What is know-how and how can it be protected?

Business assets are commonly understood as real estate and personal property belonging to the business. However, in addition to tangible goods, the company also has intangible resources, including know-how.

Know-how, meaning what?

The concept of know-how is not strictly defined in Polish law. It is mentioned in the tax regulations contained in the Personal Income Tax Act. Art. 5a sec. 34 letter. c defines it as documented knowledge (information) suitable for use in industrial, scientific or commercial activities, and in art. 29 sec. 1 point 1 of the same Act, know-how is defined as all information related to experience gained in the industrial, commercial or scientific field.

The concept is also developed to some extent by the regulation of the Council of Ministers on the exemption of certain types of technology transfer agreements from the prohibition of competition-restricting agreements, but the most complete definition is contained in Community law - Commission Regulation (EC) No 772/2004 on the application of Art. 81 sec. 3 of the Treaty to the category of technology transfer agreements. In short, know-how means technical and non-technical knowledge (commercial, administrative, organizational, financial), useful for performing a specific type of economic activity. They can be defined as the entirety of experiences, practices and procedures that the entrepreneur has gained in the course of running his business. An important feature of know-how is that it affects the way a service is performed or a product is produced, distinguishing it from the goods and services of competing companies.

In order to be able to define knowledge and experience as know-how, it must be ensured that it also meets other characteristics shaped by practice:

• confidentiality - the data is not widely known, it cannot be obtained from readily available sources,

• significance for the production process or service provision - knowledge, defined by the entrepreneur as know-how, is necessary and significantly distinguishes his goods or services from those provided by competing companies,

• identification - know-how must be clearly edited, accurately described and separated as important and classified information.

Examples of know-how are:

• databases, including customer databases,

• recipes and recipes,

• strategies and forecasts,

• data archiving system,

• business management procedures.

Company secret and know-how

The concepts of know-how and trade secrets may appear to be the same, but they should not be confused with each other. Know-how is information related to the company's commercial or service activities. Company secret is a much broader concept and, in addition to know-how, also includes information about the company's assets and financial liabilities, employee data and details of contracts concluded with them.

Legal protection of know-how

Know-how is not inventive, so it cannot be patented, but it does not mean that the entrepreneur cannot protect it in other ways. According to the Act on Combating Unfair Competition:

 

Art. 11.1 An act of unfair competition is the transfer, disclosure or use of someone else's information constituting a business secret or its acquisition from an unauthorized person, if it threatens or violates the entrepreneur's interest. (...) 4. A trade secret is understood as technical, technological, organizational information or other information of economic value, undisclosed to the public, for which the entrepreneur has taken the necessary steps to keep it confidential.

 

This provision clearly shows that disclosure of know-how without the consent of the entrepreneur is treated by the Polish legal system as an act of unfair competition. Article 23 of the same Act specifies criminal liability for breaking a trade secret:

Art. 23.1. Whoever, contrary to his obligation towards the entrepreneur, discloses to another person or uses in his own business information constituting a trade secret, if it causes serious harm to the entrepreneur, shall be subject to a fine, the penalty of restriction of liberty or the penalty of deprivation of liberty for up to years. 2. 2. The same penalty shall be imposed on anyone who, having obtained unlawfully information constituting a trade secret, discloses it to another person or uses it in his own business.

However, a fine, restriction of liberty or imprisonment do not exhaust the catalog of legal remedies available to entrepreneurs whose know-how has been disclosed. Depending on the circumstances of the act of unfair competition, the court may also order compensation for the damage, as well as a ban on holding a specific position or pursuing a specific profession, or a ban on conducting a specific business activity.

Regardless of the proceedings pending before the criminal court, the entrepreneur may claim compensation before a civil court pursuant to Art. 415 of the Civil Code. This provision requires compensation for the damage caused, so if the entrepreneur suffered large losses as a result of disclosure of know-how, the amount of compensation that the defendant will have to pay may be high.