The Importance of Trade Secrets in Modern Business
In today’s business environment-where information is among a company’s most valuable assets-the protection of trade secrets has become a matter of critical importance. Every company, regardless of size, holds information that constitutes a competitive advantage: business plans, pricing structures, client lists, formulas, technical solutions, software, proprietary methods, and marketing strategies.
Unauthorized disclosure of such information can lead to severe financial losses, reputational damage, and loss of market position. For this reason, the law provides special protection for trade secrets, and employers must clearly define confidentiality obligations in their internal policies and employment contracts.
Legal Framework in Serbia – Trade Secrets Protection Act and Labour Law
In Serbia, the protection of trade secrets is regulated by the Trade Secrets Protection Act, which applies to all business entities, as well as by the Labour Law, which sets out additional rights and obligations relating to confidential information in the employment context.
According to Article 2 of the Trade Secrets Protection Act, a trade secret is any information which:
is not generally known or easily accessible to persons within the relevant business sector,
has commercial value precisely because it is not known, and
is subject to reasonable measures of protection implemented by its holder.
The Labour Law (Articles 179 and 183) further provides that breach of confidentiality obligations may constitute grounds for termination of employment and, in some cases, liability for damages.
What Qualifies as a Trade Secret?
In practice, the definition of a trade secret covers a wide range of information, including:
business strategies, development plans, internal projects,
databases of clients, suppliers, or partners,
pricing structures, rebates, cost and profit calculations,
technical documentation, designs, formulas, software solutions,
marketing strategies, market research, analytical reports,
internal procedures, know-how, and process documentation.
A piece of information qualifies as a trade secret only if all three criteria are met:
Secrecy – it is not publicly known or accessible to competitors.
Commercial value – it provides a competitive advantage.
Reasonable protective measures – the employer must demonstrate that steps were taken to safeguard it (e.g., confidentiality markings, restricted access, contractual clauses, IT security measures).
Without these protective measures, the information does not enjoy legal protection, even if it is valuable.
Trade Secrets in Employment Contracts
Employment contracts often contain confidentiality clauses requiring employees to keep all non-public business information confidential. Such a clause may be a stand-alone provision or part of a broader internal data protection policy.
Sample Confidentiality Clause
“The Employee undertakes to treat all non-public information relating to the Employer’s business that becomes known to them during employment as a trade secret, and not to disclose such information to third parties or use it for personal or another’s benefit, during or after termination of employment.”
Employment contracts may also include a non-competition clause, restricting the employee from working for a competitor or starting a competing business for a certain period after termination if doing so could harm the employer’s business interests.
Both clauses must be:
clearly defined,
proportionate (not excessively restrictive),
signed by the employee to be legally enforceable.
Measures for Protecting Trade Secrets
To benefit from legal protection, employers must be able to prove that they implemented reasonable protective measures, such as:
1. Internal Policies
Adoption of internal regulations defining:
what constitutes a trade secret,
who has access to specific information,
procedures for handling confidential documents,
sanctions for breaches.
2. Non-Disclosure Agreements (NDAs)
An NDA is a separate agreement specifically regulating confidentiality obligations. NDAs may be concluded with:
employees,
external associates, consultants, IT providers, agencies,
business partners before sharing confidential project information.
3. Physical and Technical Security Measures
restricted access to documents and premises,
encryption of digital files and password protection,
controlled access to servers, email accounts, and databases.
4. Limited Access Based on Need-to-Know
Only authorized persons should have access to confidential information, strictly under the “need-to-know” principle.
Violation of Trade Secrets – What Constitutes Unlawful Disclosure
A violation occurs when a person unlawfully:
discloses, publishes, or provides confidential information to third parties,
uses a trade secret for personal benefit or for the benefit of a competitor,
acquires a trade secret through illegal means (theft, hacking, copying documents, photographing materials, etc.).
A breach exists even if no material damage has occurred, as mere disclosure of confidential information is prohibited by law.
Common Examples in Employment Context
an employee forwarding internal data to a competitor,
revealing product development plans on social media,
using the employer’s client database after joining another company.
Civil and Criminal Protection
The Trade Secrets Protection Act provides for civil and criminal remedies.
Civil Protection
The trade secret holder may seek:
damages for financial loss,
injunctions to stop ongoing violations,
interim measures, such as prohibiting use or distribution of the secret, seizure of materials, or blocking access to data.
Under Article 179 of the Labour Law, an employer may also impose disciplinary measures or terminate employment if the employee breaches confidentiality obligations.
Criminal Protection
Article 240 of the Criminal Code of the Republic of Serbia provides:
“Whoever unlawfully discloses a trade secret with the intent to obtain benefit for themselves or another or to cause damage to another shall be punished by imprisonment of up to two years.”
More severe sanctions may apply when the violation causes substantial financial damage or affects national economic interests.
Trade Secrets in Employer-Employee Relations: Practical Examples
Example 1: Disclosure of Confidential Information
An employee shares pricing lists and client data with a competing company.
Outcome: Termination of employment and potential lawsuit for damages.
Example 2: Use of Employer’s Data After Termination
A former employee starts a competing business using the employer’s client contacts.
Outcome: Violation of trade secret obligations and grounds for civil action.
Example 3: Poorly Defined Trade Secrets
The employer fails to clearly define trade secrets in internal regulations.
Outcome: The court may deny protection, finding that no reasonable security measures were in place.
The Role of a Lawyer in Trade Secret Protection
Ensuring legal security in the area of trade secrets requires professional preparation. A lawyer specializing in commercial and employment law can assist by:
conducting legal analysis and identifying information that requires protection,
drafting contracts and internal policies (NDAs, confidentiality regulations, employment clauses),
representing clients in disputes — filing lawsuits, requesting injunctions, and appearing in court,
training employees on confidentiality obligations and proper handling of sensitive information.
In practice, legal expertise is essential for preventing disputes and building a culture of confidentiality within the company.
Conclusion – The Importance of Preventive Protection and Legal Certainty
Trade secrets are a cornerstone of stable and secure business operations. In the digital era—where information can be shared instantly—timely legal protection is the only effective way to avoid costly disputes and reputational harm.
Employers must clearly define what constitutes a trade secret, implement contractual and technical safeguards, and regularly educate employees.
Employees, on the other hand, must be aware that confidentiality obligations continue even after termination of employment, and that violations may carry both civil and criminal consequences.
Frequently Asked Questions (FAQ)
1. What is considered a trade secret in practice?
2. Can an employer unilaterally declare any information a trade secret?
3. How long does the confidentiality obligation last after employment ends?
4. Must trade secrets be explicitly defined in the employment contract?
5. What is an NDA and how is it used?
6. What are the consequences of violating a trade secret?
7. Are trade secrets protected under criminal law?
8. How can a lawyer assist with trade secret protection?
If you want to protect your company’s interests and prevent misuse of confidential information, consult an experienced employment and commercial lawyer. Defining and securing trade secrets in advance is the best way to ensure legal safety and long-term business stability.