Trade Secret: What Can Really Be Protected and How to Avoid Costly Mistakes​
What Counts as a Trade Secret?
Many believe that it is enough to write “confidential” on a document to protect a trade secret. It's not.​
In Croatia, trade secrets are regulated by the Act on the Protection of Undisclosed Information with Commercial Value, which is based on EU Directive 2016/943. For data to qualify as a trade secret under this act, three criteria must be met:​

1. The data are secret.​
2. The data have commercial value because they are secret.​
3. Reasonable measures are taken to keep the data secret.​

“Secret” means that the information is known only to a limited circle of people, i.e. it is not generally known or easily accessible to people in the same industry or field (competitors, experts, suppliers, etc.). Information that is easily accessible by searching public sources generally cannot be protected as a trade secret (for example, a list of suppliers of a certain product that can easily be compiled by reviewing public information on their websites).​
Furthermore, secret information has commercial value if its disclosure could harm the economic interests of its owner. This does not necessarily mean that possessing the information directly generates income for its owner. Sometimes the mere fact that competitors or consumers perceive the information as valuable due to its secrecy is enough to give the owner a competitive advantage.
Commercial value can be real or potential. This means the information doesn't need to generate revenue right now - it's enough that it could do so in the future.
In practice, almost any information can be protected as a trade secret if the above criteria are met. In that sense, a trade secret can consist not only of technical and scientific data, but also various ideas, strategies, know‑how, data, methods, and even combinations of elements each of which is separately known to the public, but whose combination, which is secret, enables a competitive advantage (for example, recipes).​
Although the provisions on trade secrets in the older Data Secrecy Protection Act have not been formally repealed, following the adoption of the Act on the Protection of Undisclosed Information with Commercial Value - a newer, specialized regulation aligned with EU law - in practice, that regulation is primarily applied to the protection of trade secrets.

What Protective Measures Should You Take?
With regard to the third criterion, the law requires that reasonable steps be taken to protect the trade secret. If you do not protect it yourself, neither the law nor the courts will do it for you. It is not necessary (nor possible) to register a trade secret to obtain legal protection.
There is no universal definition or list of “reasonable” steps; this depends on the circumstances of each case. Although this may at first sound uncertain and unclear, it is actually logical that a start‑up is not expected to take the same protective measures as a multinational company with far greater resources. Not every trade secret is equally important either, so, as a rule, stricter protective measures will be required for information on which most of the revenues depend - for example, the proprietary algorithm behind the company's core product - than, say, for keeping an upcoming marketing campaign secret.​
Some common protective measures include internal policies on protection of trade secrets, non‑disclosure agreements (NDAs), confidentiality clauses in employment contracts, employee training, sharing information strictly on a need‑to‑know basis, and securing documents by physical and digital safeguards (passwords, logs, locked premises, etc.).​
As long as these three criteria are satisfied, trade secrets can be protected for an unlimited period of time.​

What Happens If Someone Infringes Your Trade Secret?
Under Croatian law, trade secrets are a recognized category of intellectual property. Therefore, any unauthorised acquisition and disclosure of a trade secret constitutes an infringement of intellectual property rights. Additionally, it may also constitute a breach of an employment contract, a non‑disclosure agreement, and even a criminal offence punishable by imprisonment of up to five years.​
If an infringement has occurred, the owner of the trade secret may seek the following remedies:

• Injunctions: Request the court to prohibit the use and disclosure of the trade secret, both when an infringement has already occurred and when there is a serious threat that it may occur.
• Destruction orders: The court may order the destruction of all documents and media containing the trade secret.
• Prohibition on products/services: The court may prohibit the manufacture and sale of products or services that infringe the trade secret.
• Compensation for damages: The court may order the infringer to pay for the damage suffered by the owner of the trade secret.
• Recovery of profits: The court may require the infringer to disgorge the profits obtained through the unauthorised use of the trade secret. (Note: compensation for damages and profit recovery can be applied simultaneously.)

What Does NOT Count as Infringement?
However, not every use of similar information constitutes infringement. It is possible that someone arrives at the same data through their own research or, by examining products available on the market (reverse engineering), comes to know the mechanism used, the components, etc. In such a case, there has been no infringement of a trade secret; rather, a third party has lawfully obtained the same information and also has the right to use it and to protect it as its own trade secret (the same information may be a trade secret for several entities).​



In conclusion, a trade secret does not protect itself, but only when it is truly secret, has commercial value, and when the owner actively and reasonably takes measures to keep it that way, thereby also avoiding costly and often irreparable legal mistakes.

 

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