Commentary on Com., 24 September 2025, No. 24-13.078
The judgment given by the Commercial Chamber of the French Supreme Court (Cour de cassation) on 24 September 2025 deserves very particular attention, both for the scope of the principle it establishes and for the questions it raises as to its field of application and its theoretical foundations. By quashing the judgment of the Rennes Court of Appeal of 23 January 2024, the Supreme Court lays down a rule of remarkable strictness in matters of unfair competition based on the misappropriation of confidential information by a former corporate officer or a former employee.
The case arose from the relationship between the vice-president of the Super VW Festival association and that association, which organises a motoring festival dedicated to Volkswagen vehicles. The vice-president had held office until the end of 2016. On 24 August 2016, he had sent his future business partner the association’s trial balance for 2016. These two individuals subsequently set up the company Motorfest, which organised a competing festival in July 2017 and 2018. The Super VW Festival association brought a claim for damages for unfair competition, which the Rennes Court of Appeal dismissed on the ground that the document sent was brief and contained no strategic information.
It is precisely on this point that the French Supreme Court (Cour de cassation) quashes the appeal judgment, stating in remarkably clear terms that the mere fact that a company, in whose creation a competitor’s former employee or former corporate officer took part, holds confidential information relating to that competitor’s business obtained during the performance of the employment contract or the corporate office constitutes an act of unfair competition.
This decision calls for a twofold reading: first, as regards the objective conception of fault that it establishes, drawing on the 2018 Trade Secrets Act; and second, as regards the extensions and limits of this strict principle.
I. Sanctioning the disclosure of confidential information to a competing company
The solution adopted by the French Supreme Court (Cour de cassation) in its judgment of 24 September 2025 stands out for its strictness and its objective character. It is part of a line of case law which, since 2022, has treated the mere holding of confidential information as an autonomous fault of unfair competition, while drawing inspiration from the principles established by the Act of 30 July 2018 on the protection of trade secrets.
A. From the appearance of holding to the reality of disclosure
The Rennes Court of Appeal had based its dismissal on two considerations, holding first that the transmission of the financial document did not in itself constitute an act of unfair competition, and second that the document was brief and contained no strategic information. This analysis, which rests on a qualitative assessment of the content of the information disclosed, reflects a traditional approach to unfair competition that requires proof of actual harm and of a fault characterised by its concrete impact on the competitor’s business.
Yet it is precisely this approach that the French Supreme Court (Cour de cassation) censures, holding to be ineffective the ground based on the brevity of the information and the absence of strategic information. The Supreme Court thus adopts a radically objective approach to fault in matters of unfair competition based on the misappropriation of confidential information. The confidential nature of the information is sufficient to establish fault, irrespective of any assessment of its strategic value or competitive impact. This solution marks a significant development in the case law, since it makes the mere holding of confidential information by a competitor a ground for liability in tort.
It should be emphasised, however, that the solution adopted in the judgment of 24 September 2025 is not truly innovative. It follows a line of case law already firmly established since the judgment given by the Commercial Chamber on 7 December 2022 (Com., 7 December 2022, No. 21-19.860). In that case, the Court of Appeal had held that the transfer of confidential information by former employees was not wrongful in the absence of proof that the information had been exploited by wrongful means. The French Supreme Court (Cour de cassation) quashed that judgment, already holding that the mere fact that a company, in whose creation a competitor’s former employee took part, holds confidential information relating to that competitor’s business and obtained by that employee during the performance of his employment contract constitutes an act of unfair competition.
The 2025 judgment therefore confirms a particularly strict line of case law that makes holding an autonomous fault. This objective conception of fault has several advantages. First, it considerably simplifies the burden of proof on the claimant, who no longer has to show that the information disclosed was strategic or that it was actually used in the competing business. It is sufficient to establish that the information was confidential and that it was obtained during the performance of the corporate office or employment contract. This approach also has the advantage of legal certainty, by drawing a clear line between what is permitted and what is not. A former corporate officer or former employee now knows that he may not hold any confidential information of his former employer or principal, even if that information seems trivial or of no strategic interest to him.
B. Case law inspired by the Trade Secrets Act of 30 July 2018
The most stimulating aspect of this judgment lies in its revealing an interpretation of the law of civil liability that is clearly inspired by the principles of the Act of 30 July 2018 on the protection of trade secrets. That Act, which transposed European Directive 2016/943 of 8 June 2016, introduced into the Commercial Code (Code de commerce) a specific regime for the protection of trade secrets in Articles L. 151-1 et seq. Yet the facts of the case predate the entry into force of that Act, since the trial balance was communicated on 24 August 2016.
However, reading the judgment of 24 September 2025 in the light of Article L. 151-4 of the Commercial Code proves particularly illuminating. That article provides that the acquisition of a trade secret is unlawful where it is carried out without the consent of its lawful holder and results in particular from any other conduct which, in the circumstances, is considered unfair and contrary to commercial practice. This provision establishes a general clause of unfairness that supplements the situations expressly covered by the text.
The wording adopted by the French Supreme Court (Cour de cassation) in the judgment under review bears striking similarities to this logic. By stating that the mere fact of holding confidential information obtained during the performance of the corporate office constitutes an act of unfair competition, the Court reasons as if it were applying the spirit of Article L. 151-4 of the Commercial Code. The circumstances of the case clearly amounted to conduct that was unfair and contrary to commercial practice. The fiduciary position of the association’s vice-president was the archetypal example.
This convergence shows that the French Supreme Court (Cour de cassation), while formally relying on Article 1240 of the Civil Code, which governs ordinary tortious liability, is in reality drawing on the principles codified by the 2018 Act. This approach may seem surprising at first sight, since the Act of 30 July 2018 was not applicable to the facts of the case. However, it makes perfect sense if one considers that the Act merely codified and systematised principles that already existed in French case law on know-how and confidential information.
The inspiration drawn from the 2018 Act is particularly clearly illustrated by the way in which the case law deals with the holding of confidential information. The 2018 Act distinguishes between the unlawful acquisition of a trade secret, covered by Article L. 151-4 of the Commercial Code, and its unlawful use or disclosure, covered by Articles L. 151-5 and L. 151-6 of the same code. But this distinction does not mean that acquisition is sanctioned only where there is subsequent use. On the contrary, Article L. 151-4 sanctions unlawful acquisition as such, independently of any use or disclosure. Likewise, Articles L. 151-5 and L. 151-6 sanction use and disclosure as autonomous faults. The 2018 Act therefore establishes three possible faults, acquisition, use and disclosure being three distinct but equally reprehensible forms of conduct.
By referring to the holding of confidential information, the case law treats such holding precisely as unlawful acquisition within the meaning of the 2018 Act. This reading helps to explain the approach of the French Supreme Court (Cour de cassation), which sanctions the very fact of having retained confidential information after leaving office in order to take part in a competing business, without any need to prove that it was actually used. As under the 2018 Act, acquisition or holding constitutes an autonomous fault that need not be accompanied by use in order to give rise to its author’s liability.
In the present case, the Super VW Festival association’s trial balance for 2016 was clearly confidential information. It was not generally known or readily accessible, since it was an internal accounting document. It had commercial value, even though the Court of Appeal had sought to minimise that value by describing it as brief and lacking strategic information. Finally, it was subject to protective measures, since only the association’s officers had access to it.
By holding that the mere holding of this information by the vice-president, after he had left office and taken part in setting up a competing company, constituted an act of unfair competition, the French Supreme Court (Cour de cassation) applies exactly the same reasoning as that underlying Article L. 151-4 of the Commercial Code in characterising fault. The vice-president’s fiduciary position made his conduct unfair and contrary to commercial practice within the meaning of that article. An association vice-president who discloses the association’s confidential accounting data to a person who is about to become his partner in a competing business is guilty of a manifest breach of his duty of loyalty.
II. The scope of the decision
Beyond the immediate scope of its solution, the judgment of 24 September 2025 is of twofold interest. First, it extends the application of the principle to new situations through a significant obiter dictum and through its application to association officers. Second, it raises important questions as to the limits of this strict principle and the practical arrangements for its implementation.
A. Practical difficulties: from proof of implicit disclosure to the methods of compensation
While the French Supreme Court (Cour de cassation) clearly draws on the 2018 Act to characterise fault objectively, this strict approach raises serious questions concerning both the legitimacy of such a broad conception of fault and the practical arrangements for implementing the principle thus established.
The apparent treatment of holding as an autonomous fault deserves criticism because, traditionally in the law of unfair competition, it is not the holding of confidential information that is prohibited, but its use or disclosure. Article 1112-2 of the Civil Code, which applies to pre-contractual negotiations, clearly illustrates this by providing that a person who uses or discloses without authorisation confidential information obtained in the course of negotiations incurs liability. The text therefore prohibits use or disclosure, not mere holding. Even more significantly, Article L.1227-1 of the Labour Code provides that a director or employee who reveals or attempts to reveal a manufacturing secret is liable to two years’ imprisonment and a fine of thirty thousand euros. It can thus be seen that, in employment criminal law, it is revelation, a form of use of the secret, that lies at the heart of the criminal penalty, and not acquisition or holding as such.
Yet the holding of confidential information sometimes, and indeed most often, results from the duties performed by the defendant. In itself, there is nothing unlawful about it. It is, in principle, its use that may be unlawful. However, a closer reading of the wording adopted by the French Supreme Court (Cour de cassation) in the 2022 and 2025 judgments reveals that what is really being sanctioned may not be exactly what the terminology used might suggest. Both judgments sanction the fact that a company, in whose creation a competitor’s former employee or former corporate officer took part, holds confidential information relating to that competitor’s business and obtained by that employee or corporate officer during the performance of his employment contract or office.
This wording highlights two distinct moments: first, the acquisition of the information by the individual during the performance of his contract or office; second, the holding of that same information by the newly created legal entity. Between that acquisition by the individual and that holding by the legal entity, there is necessarily an intermediate act which the French Supreme Court (Cour de cassation) does not expressly mention but which is logically implied: the transmission of the information from the former to the latter. It is precisely this transmission that constitutes the wrongful conduct, since it presupposes that the former employee or former officer communicated, revealed or disclosed the confidential information obtained in his former position to the competing company he helped to set up.
Yet this transmission is merely a particular form of disclosure within the meaning of the Act of 30 July 2018. Article L.151-5 of the Commercial Code provides that the use or disclosure of a trade secret is unlawful where it is carried out without the consent of its lawful holder by a person who acquired the trade secret unlawfully or who, at the time of the use or disclosure, knew or ought, under the circumstances, to have known that the trade secret had been obtained directly or indirectly from another person who was using or disclosing it unlawfully. Article L.151-6 supplements this regime by covering, in particular, the person who acquired the trade secret and who, at the time of acquisition, knew or ought, under the circumstances, to have known that the trade secret had been obtained directly or indirectly from another person who was using or disclosing it unlawfully.
Under the guise of sanctioning mere holding, the decision under review therefore sanctions the disclosure made by the former stakeholder of the competing business to the newly created company. This disclosure fully meets the conditions laid down in Article L.151-5 of the Commercial Code. It is made without the consent of the lawful holder, that is, the competing company or association that is the victim. It is the act of a person who acquired the secret through unfair conduct, since the former employee or former officer took with him sensitive information obtained during the performance of his contract or office, information that he was not supposed to retain after ceasing to hold office. The company receiving this disclosure, for its part, necessarily knew, when it received the information, that it had been obtained unfairly, since it had been set up with the participation of that very person.
In the present case, what enabled the French Supreme Court (Cour de cassation) to find fault was therefore not so much the fact that the former vice-president took part in setting up a competing company as such, but the fact that on 24 August 2016 he sent the association’s trial balance to his future partner. That communication is precisely the disclosure being sanctioned. The setting up of the competing company after that communication merely reveals the unfair purpose of the disclosure, but it is indeed the act of transmission that lies at the heart of the wrongful conduct.
This approach raises another equally important question: that of recoverable loss. Does the mere acquisition or holding of confidential information, without actual use, necessarily cause the victim loss? Not necessarily. One could imagine a former employee or former officer holding confidential information without ever using it, whether through oversight or because it ultimately proves useless to his business. In such a case, fault would be established under current case law, but the loss might be non-existent or very difficult to prove.
This difficulty does not, however, necessarily lead to the dismissal of the civil liability claim. It is possible to seek not compensation by equivalent in the form of damages, but compensation in kind. Article L. 152-3 of the Commercial Code, which applies to trade secrets, thus provides for various measures of prohibition, destruction and recall from the channels of commerce. By analogy, the court could order the deletion or destruction of the protected content, the return of the confidential documents, or a prohibition on using the information in the future. Such measures would make it possible to bring to an end the unlawful situation resulting from the mere holding of confidential information, without any need to prove quantifiable loss. This approach would have the advantage of being consistent with the objective conception of fault adopted by the French Supreme Court (Cour de cassation), while avoiding the practical difficulties of proving loss where no actual use of the information has been shown.
However, where compensation by equivalent is sought, the question of how to assess the loss remains open. Article L. 152-6 of the Commercial Code provides that, in setting the damages due as compensation for the loss suffered, the court takes into account, in particular, the profits made by the infringer of the trade secret, including the savings in intellectual, material and promotional investment that the infringer derived from the infringement. This provision allows an original approach to compensation that is based not only on the loss suffered by the victim, but also on the advantage unfairly obtained by the wrongdoer.
Yet, since the 2018 Act does not apply, one could consider applying the Cristal de Paris case law handed down by the Commercial Chamber of the French Supreme Court (Cour de cassation) on 12 February 2020 (Com., 12 February 2020, No. 17-31.614). That case law states that while the harmful effects of practices aimed at diverting or appropriating customers or disrupting a competitor’s business can be fairly easily demonstrated, since they have negative economic consequences for the victim, the same is not true of practices consisting in free-riding on a competitor’s intellectual, material or promotional efforts and investments, or in disregarding regulations whose observance necessarily entails a cost. Such acts allow their author to avoid an expense that is in principle compulsory and give rise to an undue competitive advantage whose effects, in terms of economic disruption, are difficult to quantify with the available evidence, except at a cost disproportionate to the interests at stake.
The Cristal de Paris case law therefore accepts that, where this is the case, compensation for the loss may be assessed by taking into account the undue advantage that the author of the acts of unfair competition obtained at the expense of its competitors, adjusted in proportion to the respective volumes of business of the parties affected by those acts. This approach bears a striking similarity to that adopted by Article L. 152-6 of the Commercial Code (Code de commerce) for breaches of trade secrets.
In the present case, applying this case law would make it possible, even at the stage of assessing loss, to draw on the spirit of Article L. 152-6 of the Commercial Code. The association’s vice-president, by communicating the confidential information to his future partner, enabled them to save on certain intellectual and material investments in setting up their competing festival. They benefited from knowledge of the Super VW Festival association’s financial position, which gave them an undue competitive advantage, even if that advantage may be difficult to quantify precisely. Rather than focusing solely on the loss suffered by the association, which might be hard to establish, the court could assess damages by taking into account the advantage unfairly obtained by the founders of the company Motorfest through holding this confidential information.
This approach would have the advantage of consistency between the regime of fault, inspired by the principles of the 2018 Act, and the regime of compensation, which would likewise draw on the spirit of that Act by way of the Cristal de Paris case law. It would also overcome the practical difficulty of proving loss in cases where, as here, the confidential nature of the information is sufficient to establish fault, but the economic loss actually suffered by the victim remains difficult to establish precisely. This question will have to be decided by the Court of Appeal to which the case is remitted after the judgment is quashed, and it will be particularly interesting to see which method of assessing loss is adopted.
B. Extension to employees and officers of associations
The most remarkable aspect of this decision perhaps lies less in the principle it establishes than in the wording it adopts and its scope of application. The French Supreme Court (Cour de cassation) expressly refers to both the former employee and the former corporate officer of a competitor, even though the case concerned only a former officer of an association. This wording is clearly an obiter dictum, that is, a statement of principle that goes beyond what is strictly necessary to resolve the dispute.
This extension deserves particular attention because it brings together in a single rule two situations that traditionally fall under distinct legal regimes. An employee is bound to the employer by an employment contract characterised by a relationship of subordination and governed by the Labour Code. A corporate officer, for his part, performs his duties under a mandate governed by Articles 1984 et seq. of the Civil Code and, for companies, by the specific provisions of the Commercial Code. These two legal situations entail duties of loyalty that differ in nature and intensity.
As regards employees, case law has gradually built up a regime of duty of loyalty rooted in the performance of the employment contract in good faith. This duty continues, to a certain extent, after the employment contract ends, notably through non-compete clauses. The Memento Social published by Francis Lefebvre lists the various faults that an employee may commit and that justify dismissal, including the misappropriation of confidential information belonging to the employer. Employment case law has thus gradually established that an employee may neither use nor disclose the confidential information to which he had access in the course of his duties, and that this obligation persists after the termination of the employment contract.
By expressly including employees in the rule it lays down, the French Supreme Court (Cour de cassation) therefore transposes the principles of employment law into competition law. This is not a neutral step, since it implies that the mere holding by an employee of his former employer’s confidential information, when he sets up or takes part in setting up a competing company, constitutes ipso facto an act of unfair competition, irrespective of any actual use of that information. This solution goes further than employment case law had previously established, since it makes holding itself, rather than use or disclosure, the event giving rise to liability.
The parallel with corporate officers is equally instructive. A corporate officer (mandataire social), as a manager of a company, is subject to a particularly intense fiduciary duty towards the company he represents. This duty of loyalty, the traditional basis of directors’ liability, means that he may not pursue a personal interest contrary to that of the company and must act in the company’s interest. Case law has long accepted that this duty continues to a certain extent after he leaves office, particularly with regard to the exploitation of confidential information acquired while in office.
By bringing employees and corporate officers under the same rule, the French Supreme Court (Cour de cassation) therefore suggests that it is the fiduciary position, understood broadly, that underlies the prohibition. Whether under an employment contract or a corporate mandate, a person who has had access to confidential information because of the trust placed in him may not use that information to compete with the person who entrusted it to him. This unified approach has the advantage of consistency and simplicity, but it also raises the question whether other fiduciary situations, such as those of a subcontractor, a consultant or a franchisee, should not be subject to the same regime.
The other innovative aspect of this decision is that it concerns an officer of an association rather than a corporate officer of a commercial company. This extension deserves in-depth analysis because it marks a significant development in the law applicable to associations. Traditionally, the corporate officer’s duty of loyalty has been developed and refined within company law. This duty of loyalty requires the manager not to pursue a personal interest contrary to the company’s interest and to refrain from any competing activity liable to harm the company.
In the present case, however, the entity was an association governed by the Act of 1st July 1901, and the vice-president held management functions within it. Associations are not companies and do not pursue a profit-making purpose within the meaning of company law. Their purpose is non-profit, even though they may carry on ancillary economic activities. The question therefore arose whether the rules developed for company managers could apply to the officers of associations.
The French Supreme Court (Cour de cassation) answers this question in the affirmative by applying the same liability regime to the association’s vice-president. This solution may be based on Articles 1991, 1992 and 1993 of the Civil Code, which govern mandates.
This solution nevertheless has an important particularity. Whereas the duty of loyalty of company managers has traditionally been developed in the context of the manager’s internal liability towards the company, the French Supreme Court (Cour de cassation) here applies that duty in the context of unfair competition, that is, in external relations between competitors. This transposition of the duty of loyalty from the internal sphere to the external sphere is far from trivial. It means that a breach by an association officer of his duty of loyalty towards the association may, at the same time, constitute an act of unfair competition against it where it carries on economic activities capable of generating competition.
The Super VW Festival association organised motoring festivals and was therefore in competition with other organisers of similar events. In that sense, it could rely on the law of unfair competition. But this situation remains relatively specific, since not all associations are in a position of economic competition. The scope of this case law for purely non-profit associations therefore remains to be clarified.
