminary relief); or once the proceedings have begun (for example, in the answer to the complaint or when submitting evidence). Measures to protect trade secrets and confidential information may be ordered ex officio or at the request of a party, always allowing for the possibility of a hearing or the parties’ opportunity to present their arguments.

The Protocol specifies what the request must include regarding measures to maintain secrecy or confidentiality, in accordance with the principles of necessity, appropriateness, proportionality, specificity, balancing the interests of third parties, and the least onerous measures requested; and the individuals who will comprise the “confidentiality circle.”

The Protocol also examines the various measures that may be implemented to preserve physical and digital records, ensure access to them, provide public access to hearings, and grant access to recordings and to both confidential and non-confidential versions of court documents.

A court order regarding the measures to be applied to classified or confidential information must be specific as to the applicable measures (which must be necessary to achieve the purpose, appropriate, and proportionate); it must provide a rationale for the confidential nature of the information and specify the classified or confidential information in question.

In short, one year after the law was enacted, we are seeing how trade secrets are becoming an increasingly important intangible asset— and that their importance will continue to grow. We can expect an increase in litigation in this area, with cases becoming more sophisticated. We may not reach the levels seen in the United States, but there will undoubtedly be a higher number of lawsuits, and it is advisable to be prepared for this.

Authors: Javier Fernández-Lasquetty and Cristina Espín