Trade secret protection is fast becoming a go-to means for intellectual property protection for startups and established corporations alike. Protecting IP under trade secret law has certain advantages over patent protection because of the broad range of subject matter that can be counted as a trade secret asset, and the extended time period for which protection can last – potentially many decades longer than the approximately 20 years of protection a patent provides. Where a technology is not easily reverse-engineered or independently developed, trade secret protection should be part of the conversation when discussing overall IP protection strategy. This often comprises a combination of IP protection methods, including a combination of patent and trade secret protection.
Establishing a comprehensive trade secret strategy often begins with the establishment of firm-wide trade secret protection protocols that define baseline protective measures required of firm personnel when using, storing, exchanging, and transmitting trade secret assets. These protocols are often best established along with firm-wide training initiatives to educate personnel concerning the existence and importance of trade secret assets and how to implement the protections established by the firm’s protocols. Where companies operate in multiple countries across the globe, these trade secret protection protocols must be crafted and applied in a way that ensures protection under the varying laws of all the countries in which a company does business.
In our ongoing series on cross-border trade secret protection, we are examining the varying trade secret protections available across the globe that will necessarily inform the contents and application of companies’ trade secret protection protocols. In our last two alerts on the subject, available here, and here, we compared the protections available under the United States’ Defend Trade Secrets Act (“DTSA”) with the European Directive on the Protection of Undisclosed Know-How and Business Information (Trade Secret) Against Their Unlawful Acquisition, Use and Disclosure (“EU Directive”), and also with the protections provided by individual European member states France and Germany, and those of the United Kingdom (“UK”).
In this alert we head to the Southern Hemisphere for the first in a two-part series on trade secret protection in Latin American (“LATAM”) countries. In this first part, we examine how Brazil, Argentina, Columbia, and Chile protect confidential and trade secret information and compare those protections to the provisions of the DTSA. By understanding the trade secret protections available across the globe, companies can effectively put into practice trade secret strategies that safeguard what are often a company’s most valuable assets.
South America Does Not Currently Have a Blanket Trade Secret Protection Directive
There is currently no blanket directive concerning the protection of trade secret assets across South American nations in the way the EU Directive harmonizes the protections available for trade secret information across Europe. The closest analogue is the Trade-Related Aspects of Intellectual Property (“TRIPS”) Agreement, to which many South American countries are signatories. The TRIPS Agreement mandates protections for “undisclosed information” across the majority of countries in South America. See World Trade Organization (WTO) TRT/WTO 01/002, available at https://www.wipo.int/wipolex/en/text/500864. Specifically, the TRIPS Agreement requires that member countries shall protect “undisclosed information” from disclosure to others without the consent of the entity in control of that information, where such information:
- is secret in the sense that it is not, as a body or in the precise configuration and assembly of its components, generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question;
- has commercial value because it is secret; and
- has been subject to reasonable steps under the circumstances, by the person lawfully in control of the information, to keep it secret.
TRT/WTO 01/002, Art. 39, Para. 2.
The TRIPS Agreement defines “undisclosed information” similarly to the DTSA’s definition of a trade secret, as information that “derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information,” and for which the owner has “taken reasonable measures to keep such information secret.” 18 U.S.C. § 1839(3). However, the TRIPS Agreement does not indicate how “undisclosed information” should be protected so as to maintain its protected status. The designation of such necessary protective measures is left to the individual member countries.
While most South American countries are signatories to the TRIPS Agreement, the methods for protecting confidential and trade secret assets across South America vary from country to country. In many South American countries there is no specific law directed to trade secret protection, and protection is provided under unfair competition and contract law concepts instead. Below, we examine the laws in Brazil, Argentina, Columbia, and Chile that protect confidential and trade secret assets of domestic and foreign corporations doing business in those countries. While companies need to be nimble given the varying protections available for confidential and trade secret information across South America, establishment of robust cross-border protection protocols in South America is achievable when armed with knowledge of the relevant governing statutes.
Brazil
While Brazil has no standalone trade secret law, the country’s Industrial Property Law provides for criminal liability for unfair competitive activities relating to the unlawful use of confidential information of another. See Decree-Law No. 9,279 of May 14, 1996, available at https://www.gov.br/inpi/en/services/patents/laws-and-regulations/laws-and-regulations/lpienglish.pdf. Specifically, Article 195 of the Industrial Property Law provides that performance of the following acts constitutes the crime of unfair competition, punishable by fine or 1-3 months detention:
- “unauthorized disclosure, exploitation, or use of confidential knowledge, information, or data used in the industry, commerce, or service provision, except for the ones that are public or evident for an expert who has had access thereto upon contract or employment, even after the end of such contract or employment;” or
- “unauthorized disclosure, exploitation, or use of confidential knowledge or information referred to in the item above, obtained illegally or accessed through fraud[.]”
Law No. 9,279 of May 14, 1996, Art. 195 (XI), (XII).
The Industrial Property Law further provides for “damages as compensation for losses caused by infringement of industrial property rights,” and also an injunction akin to a temporary restraining order under the Federal Rules of Civil Procedure where a judge may, “in order to avoid irreparable damage or damage that is difficult to be repaired, determine by an injunction the interruption of the infringement or of the act that enables it, before the defendant is served process . . .” Id. Art. 209; see also Brazilian Civil Procedure Code, Decree-Law No. 13.105/15 of March 16, 2015. The Brazilian Consolidation of Labor Laws further dictates that misappropriation of a trade secret constitutes grounds for dismissal of an employee engaged in such conduct. See Decree-Law No. 5.452 of May 1, 1943.
While there is available recourse for misuse of confidential business assets under the Industrial Property Law, companies operating in Brazil should proactively work to prevent disclosure of confidential and trade secret information in the first instance by putting in place robust trade secret protection protocols that limit the sharing of such assets and mandate the implementation of clear confidentiality obligations.
Argentina
Like Brazil, Argentina lacks a specific trade secret law, but it does have a law for the protection of confidential information that has similarities to the DTSA both with respect to defining what constitutes confidential/trade secret information and setting forth acceptable protective measures for such assets.
Argentina’s “Confidentiality Law on Information and Products that are Legitimately under the Control of a Person and are Improperly Disclosed in a Manner Contrary to Honest Commercial Uses” (“Law on Confidential Information”) defines confidential information as that which:
- “is secret in the sense that it is not, as a body or in configuration, a precise collection of its components, generally known or easily accessible to persons introduced in the circles in which the type of information in question is normally used;”
- “has commercial value because it is secret;” and
- “has been subject to reasonable measures, under the circumstances, to keep it secret, taken by the person who legitimately controls it.”
Law No. 24,766, Dec. 20, 1996, Art. 1, available at https://www.wipo.int/wipolex/en/legislation/details/103. This definition is similar to the definition for “trade secret” under the DTSA, which defines a trade secret to include “all forms and types of financial, business, scientific, technical, economic, or engineering information,” if
- “the owner thereof has taken reasonable measures to keep such information secret;” and
- “the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information[.]”
18 U.S.C. § 1839 (3).
Interestingly, the Argentine Law on Confidential Information limits its applicability to “information contained in documents, electronic or magnetic media, optical discs, microfilms, films or other similar elements.” Law No. 24,766, Dec. 20, 1996, Art. 2. This is a different scope than the DTSA, which protects “all forms and types of . . . information.” and the language of the Argentine statute raises questions as to its protection for confidential information contained within the structure of physical devices. See 18 U.S.C. § 1839 (3). Also of note in the Argentine Law on Confidential Information, and a differentiator from the protections available under the DTSA, is the statutory language concerning improper use of another’s confidential information. The Law on Confidential Information prohibits access to confidential information of another by those without authorization to do so, unless an individual has “just cause,” to use or disclose such information. See Law No. 24,766, Dec. 20, 1996, Art. 3. The statute does not define what “just cause” includes, thus leaving a potential door open to disclosure of confidential assets not present in the DTSA or EU Directive. Like the DTSA, however, the Argentine law does provide for criminal liability for those that violate the provisions of the law. See Id., Art. 12.
While there are distinct similarities in some of the language of the Argentine Law on Confidential Information and the DTSA, which may in certain circumstances make implementation of trade secret protection protocols and strategies for information travelling between the U.S. and Argentina more straightforward, companies must be cautious with regard to the nuances of the statute that set it apart from the DTSA, including the fact that confidential information may be disclosed in circumstances where “just cause” allows it. As such, engaging counsel familiar with the unique aspects of the Law on Confidential Information and the differences in protection it provides than those available under the DTSA is necessary when implementing a cross-border trade secret protection strategy to be applied in Argentina (and all other South American nations).
Columbia
Columbia also does not have a specific law directed to the protection of trade secret assets. Rather, trade secrets can be protected through Law No. 256 of January 15, 1996, on Establishment of the Unfair Competition Rules, Colombia (“Law No. 256”). With respect to protection of “Secrets,” Law No. 256 states as follows:
The disclosure or exploitation, without authorization from the owner, of industrial secrets or any other type of business secrets to which access has been obtained legitimately but with a duty of confidentiality, or illegitimately, as a result of any of the conduct provided for in the following paragraph or in article 18 of this law, shall be considered unfair.
Law No. 256, Art. 16, available at https://www.wipo.int/wipolex/en/legislation/details/9999. Thus, disclosure or exploitation of a secret asset is improper where such activity is not authorized by the owner of the secret, regardless of whether the secret was obtained legitimately pursuant to certain confidentiality obligations or illegitimately without permission of the owner. This protective language is, at a general level, similar to that of the DTSA in that it proscribes acquisition and use of a secret of another without permission from the secret’s owner. However, the general nature of this provision leaves open to interpretation a number of things that are more clearly spelled out in the DTSA. For example, Law No. 256 does not provide a definition of “secret,” “industrial secret,” or “business secret.” See id. Law No. 256 also does not define what it means to obtain a secret “without authorization,” and suggests that obtaining a secret “illegitimately,” may be limited to “acquisition of secrets through espionage or similar procedures.” See id. Article 16 of the Columbian law also does not address whether an injunction or damages can be sought in the context of actual or threatened improper use of another’s secret, see Law No. 256, Art. 16, however, other sections of Law No. 256 suggest that remedies akin to damages and injunctive relief are potentially available:
The following actions may be brought against acts of unfair competition:
- Declaratory and condemnatory actions. Those affected by acts of unfair competition may seek a judicial declaration that the acts committed were illegal and, consequently, an order for the offender to remove the effects produced by said acts and compensate the plaintiff for the damages caused. The plaintiff may request, at any time during the proceedings, that the precautionary measures established in Article 33 of this Law be taken.
- Preventive or prohibition action. Any person who believes they may be affected by acts of unfair competition may file a claim to request a judge to prevent the unfair conduct that has not yet been committed, or to prohibit it even if no harm has yet occurred.
Law No. 256, Art. 20.
Thus, while there are laws in Columbia that speak to the protection of business and industrial secrets, the protections available are less specifically enumerated than in the United States and Europe, and there is no specific law dedicated to trade secret protection. As such, like with Brazil, companies must proactively work to prevent disclosure of confidential and trade secret information by implementing robust robust trade secret protection protocols that complement the available protections under the law.
Chile
Unlike many South American countries, Chile has specific laws directed to the protection of trade secret information. See Law No. 19.039 on Industrial Property (Consolidated Law approved by Decree-Law No. 4 of 2022 incorporating amendments up to Law No. 21.355 of July 5, 2021), Chile (“Industrial Property Law”), available at https://www.wipo.int/wipolex/en/legislation/details/21453. Title VIII of Chile’s Industrial Property Law addresses trade secret protection generally, and also specifically in the context of the disclosure of trade secret assets to governmental authorities related to the registration of pharmaceutical and agrochemical products. Chile’s Industrial Property Law defines a trade secret as follows:
A trade secret is any undisclosed information that a person possesses under their control and that may be used in any productive, industrial, or commercial activity, provided that such information meets the following cumulative requirements:
- It is secret in the sense that it is not, as a whole or in the precise configuration and assembly of its components, generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question;
- It has commercial value because it is secret; and
- Reasonable steps have been taken under the circumstances by the person lawfully in control of the information to keep it secret.
Industrial Property Law, Art. 86. This definition largely tracks the trade secret definition of the DTSA. Chile’s Industrial Property Law goes on to define what constitutes a violation of that law, which include the “unauthorized acquisition, disclosure, or exploitation of a trade secret by any means, or the disclosure or exploitation of a trade secret to which one has had lawful access but with a duty of confidentiality.” Id. Art. 87. While these provisions are similar to some of those found in the DTSA, see e.g., 18 U.S.C. § 1839 (5), there is a mens rea element in Chile’s Industrial Property Law that is not present in the DTSA. Specifically, the Industrial Property Law requires that a would-be violator have the “intent to obtain a benefit . . . or to harm the rightful holder of the trade secret,” when violating the law. This additional element potentially makes proving improper acquisition or use of a trade secret more difficult under the Industrial Property Law, as compared to under the DTSA.
While the mens rea element sets the Chilean Industrial Property Law apart from the DTSA and other laws protecting confidential information across South America, like the DTSA, the Industrial Property Law does provide for civil actions seeking injunctive relief in the form of “[a]n injunction to cease acts that infringe the protected right,” and “compensation for damages,” for a “holder whose industrial property right has been infringed or affected.” Industrial Property Law Art. 106, 107. However, like with many other laws directed to the protection of confidential or trade secret information in South America, the Chilean statute does not match the protections or scope of those provided under the DTSA or EU Directive.
In sum, the trade secret protections available by statute in South American nations vary more than those amongst European nations and the United States, and in many cases the protections are less specifically enumerated than those in the United States and Europe. As such, proactive protocols to supplement those statutory protections should be considered by companies doing business in South America. In our next installment in this series, we will examine the trade secret protections available in another set of LATAM countries, as we continue to work our way around the globe. Stay tuned!
For questions on cross-border trade secret protections, please reach out to Nick Armington or any member of Prince Lobel’s Intellectual Property group.
