Co-published editorial
Trade secrets
in Mexico
By Ignacio Dominguez-Torrado, Uhthoff,
Gomez Vega & Uhthoff SC, Mexico City
What can be defined as a trade secret in
your jurisdiction?
The Mexican legal system establishes
protection for some, though not all,
information. The elements that any given
information must include in order to be
considered as a trade secret are set out in
Articles 82 and following of the Industrial
Property Law.
To begin with, the information must
have an industrial, commercial, professional
or technical nature. The information
constituting a trade secret must relate to
the nature, characteristics or purposes of
products, to production methods or
processes, or to ways or means of
distributing or marketing products or
rendering services. Even if the information
meets these conditions, it will not be
considered as a trade secret unless it gives
the proprietor a competitive edge over its
competitors, meaning that the information
must represent an economic or competitive
advantage for the owner. Examples of
information that may be considered as a
trade secret include:
• Technical and professional information.
• Technical knowledge or know-how.
• Recipes.
• Formulae.
• Business methods.
It is also vital that the proprietor of the
information deems it to be confidential and
applies sufficient means, measures and
safeguards to preserve this confidentiality.
This might include restricting access to
authorised parties by implementing
passwords, limited access, encryption
methods and similar procedures.
90 Intellectual Asset Management July/August 2010
These are the first conditions that
information must meet in order to be
considered as a trade secret. In addition,
information cannot be disclosed orally if it
is to be considered a trade secret, even if the
disclosing party declares to the recipient
that the same must be kept in confidence.
Under Mexican law, the information subject
matter of a trade secret must be fixed on a
tangible medium; hence, it must exist in
documents, electronic or magnetic media,
optical discs, microfilm, film or other
similar material.
What level of protection is afforded to
trade secrets?
Information that is considered to be in the
public domain, that is evident to a person
skilled in the art on the basis of previously
available information or that must be
disclosed by virtue of a legal provision or
court order shall not be considered to be a
trade secret. However, information that is
supplied to an authority by a person
possessing it as a trade secret shall not be
considered public domain or to have been
disclosed by virtue of a legal provision when
it is supplied for the purpose of obtaining
licences, permits, authorisations,
registrations or any other official acts.
How willing are courts to enforce trade
secret protection?
This depends on whether the claim filed by
the injured party before the Administrative
Authority, the Civil Court or the
Prosecutor’s Office is well prepared and
documented. The authorities will act
promptly against an infringer and will issue
a decision provided that the documents
filed before them are sufficient to establish
a breach or infringement of a trade secret.
www.iam-magazine.com
Trade secret protection
Ignacio Dominguez-Torrado
Partner
Uhthoff, Gomez Vega &
Uhthoff SC
Mexico City
Tel +52 55 5533 5060
[email protected]
Ignacio Dominguez-Torrado
received his law degree from the
Universidad Panamericana in
2000. He obtained his LLM from
the University of Virginia in 2002.
Mr Dominguez-Torrado is a
member of the Mexican
Association for the Protection of
Industrial Property, the Mexican
Bar Association and LESMEXICO. He was made partner of
Uhthoff Gómez Vega & Uhthoff
SC in 2007 and now heads the
firm’s corporate law department.
www.iam-magazine.com
What level of proof do the courts require
in order to find that trade secrets have
been violated?
It is a sine qua non requirement that any
claim filed – regardless of whether through
an administrative proceeding, civil court or
criminal suit – be accompanied by sufficient
documentation to establish that a violation
of trade secret rights has taken place. The
documents filed must clearly demonstrate
that such a breach occurred even after all the
requirements for trade secret protection were
met (ie, that the disclosure took place with
knowledge of the confidential nature of the
information; that the necessary requirements
to safeguard the confidentiality of the
information had been met; and that the
nature of the information could be
considered a trade secret under the law).
What remedies are available once a court
finds that trade secrets have been
violated?
Trade secrets are governed by three laws:
• The Industrial Property Law deals with
trade secrets in general and sets out
remedies for breach thereof.
• The Civil Law governs breaches of
contractual relationships and claims for
damages.
• The Federal Criminal Code establishes
that the disclosure of trade secrets is a
criminal offence under the Industrial
Property Law.
Under the Civil Law, the offended party
may seek payment of damages, not only
when a breach of contractual obligations has
taken place, but also if disclosure takes
place for any other reason. Not all
disclosures may take place by way of a
contractual commercial relationship;
disclosures also include disclosures made to
any person who, by reason of his work,
employment, function or post, the practice
of his profession or the conduct of business
relations, is given access to a trade secret
and is warned that it is strictly confidential.
The Industrial Property Law and the
Federal Criminal Code consider the
following conduct to constitute an offence:
• Revealing to a third party a trade secret
that was known by virtue of
employment, position, responsibility,
the practice of a profession or business
relations, or as a result of the grant of a
licence for its use, without the consent
of the proprietor of the trade secret,
having been advised of its
confidentiality, for the purpose of
procuring an economic benefit for
•
•
oneself or for that third party, or for the
purpose of doing harm to the proprietor
of the trade.
Appropriating a trade secret without the
right to do so and without the consent
of the proprietor or an authorised user,
in order to use it or reveal it to a third
party for the purpose of procuring an
economic benefit for oneself or for that
third party, or for the purpose of doing
harm to the proprietor of the trade
secret or to an authorised user.
The use of information constituting a
trade secret that is known by virtue of
employment, position, responsibility,
the practice of a profession or business
relations, without the consent of the
proprietor or the authorised user
thereof, or that has been revealed to one
by a third party, in the knowledge that
the third party was acting without the
consent of the proprietor of the trade
secret or an authorised user, for the
purpose of procuring an economic
benefit or doing harm to the proprietor
of the trade secret or the authorised
user thereof.
In addition to the possibility of claiming
damages via a civil court, as mentioned
above, this conduct is punishable by
imprisonment for between two and six
years and a fine corresponding to between
100 and 10,000 days of the general
minimum wage payable in the Federal
District (approximately $5 per day).
Both civil and criminal actions are
related and mentioned in the Industrial
Property Law. All actions must be initiated
by the injured party.
When might companies opt for trade
secret protection over patent protection?
Most companies possess information that
they consider to be an asset, especially if it
gives them an edge over their competitors.
However, there can be various reasons –
either to avoid publishing the information
or because the subject matter is not
patentable – for seeking protection outside
the IP system. Trade secrets are a proven
alternative for companies that wish to avoid
the trade-off between the protection that is
granted through a patent and the necessity
of disclosing valuable information – not to
mention the time and expense of the patent
application process. Many companies
around the world have chosen to protect
their information in the form of trade
secrets – the most famous of which is
probably the formula for Coca-Cola.
Intellectual Asset Management July/August 2010 91
Co-published editorial
In addition, trade secrets can be used to
protect non-patentable subject matter,
including the following:
• Theoretical or scientific principles.
• Schemes, plans, rules and methods for
carrying out mental processes.
• Methods for doing business.
• Mathematical methods.
• Methods of presenting information.
• Methods of surgical, therapeutic or
diagnostic treatment applicable to the
human body and to animals.
Can trade secret and patent protection
be used in conjunction?
During the early stages of development, it is
indeed possible to use patent and trade
secret protection in conjunction. However,
one of the main reasons for choosing
between trade secret protection and patent
protection is the downside that patent
publicity brings. As we have mentioned,
some information that is protected under a
trade secret could also fall within patent
protection. However, once a patent
application is published and the patent is
granted, the scope of the subject matter is
disclosed to the public and thus the main
requirement for trade secret protection –
confidentiality – is lost. Further, patents in
Mexico have a limited protection period of
20 years from the filing date; once this
expires, the information and subject matter
will fall into the public domain. There is no
such limitation on trade secret protection.
How are trade secrets best protected in a
licensing context?
The best options for seeking protection in a
licensing context will depend on the kind of
rights under licence. If the rights are
protected under a trade secret, the best way
to obtain protection will be to include a
confidentiality agreement with a trade
secret clause in the licence. This can be
done by inserting a confidentiality clause
into the licence agreement or by signing a
separate confidentiality agreement.
What are the key issues to bear in mind
when developing a trade secret policy?
Information considered to be a trade secret
cannot be protected by any other legal
means (ie, copyright or patent); thus, there
is no registration or recordal of trade secrets
before any Mexican authority. Instead, the
key to successful protection lies in the
reliability of parties with regard to
confidentiality procedures implemented
92 Intellectual Asset Management July/August 2010
through contractual obligations and other
safeguards.
A trade secret proprietor should execute
confidentiality agreements, also referred to
as non-disclosure agreements, with every
party to which the trade secret is disclosed.
It is vital that such documents are signed
before any information is disclosed, and
that the disclosing party ensures that the
disclosed information is duly marked as
confidential to avoid any excuse from the
recipient. If possible, the confidential
information must be incorporated into the
agreement by means of a schedule or
exhibit to such agreement. By proceeding
accordingly, there should be no doubt as to
what information should or should not be
considered confidential and thus to be a
trade secret. Moreover, and since generally
when confidential information is disclosed
to a company it is not disclosed exclusively
to one person, it is important that the
agreement regarding the trade secret
foresees the recipient’s obligation to ensure
that any employees who access the trade
secret do so only under similar nondisclosure agreements or even under
confidentiality clauses in the labour
agreements.
Are there any other issues that you
would like to raise?
A trade secret proprietor must ensure that
it complies with confidentiality measures
and safeguards in order to restrict access to
the information. Although it is possible to
seek remedies against a non-authorised
person via legal action set out under
Mexican law, the trade secret proprietor
should bear in mind that such actions will
take time and will be subject to formal legal
criminal and civil procedures. Trade secret
proprietors must ensure that all relevant
documents explicitly prohibit the disclosure
of the information and make clear its
confidential nature. Trade secrets are a
proven method of safeguarding proprietary
valuable information as long as proper
counsel is sought and all the necessary
measures are taken to fulfil the legal
requirements discussed in this article.
Uhthoff, Gomez Vega & Uhthoff SC
Hamburgo 260 col Juárez
Mexico City 06600, Mexico
Tel +52 55 5533 5060
Fax +52 55 5208 8387
www.uhthoff.com.mx
www.iam-magazine.com