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Trade Secrets in Mexico Part II

Friday, December 26th, 2008


Jorge Millan, Attorney at Law

By Jorge Millan, Attorney at Law

In my last article regarding trade secrets in Mexico, I explained what they are and suggested that CONFIDENTIAL be printed on them or written within all electronic files to warn possible unauthorized individuals of the confidential nature of your trade secrets.

Another way to protect trade secrets is a CONFIDENTIALITY CONTRACT. This legal document should clearly specify the information to be transferred, as well as the use for which that information is intended. The protection granted to trade secrets through this instrument is, in my opinion, the best. Why? Because the contract will be the ideal proof of the obligation assumed by the recipient to keep your information confidential.

The secrecy obligation not only applies to your employees. It extends to any consultant, from any field, that you may have hired, e.g. legal, technical, commercial or marketing advisers, your advertising firm, etc. That is, it applies to anyone who renders services for you.

FRANCHISES are a perfect, modern example of the use of trade secrets. I have a client that owns and operates a large chain of Mexican food establishments, and when franchising the business, they transfer, temporarily, some of their secret recipes, methods of food preparation, and everything else necessary to operate a franchise.

To illustrate: just think of a McDonald’s® franchise establishment. The franchisee will have to sign a contract that contains, in addition to any other terms, a license for the temporary use of the franchisor’s registered trademarks and a CONFIDENTIALITY CLAUSE regarding the trade secrets that will be conveyed.

The establishment’s sign will have to show THE NAME OF THE FRANCHISEE and I also require the franchisee to print “FRANCHISED ESTABLISHMENT.” This publicity is an important element to trade secrets´ protection because it is indirectly telling the public that he/she is temporarily using someone else’s trademarks and trade secrets.

The reason is simple. This public statement constitutes a “legal presumption” that the franchisee received the use of confidential information. Such presumption is considered evidence in court.

If you have sadly discovered that someone stole your secret information for their own benefit, in Mexico you have the following choices:

 ·          File a lawsuit against the infringer in a Civil, Federal or Common Court for damages and lost revenue, and/or

·         File criminal charges against the person who stole it and/or the legal entity that may also was involved.

Before you plan on taking legal action against such infringer, make sure that you have the best evidence possible, so you can prove your case in court.

WHAT CAN YOU ASK FROM THE COURTS?

Remember that a trade secret is an industrial property (IP) right protected by Industrial Property Law.

A 2004 Mexican Supreme Court establishes certain requirements that must be met prior to filing a lawsuit for damages and lost revenue for violation of industrial property rights. However, you should know that a trade secret falls outside the scope of this Supreme Court precedent because no prior administrative action is contemplated for the violation of a trade secret.

Therefore, I will leave you with good news: You can file a lawsuit directly in Court against a trade secret violator for 40% of the total sales of all the products or services sold, which used your confidential information!

Jorge F. Millan is an attorney in Mexico with extensive experience in the Maquiladora industry. He is bilingual and you can reach him at LawMillan@serv.net.mx.

 

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