Trade Secrets, Unfair Competition and Protection of Strategic Data

Trade secrets have become a central competitiveness issue

In a highly competitive digital economy, a company’s strategic data often represent a key asset: client files, know-how, commercial data, technical processes, source codes, development strategies or sensitive financial information. Law No. 2018-670 of 30 July 2018, implementing European Directive 2016/943, significantly strengthened the protection of trade secrets in France. Article L151-1 of the French Commercial Code now protects information that is not generally known or readily accessible, that has economic value because of its confidential nature and that is subject to reasonable protective measures. This protection goes far beyond traditional industrial secrets and now covers virtually all strategic business information.

Competition remains free, but unfair practices are sanctioned

The mere fact of creating a competing business, recruiting employees from a competitor or developing a similar offer is not prohibited. However, diversion of client files, transfer of confidential data, use of strategic information or breach of confidentiality obligations may give rise to liability under Articles 1240 and 1241 of the French Civil Code. French case law regularly recalls that freedom of competition does not protect unfair conduct harming a company’s economic interests. Courts therefore distinguish between lawful preparatory acts for a competing activity and genuine acts of unfair exploitation or misappropriation of confidential information.

Former employees and executives remain bound by a duty of loyalty

The French Supreme Court has recently strengthened the protection of companies against the misuse of confidential information. In a decision dated 7 December 2022 (Cass. com., No. 21-19.860), the Court recalled that an employee remains bound by a duty of loyalty until the exact termination date of the employment contract. The Court also held that the mere possession of confidential information transferred from the company to a competing structure may already constitute an act of unfair competition under Article 1240 of the French Civil Code, even where no immediate commercial exploitation is demonstrated. In another decision dated 17 May 2023 (Cass. com., No. 22-16.031), the Court nevertheless clarified that it remains necessary to concretely demonstrate that the competing company actually possessed or obtained the disputed information. The Court also recalled that a company cannot be held liable for acts committed before its incorporation, pursuant to Article L.210-6 of the French Commercial Code. Recent case law further confirms that this protection also extends to former corporate officers and executives involved in the creation of a competing structure (Cass. com., 24 September 2025, No. 24-13.078).

Companies now benefit from powerful evidentiary tools

In this type of litigation, evidence plays a central role. Article 145 of the French Code of Civil Procedure allows parties to obtain investigative measures before trial in order to rapidly preserve digital or IT evidence. Courts regularly authorize ex parte proceedings where there is a risk that data may disappear. In a decision dated 14 November 2019 (Rouen Court of Appeal, RG No. 18/04788), the Court validated IT investigations intended to obtain evidence of unfair competition and breaches of confidentiality obligations, while also recalling the need to respect proportionality, privacy rights and confidentiality of correspondence. Courts now seek a constant balance between the right to evidence and the protection of trade secrets, notably through the proportionality test reaffirmed by the French Supreme Court in its decision dated 5 June 2024 (Cass. com., No. 23-10.954).

Protecting trade secrets also requires an internal strategy

Legal protection of trade secrets largely depends on the measures implemented by the company itself. Courts specifically verify the existence of confidentiality agreements (NDAs), non-compete or confidentiality clauses, restrictions on access to sensitive data, cybersecurity systems, traceability mechanisms and internal policies aimed at protecting strategic information. A company that fails to actively protect its data may lose the benefit of the protection provided by the French Commercial Code. These issues now go far beyond traditional commercial law and increasingly involve cybersecurity, GDPR compliance, international data transfers, cyber-risk management and digital governance.

A rapid response often becomes decisive

Rapid action is essential in order to preserve evidence, secure sensitive data and limit commercial, financial and reputational risks. Behind a simple file transfer or the departure of a strategic employee may lie major economic stakes relating to clients, know-how, company valuation or market competitiveness. These disputes therefore require legal, technical and strategic analysis in order to quickly identify potential liabilities, evidentiary risks and genuinely available defense strategies.