Trade secret laws and regulations in Mexico

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Yes. On 5 November 2020, the Federal Law for the Protection of Industrial Property (New Industrial Property Law) was enacted in Mexico as an effort to modernise and complement the former Industrial Property Law, which had been in force since 1994, and to comply with new standards and commitments accorded by Mexico under the United States-Mexico-Canada Agreement (USMCA). 

Furthermore, it is important to consider that there are several laws related to different practices of Mexican Law that contain confidentiality obligations that may relate to trade secrets, such as the Federal Civil Code (attorney client privilege), the Regulatory Law on Professions (Professional behavior), Federal Law on the Protection of Personal Data in Possession of Private Parties (for information provided to private entities), and the Federal Labour Law. 

In accordance with the New Industrial Property Law, trade secrets are defined under article 163 as “any information of industrial or commercial application kept by the person exercising legal control over it on a confidential basis, that implies obtaining or maintaining a competitive or economic advantage over third parties in the conduct of economic activities and in respect of which the person has undertaken sufficient means or mechanisms to maintain the restricted access and confidentiality of the information”.  

In accordance with the law’s definition, trade secret information may be supported by any present or future means (e.g. physical, digital, optical, etc.).

It is important to consider that the New Industrial Property Law establishes exceptions on what information may be considered a trade secret. In this sense, the law establishes that information of public domain, which is defined as “information that is generally known, of common knowledge or that is easily accessible to persons within the same circles in which such information is normally used or any information that must be publicly disclosed by legal provision or court order”, will not be considered a trade secret. 

Nevertheless, the same article also establishes that any information provided to an authority by the person who exercises legal control over it for the purposes of obtaining licenses, permits or authorisations will not be considered public domain information or information disclosed by legal provision and, therefore, can still be considered a trade secret. 

In addition to all of the above, the New Industrial Property Law establishes that any person granted access to a trade secret by virtue of its work, employment, labour position, professional exercise, business relationship, or granting of a license, has the obligation to abstain from disclosing or using such information without the consent of the person that exercises legal control over such information or without the consent of an authorised user. 

Although no specific measures are contemplated in the New Industrial Property Law, the definition considers that the person exercising legal control over the information must undertake “sufficient measures” to restrain access to the information or maintain its confidentiality. 

In addition, it is important to consider that the New Industrial Property Law does not contemplate a temporal restriction upon the confidentiality of trade secrets. For example, article 248 establishes that a franchisee is obliged to maintain confidentiality over the information provided by the franchisor for an indefinite period of time.

Yes, under article 165 of the New Industrial Property Law, trade secretes can be transferred or licensed to a third party as they are considered industrial property rights. Nevertheless, the article imposes the obligation upon the party receiving the information to maintain its secrecy and confidentiality. 

Yes. Under the New Industrial Property Law trade secrets may amount to: (i) administrative liability for breaches in relation to trade secrets and its general obligations contained therein; (ii) civil liability when considering a breach of contract or a claim for damages; and (iii) criminal liability when the misappropriation of trade secrets is considered a criminal offence in connection with the New Industrial Property Law. 

Regarding criminal liability, the New Industrial Property Law establishes that the disclosure, use, acquisition or appropriation of trade secrets without the authorisation or consent from the person that exercises legal control over the information, and with the intent of (i) obtaining a competitive or economic edge for itself or a third party, or (ii) causing damages to the person in possession of the trade secrete or an authorised user, is considered a prosecutable criminal offense. 

While criminal liability was already considered in the old Industrial Property Law of 1994, the New Industrial Property Law also establishes administrative liability for infringements of trade secrets whenever they translate to an unfair competitive advantage over the misappropriation of trade secrets and the production and commercialisation of products (including sale, importation, exportation, storage, etc.) or the provision of services that use trade secrets without due consent or authorisation. 

In this sense, administrative infringement under the New Industrial Property Law implies the payment of a fine by the infringer, without disregarding any possible criminal or civil liability that may be awarded for the damages caused against the affected party.

Moreover, trade secrets can be protected and therefore specific consequences can be agreed through confidentiality agreements, Non-Disclosure Agreements or even through specific confidentiality clauses in other types of agreements. Therefore, a breach against these types of agreements or clauses may amount to civil liability under breach of contract, which allows claims to be submitted by the affected party before civil courts. 

Furthermore, even if it is not expressly regulated, the unauthorised use, acquisition, transfer or divulging of trade secrets can be subject of civil liability as a consequence of a claim for damages caused to the aggravated party. 

As there is no express prohibition against it, it can be inferred that co-ownership of trade secrets is permitted. 

Misappropriation is the main action that constitutes infringement against trade secrets under the New Industrial Property Law. 

Misappropriation is defined as “the unlawful or illegal acquisition, use or disclosure of a trade secret in a way that is contrary to the standards practices and uses of the industry, trade or commerce that implies a disloyal competition, including the acquisition, use or disclosure of a trade secret by a third party that knew or had reasonable grounds to know that such trade secret was acquired in a way contrary to such standards, practices and uses”. 

Moreover, the New Industrial Property Law also contemplates specific confidentiality obligations regarding trade secrets received expressly under virtue of an agreement, employment, provision of professional services or relationships and even for governmental employees and public servants (including judicial and administrative officials and authorities). 
When such actions are purposed to obtain a competitive or economic edge for itself or a third party or cause damages to the person in possession of the trade secrete or an authorised user, the actions can be considered a prosecutable criminal offense. 

In accordance with the New Industrial Property Law, liability can also be imposed against (i) persons (natural or legal persons) that hire present or past employees, professionals, consultants or advisors that had previously rendered services for another person with the purpose of obtaining trade secrets from such person; or (ii) against any person that acquires trade secrets through any illegal means. 

It is important to consider that the aforementioned law also establishes the following exceptions to misappropriation:

• The independent discovery or creation of the information that is later considered or claimed to be a trade secret. 
• The observation, study, or testing (reverse engineering) of a product or object that has been made available to the public or that is under the lawful possession of the person that keeps the information, provided that such information, product or object is not subject to any confidentiality obligation regarding the trade secret. 
• The lawful acquisition of information from another person without confidentiality obligations or without the knowledge that the information was considered a trade secret. 

First of all, it must be taken into account that Mexican procedural laws differ greatly on the nature of the proceeding (administrative, civil or criminal) and that Mexican law does contemplate discovery proceedings. Nevertheless, it is possible to request the IMPI to conduct inspection visits to verify the compliance of the New Industrial Property Law, which in turn may lead to the imposition of interim measures as will be described further below.  

On the other hand, the proof of evidence for a claim regarding trade secrets should focus on the existence of the trade secret (i.e. proof the existence of confidential information that provides a competitive advantage for which specific measures were taken to maintain its confidentiality), proof of access by the accused party to the information considered as trade secret (i.e. lawful access by means of employment, work, etc. or unlawful access such as theft) and proof of the accused party of infringement (i.e. the use of the trade secret to obtain a competitive or economic edge or to cause damages to the party owning the trade secret).  

The IMPI or the courts have the authority to impose the following interim measures if it has become aware of infringements or crimes committed related to the Industrial Property Law:

• order the seizure of merchandise of infringing products; 
• prohibitions on commercialising them; 
• order the cessation of activities; 
• suspend the distribution of merchandise intended for imports, exports or transit of infringing products; 
• order the suspension and removal of digital or electronic content; 
• order the suspension of the provision of infringing services or the temporary closing of establishment and other ex-officio measures considered necessary. 

Furthermore, as an infringement against Industrial Property, including trade secrets, may give rise to administrative, civil and criminal liability, each of these courts or tribunals is enabled to establish the interim or final measures and remedies they see fit. 

As administrative, criminal and civil procedures are different in nature, they are each ruled by different procedural laws. Nevertheless, most procedural laws are based on written submissions and documentary proceedings.

Furthermore, interim measures in administrative or civil procedures are usually requested alongside the initial filing of the action or claim where the merits of the issue are considered. 

Yes. In regard to administrative liability, the New Industrial Property Law contemplates the imposition of a fine against persons that transgress the law’s dispositions and obligations. 

While injunctions can be imposed through civil proceedings, civil liability is remedied through compensatory damages (punitive damages are not contemplated in the Mexican legal system). 

Furthermore, while criminal liability under the New Industrial Property Law contemplates imprisonment, monetary remedies in favour of the aggravated party can also be applied to the prosecuted party. 

No, as ex-parte hearings are not contemplated nor allowed under Mexican procedural laws. 

The New Industrial Property Law establishes that the proceeding for the determination of indemnities for infringements of industrial property rights (which include trade secrets) may be initiated before the Mexican Industrial Property Institute (“IMPI”) or directly through a civil court, provided that the amount of any indemnity is never less than 40% of the rightful and evidenced value of the Industrial Property rights affected. 

Under article 399 of the New Industrial Property Law, civil claims for damages arising out of an administrative infringement of the New Industrial Property Law that do not constitute a criminal offence cannot be filed after two years from the date of the IMPI’s declaration of infringement. 

If the claim arises out of a breach of contract and no specific period is established, the right to claim damages applies for ten years after the obligation becomes enforceable.

Under civil law, there are several circumstances that may interrupt or suspend the prescription period to file a claim, such as the filing of the claim itself or acknowledgement by the party whom the claim is brought against of the right of the claim.

Yes. As explained above, both the IMPI and administrative and civil courts may implement several interim measures to protect the aggravated party. 

Furthermore, article 169 of the New Industrial Property Law expressly establishes the obligation for authorities in charge of proceedings to protect the confidentiality of the trade secrets, unauthorised disclosure and use by third parties. 

Yes. Under the New Industrial Property Law, there are exceptions for considering information a trade secret, exceptions to what may not be considered misappropriation and even exceptions of liability whenever a person receives information considered to be a trade secret, without the knowledge of its confidentiality or nature or when it was delivered without the obligation of maintaining it confidentiality.  

While the New Industrial Property Law does not contemplate such a scenario, an unfounded claim will most probably be dismissed, entitling the accused party to file a counter claim for such actions. Under civil procedural laws, the counter claim is often filed by the accused party as part of its defence against the claims brought forward against it.

In regard to criminal law, filing an unfounded claim before a state prosecutor in bad faith may constitute a prosecutable criminal offense.

It is standard practice in labour and employment agreements to include confidentiality clauses in order to protect trade secrets. 

Furthermore, it is also possible for companies to include non-compete clauses for officers or directors in specialised sectors. 

Yes. Employees are obliged to maintain confidentiality of trade secrets whenever they are granted access to such information by virtue of their work or position. In this sense, they can be held liable for any misappropriation of trade secrets or other industrial property rights of the employer. 

As mentioned above, it is not uncommon to include non-compete clauses or to execute non-compete agreements for certain officers or directors of companies in specialised sectors or industries in order to protect trade secrets of the employers.

Under the New Industrial Property Law, there are no statutory provisions for protecting whistleblowers or informants in relation to infringement of trade secrets. 

Yes. Under the New Industrial Property Law, liability can also be imposed against persons (natural or legal persons) that hire present or past employees, professionals, consultants or advisors that had previously rendered services for another person, with the purpose of obtaining trade secrets from such persons.

It is common practice in Mexico to include one or several clauses in order to regulate the following: 

• Determination of what information is shared as confidential information and/or trade secrets and how it may or will be shared between the parties. 
• Non-disclosure and confidentiality obligations, including the term of such obligations, determination of personnel of the receiving party authorised to manage and use this confidential information and the establishment of mechanisms to guarantee the confidentiality of the disclosed information or trade secrets. 
• Exceptions to cases where the receiving party of the information may share the confidential information or trade secret (e.g. when required by a competent authority or if required to file for a permit, licence, etc.). 
• Specific penalties and mechanisms to mitigate a breach of a confidentiality obligation or a misuse or misappropriation of confidential information. 

Usual pitfalls may include confusing exclusivity obligations with confidentiality obligations, poor definition of what type of information may constitute a trade secret or trying to impose unrealistic and/or impossible obligations that may affect any of the parties in the future (e.g. extremely long non-compete obligations) or deprive the parties from performing their obligations under the agreement. 

In regard to cross-border agreements, it would be recommendable to specify the applicable law of the agreement in order to avoid interpretation issues and to define or specify what information is shared as trade secrets. Furthermore, it is recommended that a specific jurisdiction be determined for any possible dispute resolution proceeding in order to avoid competence issues. 

As an example, under Mexican Law, contracts are usually governed and interpreted under the law upon which the obligations of the agreement are to be executed.

Yes. Specific conventional penalties or indemnities related to a breach of confidential obligations such as misuse of trade secrets are often included. 

Moreover, it is possible (and common depending on the type of the agreement) to include breaches of confidentiality obligations contained in agreeents as causes for the immediate rescission of agreements without liability to the rescinding party.