Industrial Secrets Protected for the First Time
On January 1, 1994, Andean Pact legislation began protecting industrial secrets for the first time. Applying to Bolivia, Ecuador, Colombia, Peru, and Venezuela, Decision 344 replaced Decision 313, passed in 1992, which had governed various forms of industrial property but not industrial secrets. Regulated in separate chapters of Decision 344 are patents, utility models, industrial designs, marks, trade names, and denomination of origin. Chapter IV of Decision 344, covering industrial secrets, stipulates that information is an industrial secret to the extent that:
- The information as a whole, or in the precise configuration or composition, is not generally known or easily accessible to persons who normally deal with this information;
- The information has real or potential commercial value by being secret; and
- The person, who legally controls the information, has adopted reasonable measures to maintain its secrecy, under the circumstances. 1
Furthermore, the information must concern the nature, characteristics, and uses of products, production methods or processes, or the means or ways of product distribution or marketing or the rendering of services.2
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Trade Secrets Must be Written
A peculiar requirement for industrial secrets under Decision 344 is that they “appear recorded in documents, electronic or magnetic media, optical disks, microfilms, films or other similar elements.”3 The legislation does not specify when the secret information must appear recorded. This raises questions about the security of verbal disclosures of secret information maintained only in the owner’s mind at the time of the disclosure. This, in turn, encourages the documentation of any trade secrets to perfect protection.Excepted from industrial secret protection is information which is in the public domain. The public domain includes information that must be disclosed by legal provision or by judicial order. Information that must be disclosed in applications for government approval of certain transactions is not deemed to be in the public domain.4 Such compulsory disclosures may occur, for example, in agreements transferring technology, which Decision 291 of the Andean Pact requires to be registered with the government of the relevant Andean Pact country.5
Concerns Over Industrial SecretsSeparately, Decision 344 acknowledges the right of parties to a technology transfer contract to agree on the confidentiality of industrial secrets. The parties, however, must specify the information that is considered confidential.6 This poses a concern for technology transfer contracts that must be registered with the government. Neither Decision 344 nor Decision 291 imposes an express duty upon the government to protect from public access industrial secrets disclosed in registered technology transfer contracts. The drafters of Decision 344 explicitly required the government to prevent such access in the special case of experimental data revealed with applications to market pharmaceutical and agrochemical products.7 To remove any doubt, the drafters should have spelled out government duties regarding public access to registered technology transfer contracts in general.
Restrictions on Disclosure by Employees
A separate article restricts persons with access to industrial secrets by virtue of employment, title or position from disclosing the secret information, provided that they were advised of the information’s confidential nature.8 The manner in which the person must be advised of the confidential nature is no described. Presumably, this advisory could appear in employment contracts, policy manuals, security passes signs, etc. In contrast with requirements mandated for technology transfer contracts, there is no express level of specificity for the advisory on confidentiality when a person is privy to information by virtue of employment, title or position. This is another area needing clarification.A person who “licitly has control” of an industrial secret shall be protected against unauthorized disclosure, acquisition or use of the secret by third parties when this would violate fair trade practices.9 The manner of protection is not defined. Unlike the chapters on patents and marks, the chapter on industrial secrets of Decision 344 does not expressly authorize the recovery of damages. This may create significant uncertainties for a plaintiff seeking relief under this legislation. Furthermore, the absence of specific liability for damages may lessen the deterrent effect of this new protection.The member countries of the Andean Pact can remedy the shortcomings of this statutory scheme with separate domestic legislation. Decision 344 authorizes them to pass laws granting stronger protection to owners of industrial property.10 While Bolivia, Colombia, Ecuador, Peru, And Venezuela could further improve investor confidence with legislative refinements to this chapter of Decision 344, formal recognition of industrial secret protection by this multilateral legislation is a great step forward.1 Article 72, Decision 344 of Andean Pact – Common Regime on Industrial Property, published in the Gaceta Oficial del Acuerdo de Cartagena on October 29, 1993 (author’s translation). 2 Article 72, Decision 344.3 Article 75, Decision 344.4
Article 74, Decision 344.5
Article 12 of Decision 291 of the Andean Pact – Common Regime on the Treatment of Foreign Capital and Marks, Patents, Licenses and Royalties, published in Gaceta Oficial del Acuerdo de Cartagena on April 4, 1991.6
Article 76, Decision 344.7
Article 78, Decision 344.8
Article 77, Decision 344. 9
Article 72, Decision 344.10
Article 143, Decision 344.
