COMPETITION • FRENCH LAW • UNFAIR COMPETITION
Know-how is not strictly speaking a secret in the criminal sense of the term. It is the sum of information and knowledge resulting from an undertaking’s experience. It is the fruit of another’s labor and it is unfair to appropriate it in conditions that breach the equality of competition or involve parasitic acts. Know-how can be appropriated in different ways. The most common methods are hiring away a competitor’s employees, setting up a new competing undertaking with former employees and industrial espionage. Inter-company service agreements often provide the means for illegally appropriating know-how. Finally, contracts for which the disclosure of know-how is an essential element of the agreement (licensing or franchising) provide an opportunity for unlawful appropriation. For this reason, franchise agreements always have a confidentiality clause that applies throughout the lifetime of the contract. Disclosure of the franchisor’s know-how therefore gives rise to contractual liability on the part of the franchisee and any third parties involved.
