A Practical Overview of Disclosure of Trade Secret as a Criminal Offense

Trade secrets bear critical value for companies to stand out and become distinct from their competitors in the competitive market conditions. Indeed, companies are often exposed to significant risks arising from the disclosure of trade secrets due to misconduct of certain individuals having access to these secrets. Therefore, confidentiality of these secrets, which bear commercial value and provide a competitive advantage, is almost crucial for companies to survive. In this regard, Turkish legal system embodies a special protection for trade secrets and regulates the disclosure of trade secrets as a criminal offense under the section titled as economic, industrial and commercial offenses of the Turkish Penal Code No. 5237 (“TPC”).

According to article 239 of the TPC titled as disclosure of information and documents qualified as trade secrets, banking secrets or customer secrets, those who disclose or provide unauthorized persons with information or documents qualified as trade secrets, banking secrets or customer secrets they possess due to their title or duty, profession or job shall be sentenced to imprisonment, upon complaint, between one year to three years and judicial fine up to 5,000 days^[1]. Those who acquire such information or documents unlawfully and disclose these or provide unauthorized persons with them shall be subject to the same punishment.

In order to determine the field of application of this crime, the scope of trade secret must be set forth. Although Turkish laws do not provide an explicit definition of trade secret, article 2(a) of the draft law on Trade Secret, Banking Secret and Customer Secret prepared by the Ministry of Justice – which is still not enacted – defines trade secret as follows: information or documents regarding a business or company’s field of activity such as, or in relation to, internal corporate structure and organization, financial, economic, credit or cash status, research and development studies, activity strategy, material resources, technical specifications of production, pricing policies, marketing tactics and expenses, market shares, wholesaler and retail customer potentials and networks, contract connections subject to an approval or not, which (i) are known or accessible by only a limited number of members and other officers, (ii) entail a risk especially if revealed to competitors, (iii) must not be disclosed to public or third parties, and (iv) bear significance for the business or company’s success and prolificacy in commercial life.

Additionally, certain court precedents shed light on which information should be qualified as trade secret. Recent precedents define trade secret as secret information which provide an economic benefit to a real or legal person merchant against its competitors, and the owner of which takes certain measures to protect its confidentiality or total of information such as a formula, order, model, etc. used by the merchant during its commercial activities, which provide an advantage against the competitors deprived of or incapable to use such potential.

In light of the above, Turkish Court of Cassation has certain precedents which indicate that job briefs, deviation rates at budget plans, turnovers, product and sale strategies, order amounts, and confidential information about the actions and transactions at a company’s other affiliates around the world may qualify as trade secret^[2]. That said, the Court of Cassation appears to have ruled that information such as general methods and drafts which can be remembered easily^[3], visuals and technical drawings of designs which are no longer deemed as innovation^[4] will not qualify as trade secret.

Aside from the definition of trade secret, clarification of the term “disclosure” is important when assessing the elements of the offence. Turkish academics argue that disclosure requires a hidden and unknown subject matter, therefore explaining or declaring the secrets known due to a professional or occupational status should not be evaluated as disclosure of production or business secrets^[5]. Likewise, disclosure requires such information to be delivered to unauthorized persons or made accessible to them, the secret can be transferred verbally or in writing or by electronic means^[6]. Court of Cassation’s precedents stress that, in order to deem information a trade secret, such information must not be known to public or the competitors in the same field. In this regard, court decisions indicate that manufacturing an old-dated product which has already been manufactured and sold around the world may not qualify as disclosure of trade secret per se^[7]. Disclosure of secrets that are against the law, public moral and customs, consent of the secret’s owner to the disclosure, necessity of the disclosure for the public are also considered as circumstances which would not raise liability.

At this stage, it must be noted that, given the significance of trade secrets to sustain the competitive market conditions, trade secrets have been subject to another special protection in scope unfair competition provisions under article 54 and ff. of Turkish Commercial Code (“TCC”). According to article 55 of the TCC, (i) disclosing production and trade secrets unlawfully, (ii) particularly making use of or disclosing the information acquired secretly without permit or by any other unlawful means and the manufacturer’s business secrets, and/or (iii) soliciting the employees, representatives or other assisting persons to acquire or disclosure the employer’s or client’s production and business secrets qualify as unfair competition as actions against the principle of good faith. Article 62/(c) of the TCC also stipulates that those who deceive employees, representatives and/or other assisting persons to acquire the employer’s or client’s production and business secrets shall be sentenced to imprisonment up to two (2) years or judicial fine, upon complaint, unless it requires a heavier sanction as another offence.

In light of these provisions, if companies encounter an incident of disclosure of trade secrets or become exposed to such a risk, they may seek legal remedies under the unfair competition provisions of the TCC by requesting the determination and cessation of unfair competition, in addition to initiating civil actions to request material and/or moral compensation if the conditions have occurred. These mechanisms can be supported with criminal complaints based on the unfair competition offence under the TCC, disclosure of trade secrets offence under the TPC, and even abuse of trust offence under article 155 of the TPC^[8], if it fits the specifics of the case. However, in practice, public prosecutors may sometimes perceive these kinds of disputes as commercial disputes and render non-prosecution decisions. Therefore, it is recommended to collect evidence diligently, have technical inspection on devices where the offence is committed by way of electronic means, and the complaint petition is substantiated by solid proof.