Trade Secret Regulation in Central America: An Overview | Denton

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In Central America, trade secrets are generally regulated by industrial property laws, within the framework of the repression of unfair competition. Guatemala, El Salvador, Honduras, Nicaragua, and Panama regulate trade secrets in their industrial property laws, while Costa Rica has a specific law to deal with it: the Undisclosed Information Law.

In all the national legislations of the region, we find a similar and general definition of “trade secret”. Is subject to protection as a trade secret any information:

  1. at market value,
  2. which is not generally known or readily available to persons who belong to the circles in which such information is normally used, and
  3. whose rightful owner has taken reasonable steps to keep it secret.

All Central American countries have the same general provisions regarding the requirements for protecting industrial property considered a trade secret and the measures to be taken against infringements, with some differences. For example, in Costa Rica, the Undisclosed Information Law regulates a type of repository (deposit) of physical media on which undisclosed information is contained. The deposit is kept by the Registry of Industrial Property; despite the existence of a repository, it is rarely used. Honduras, on the other hand, does not have specific regulations governing the applicability and enforcement of trade secrets.

Regarding the enforcement of trade secrets in the region, in all countries it is possible to initiate civil and criminal proceedings.

In much of Central America, trade secret regulations are limited and there are no clear enforcement procedures. This is why protecting information by labeling it a trade secret is not commonly used here.

Case law in the region – a recent example

Without comprehensive regulation, trade secrets remain largely untried by judges. A recent judgment in Guatemala regarding trade secrets was issued by the Constitutional Court (the highest court in the country) in 2019.

Court ruled in case of former employee sued for breach of nondisclosure and noncompetition agreement; the court had to determine whether the agreement was sufficient to prove the existence of a trade secret; it also analyzed the compliance of each element necessary for the information to be considered a trade secret.

The Court determined that: (i) the adoption of a confidentiality clause is part of the measures necessary to protect a trade secret; however, (ii) the information available to the Respondent could not be protected as a trade secret because: (a) it was obtained prior to the commencement of the employment relationship with the Complaining Entity ; and (b) the information did not comply with the presupposition established in Guatemalan industrial property law that such information should not be generally known or readily available to persons within the circle in which such information is used.

Trade secrets still have a lot of development potential in the region, and it is essential to further explore the concept and seek ways to develop its application.

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