On 5 November 2020 the Federal Law for the Protection of Industrial Property (FLPIP) entered into force. The FLPIP makes changes to the existing law regarding matters such as:
- inventions;
- trademarks;
- opposition issues;
- invalidation and infringement actions;
- counterfeit issues; and
- trade secrets.
Articles 163 to 169 of the FLPIP relate to the regulation of trade secrets.
Article 163 of the FLPIP defines a 'trade secret' as "all information with industrial or commercial application which is kept by a person exercising legal control and… is marked as confidential". This differs from the previous law under which trade secrets did not entail any type of control by a party.
Further, Article 165 of the FLPIP now states that the party which has legal control over a trade secret is the only party that can transmit such trade secret to or authorise its use by a third party. It seems that a party must now prove that it has legal control over the information which is part of a trade secret in order for that trade secret to be considered as such and to enable the party to transmit the trade secret or authorise its use.
The FLPIP maintains the previous law's exceptions to the information considered a trade secret. However, it adds information that is easily accessible in industry circles to those exceptions.
The material supports for documenting trade secrets are now broader, since the FLPIP includes any known or unknown materials. Unlike under the previous law, the information contained in a trade secret need not refer to the nature, characteristics or purposes of:
- a product;
- a method;
- a production process;
- a distribution process; or
- the commercialisation of a product or provision of a service.
Improper appropriation of trade secrets
Article 163 of the FLPIP introduces the concept of 'improper appropriation', which is defined as the acquisition, use or disclosure of a trade secret in a manner that is contrary to good practice in industry, commerce or services and may result in unfair competition. This includes the acquisition, use or disclosure of a trade secret by a third party that knew, or had reasonable grounds to know, that the trade secret had been acquired in such a manner.
The FLPIP establishes that the improper appropriation of information which is considered a trade secret constitutes infringement. It also categorises as a crime the act of accessing without authorisation a trade secret kept in a computer system for the purposes of causing damage or obtaining an economic advantage. For clarity, Article 164 of the FLPIP establishes what is not considered improper appropriation.
Article 169 of the FLPIP maintains the authorities' obligation to adopt necessary measures to prevent the unauthorised disclosure of a trade secret in judicial or administrative procedures. However, the obligation to not use or disclose the trade secret by any interested party now also applies to:
- the representatives of the interested party or any party authorised thereby to hear and receive legal notices;
- judicial or administrative officials; and
- witnesses, experts or any other parties which are involved in the judicial or administrative processes or which have access to documents that are part of such processes.
Under Article 386 of the FLPIP, the improper appropriation of information that is considered a trade secret – as well as the production, offer for sale, sale, import, export or storing of products or services that use a trade secret – are expressly considered to be administrative infractions. According to Article 388 of FLPIP, the fines applicable to a party which commits an administrative infraction are higher than those under the previous law.
The FLPIP brings more security and certainty to the protection of trade secrets by:
- introducing the concept of improper appropriation;
- limiting the management of a trade secret to the party that has legal control over it;
- deeming the illegal appropriation or use of a trade secret as an administrative infraction; and
- imposing more severe punishments on parties that infringe the law.
