Trade Secrets in Israel – Guide and FAQs
The definition of "Trade Secret" is set in the Commercial Torts Law. According to this definition, a trade secret is any type of business information which affords its owner an advantage over their competitors, and which is kept confidential.
This rather broad definition covers various types of information: client's list, mailing lists, formula, certain chemical compound, production methods, recipe etc.
However, if the trade secret can be revealed by reverse engineering, the information is not protected.
As long as the secret is kept confidential. Meaning, in theory, forever.
However, if third parties create or gather the same valuable information independently, they are entitle to use it.
The law dictates three types of trade secret misappropriation:
- Taking a trade secret without its owner's consent, regardless of the fact whether the trade secret was taken directly from its owner or from any other person;
- Use of a trade secret contrary to a contractual or fiduciary obligation;
- Receiving a trade secret or use of it, when it is evident, at the time of receipt or use, that the trade secret was transferred contrary to the preceding clauses 1 and 2.
As can be deducted from the language of the Israeli law, trade secrets may enjoy protection also when an official NDA was not signed, and even without any supporting documents, attesting to confidentiality obligation.
In fact, Israeli case law has determined that absolute confidentiality is not a condition for trade secret protection, and relative confidentiality may suffice (for example, when the trade secret was disclosed to part of the company's personnel).
In addition, case law also has acknowledged rights with respect to confidential information which does not comply fully with the definition of a trade secret. Such rights were deducted from the obligation of confidence, for example that of employees.
The Israeli Commercial Torts Law affords statutory damages for each tort of up to 100,000 ILS (approx. 30,000 US$).
The plaintiff can also claim for actual damages. For example, by calculating the loss of profit caused by the use of a list of clients.
The court will grant only one of the two – either statutory damages or compensatory damages.
?What are the requirements for trade secret protection in Israel
The definition of "Trade Secret" is set in the Commercial Torts Law. According to this definition, a trade secret is any type of business information which affords its owner an advantage over their competitors, and which is kept confidential.
This rather broad definition covers various types of information: client list, mailing lists, formula, certain chemical compound, production methods, recipes etc.
However, if the trade secret can be revealed by reverse engineering, the information is not protected.
?What is the protection term of trade secrets in Israel
As long as the secret is kept confidential. That is, in theory, indefinitely.
However, if third parties independently create or obtain the same valuable information, they are entitled to use it.
?What constitutes misappropriation of a trade secret in Israel
The law dictates three types of trade secret misappropriation:
- Taking a trade secret without its owner's consent, regardless of whether the trade secret was taken directly from its owner or from any other person;
- Use of a trade secret contrary to a contractual or fiduciary obligation;
- Receiving a trade secret or using it, when it is evident, at the time of receipt or use, that the trade secret was transferred contrary to the preceding clauses 1 and 2.
?Is trade secret protection subject to a written confidentiality undertaking
As can be inferred from the language of the Israeli law, trade secrets may enjoy protection also when an official NDA was not signed, and even without any supporting documents, attesting to confidentiality obligation.
In fact, Israeli case law has determined that absolute confidentiality is not a condition for trade secret protection, and relative confidentiality may suffice (for example, when the trade secret was disclosed to certain members of the company's personnel).
In addition, case law also has recognized rights with respect to confidential information which does not comply fully with the definition of a trade secret. Such rights were deducted from the obligation of confidence, for example that of employees.
Statutory damages for trade secret misappropriation in Israel
The Israeli Commercial Torts Law affords statutory damages for each tort of up to 100,000 ILS (approx. 30,000 US$).
The plaintiff can also claim actual damages. For example, by calculating the loss of profit caused by the use of a list of clients.
The court will grant only one of the two – either statutory damages or compensatory damages.
Conditions for Protection
The definition of "Trade Secret" is set in the Commercial Torts Law. According to this definition, a trade secret is any type of business information which affords its owner an advantage over their competitors, and which is kept confidential.
This rather broad definition covers various types of information: client's list, mailing lists, formula, certain chemical compound, production methods, recipes etc.
However, if the trade secret can be revealed by reverse engineering, the information is not protected.
Trade secrets Protection Term
As long as the secret is kept confidential. Meaning, in theory, forever.
However, if third parties create or gather the same valuable information independently, they are entitled to use it.
Trade Secrets Misappropriation
The law dictates three types of trade secret misappropriation:
- Taking a trade secret without its owner's consent, regardless of the fact whether the trade secret was taken directly from its owner or from any other person;
- Use of a trade secret contrary to a contractual or fiduciary obligation;
- Receiving a trade secret or use of it, when it is evident, at the time of receipt or use, that the trade secret was transferred contrary to the preceding clauses 1 and 2.
Confidentiality Undertaking
As can be deducted from the language of the Israeli law, trade secrets may enjoy protection also when an official NDA was not signed, and even without any supporting documents, attesting to confidentiality obligation.
In fact, Israeli case law has determined that absolute confidentiality is not a condition for trade secret protection, and relative confidentiality may suffice (for example, when the trade secret was disclosed to part of the company's personnel).
In addition, case law also has acknowledged rights with respect to confidential information which does not comply fully with the definition of a trade secret. Such rights were deducted from the obligation of confidence, for example that of employees.
Statutory Damages in Israel
The Israeli Commercial Torts Law affords statutory damages for each tort of up to 100,000 ILS (approx. 30,000 US$).
The plaintiff can also claim for actual damages. For example, by calculating the loss of profit caused by the use of a list of clients.
The court will grant only one of the two – either statutory damages or compensatory damages.
Information on this website is generalised and does not constitute exhaustive legal advice. Readers must seek legal counselling suitable for their personal matter.