Introduction

Of several intellectual properties – such as trade marks, patents, industrial design and copyright – trade secrets probably receive the least attention, as they fall outside the main legal definitions.

Although trade secrets have been recognised for more than 200 years and have an unquestionable economic value, they have received little attention and are treated punctually in Brazilian law, which is why there are divergences on their definition, content, elements, legal nature and effects.

The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)

Brazil is a signatory to TRIPS, an annex to the Agreement that established the World Trade Organization. Article 39 of that Agreement provides for the following.

"1. In the course of ensuring effective protection against unfair competition, as provided in Article 10bis of the Paris Convention (1967), Members shall protect undisclosed information in accordance with paragraph 2 and data submitted to governments or governmental agencies in accordance with paragraph 3.

2. Natural and legal persons shall have the possibility of preventing information lawfully within their control from being disclosed to, acquired, or used by others without their consent in a manner contrary to honest commercial practices so long as such information:

(a) is secret in the sense that it is not, as a body or in the precise configuration and assembly of its components, generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question;

(b) has commercial value because it is secret; and

(c) has been subject to reasonable steps under the circumstances, by the person lawfully in control of the information to keep it secret.

3. Members, when requiring, as a condition of approving the marketing of pharmaceutical or agricultural chemical products that utilise new chemical entities, the submission of undisclosed test or other data, the origination of which involves a considerable effort, shall protect such data against unfair commercial use. In addition, Members shall protect such data against disclosure, except where necessary to protect the public, or unless steps are taken to ensure that the data are protected against unfair commercial use."

Domestic Laws

Following the TRIPS guidelines, Law 9,279 of 1996 (the Brazilian Industrial Property Law) governs trade secrets separately within the scope of the unfair competition rules. Items XI and XII of Article 195 of the Industrial Property Law state the following

A crime of unfair competition is committed by whoever:

• engages in unauthorised disclosure, exploitation or use of confidential knowledge, information or data usable in industry, commerce or service-rendering activities, unless in the public domain or that is evident to a person skilled in the art, to which they have had access by means of a contractual or employment relationship, even after termination of the corresponding contract; or
• engages in unauthorised disclosure, exploitation or use of knowledge or information as mentioned in the preceding item, when obtained by illicit means or to which they have had access by fraud.

Other legal provisions also contain references to the matter, including Article 223-D of the Consolidated Labour Laws; Law 10.603 of 2002, which provides for the protection of undisclosed information submitted for approval and trading of products; and the Bankruptcy Law, in which Article 169 establishes that violating, exploiting or disclosing without cause a trade secret or confidential data regarding transactions or services that contributes to leading a debtor to a condition of economic or financial unfeasibility is considered a crime.

Given the lack of a legal definition, the concepts presented by different scholars take into account the main elements of trade secrets, as well as their importance in the market and their economic value.

Accordingly, all transmission of knowledge and experience (in the form of plans, instructions, designs, formula, advice, information, prescriptions, data, calculations, combinations, processes, etc) relating to the production process, not registered in the form of a patent or non-patentable, as well as technological knowledge or expertise related to the productive organisation or commercialisation of a product, that is secret (in the subjective sense that will be attributed to it) and with productive value, capable of being transmitted and used by the acquirer independently, will be considered know-how, including the following.

• Technical knowledge not protected by a patent or any other industrial property right, of extremely restricted access, that, when applied to an industrial production process, implies advantages for its holder.
• A set of technical scientific, commercial, administrative, financial or other type of knowledge, of a practical nature and use, for business or professional application.
• Technical or commercial (non-patented) knowledge is knowledge that has economic value, is transmissible, is secret or relatively secret (ie, the access to which to other people who act in certain industrial or commercial lines of business is difficult) and that brings competitive advantage to its holder
• Technical knowledge not protected by a patent or any other industrial property right, with extremely transferrable access and that, when applied to an industrial production process, implies advantage for its holder.

The Brazilian General Data Protection Law (LGPD)

Because of this unclear scenario, on 18 September 2020 Brazil enacted the LGPD (Law 13,709 of 2018), which makes some references to “business secrets” – or trade secrets – again without any definition, which raises doubts about its application and balance with the transparency principle.

When the LGPD came into effect, data protection agents were required to adopt measures immediately to come into line with the new rules, as the administrative sanctions set forth in the LGPD came into effect on 1 August 2021 (the rules to govern inspection and punitive administrative proceedings have already been approved by the National Data Protection Authority, or ANPD).

However, the LGPD has numerous provisions that are still pending regulation by the ANPD, causing uncertainty among the processing agents at the time of implementing the law.

One of the challenges faced by data processing agents is the ability to protect trade secrets and simultaneously comply with the transparency principle set forth in the LGPD, which states that individuals are entitled to clear, accurate and easily accessible information on the processing of their data and on the identity of the processing agents.

The LGPD, by recognising the legal and economic relevance of trade secrets, established in several provisions the need to fulfil these obligations, as, for example:

• the provision of information by the processing agents on the method and duration of the data processing;
• the controller’s preparation of the personal data protection impact report;
• when communicating the occurrence of a security incident to the ANPD;
• when fulfilling the portability of data at the data subject’s request; and
• in the controller’s provision of information on the criteria and procedures used for its automated decisions.

As the LGPD expressly states, it is the responsibility of the ANPD to ensure the fulfillment of “trade and industrial secrets”, with due regard for personal data protection and information secrecy when it is protected by law or when a breach of secrecy violates the grounds of the law itself.

However, even with the LGPD’s express provision to maintain confidentiality of trade secrets indefinitely, one of the basic principles of personal data protection is transparency in data processing, which may conflict with the protection of trade secrets.

Although trade secrecy represents a legal limit to transparency, in practice, ensuring compliance with the transparency principle in personal data processing, and at the same time not disclosing trade secrets, may be quite challenging.

Thus, if one of the goals of the LGPD is to stimulate the digital market and strengthen competition, a sustainable balance between the duty of transparency and protection of trade secrecy should be found. If not, the result may be a disincentive to innovation and technological investment.