Learn about trade secrets in the Philippines

Protecting trade secrets is an extremely important factor for the success and sustainable development of every business, especially in a dynamic and competitive economy like the Philippines. This proprietary information is not only a valuable intangible asset, but also the key to attracting investment and making a difference in the market. However, protecting trade secrets in the Philippines also faces challenges such as competition among businesses, the risk of information leakage from former employees, or cyberattacks. Viet An Law would like to guide clietns on how to protect trade secrets in the Philippines through the article below.

Learn about the legal basis for protecting trade secrets in the Philippines

Currently, the Philippines does not have any specific laws protecting trade secrets (also known as undisclosed information), although there are various Philippine laws that apply to the protection of trade secrets and sanction the disclosure of such trade secrets.

Article 4(g) of Republic Act No. 8293 as well as the Intellectual Property Law of the Philippines includes the “protection of undisclosed information” or trade secrets under the term “intellectual property rights”.

Article 40(f) of Republic Act No. 7394 as well as the Consumer Law of the Philippines prohibits “the use by any person for his or her own personal use or disclosure, other than to disclosure to the Department or court as relevant in any proceeding under this Act,  any information relating to any method or process is protected as a trade secret.”

Article 292 of the amended Penal Code provides for the penalty for the disclosure of industrial secrets as follows: “The penalty of imprisonment for a minimum and medium period and a fine not exceeding 500 pesos shall be imposed on the person in charge, employee or worker of any manufacturing or industrial establishment,  person, to the detriment of its owner, will reveal the secrets of the latter’s industry.”

Under Rule 27 of the Rules of Court, the court, upon request, may order the production or inspection of documents or items that are not privileged and are important evidence in any matter relating to the case.

Definition of Trade secret in Philippines

In Air Philippines Corp v Pennswell (GR No 172835, December 13, 2007), the Supreme Court had the opportunity to define what a trade secret is: a plan or process, tool, mechanism, or compound known only to the owner and those of their employees. need to be trusted.

This definition also extends to secret formulas or processes that are not patented but are only known to be used by a few individuals in coordinating certain commercially valuable commercial items. A trade secret can include any formula, sample, device, or compilation of information:

• used in people’s business; and
• provide employers with an opportunity to gain an advantage over competitors who don’t own that information. Generally, a trade secret is a process or device designed for continuous use in business operations – for example, machines or formulas – but can be a price list or a specialized catalog or customer list.

Thus, trade secrets in the Philippines are defined as follows:

“A trade secret is a plan, process, tool, mechanism, or compound that is known only to the owner and the people among their employees and needs to be trusted. It may be a secret formula or process that is not patented but is known and used only by a few individuals in the coordination of certain commercially valuable commercial items.”

To be considered a trade secret, the information must meet the following criteria:

• Used in business: That information must be used to generate a profit or competitive advantage for the business.
• Confidential: The information is not publicly available or easily accessible by people outside the business.
• Give a competitive advantage: Information must help businesses have an advantage over competitors.

Learn about trade secret infringements in the Philippines

Disclosure of confidential information

• Disclosure to outsiders: Intentionally or unintentionally revealing confidential information to unauthorized persons.
• Use of information for personal purposes: Taking advantage of confidential information for personal gain or unfair competition with the owner.
• Disclosure in the process of working at another company: Former employees disclose confidential information of the old company to the new company.

Collecting confidential information by illegal means

• Fraud, system intrusion: Using malware and hacking into computer systems to steal information.
• Information bait: Trying to trick employees into revealing confidential information.
• Document theft: Theft or unauthorized copying of documents containing confidential information.

Using confidential information to create competitive products and services

• Copying formulas and designs: Producing products that are similar or identical to competitors’ products based on stolen confidential information.
• Apply the production process: Use the exclusive production process of competitors to reduce production costs and increase profits.

Breach of confidentiality contract

• Disclosure of information after the end of the contract: Former employees disclose confidential information after signing a confidentiality agreement.
• Failure to comply with confidentiality terms: Failure to fully fulfill confidentiality obligations as stipulated in the contract.

Learn about trade secret protections in the Philippines

Building a culture of security

• Raise awareness: Organize training sessions and seminars for employees to understand the importance of trade secrets and the risks of disclosing information.
• Develop a privacy policy: Develop a clear, detailed privacy policy, including regulations on access, use, and sharing of information.
• Sign a confidentiality contract: With all employees, partners, suppliers to ensure they understand their confidentiality obligations.

Implementation of technical measures

• Restrict access: Give access to information only to those who really need it.
• Data encryption: Protect data with encryption software.
• Fire protection system: Build a fire protection system to protect data from fire loss.
• Antivirus software: Regularly update antivirus software to prevent cyberattacks.

Physical Management

• Document Protection: Store important documents in a safe, locked place.
• Access control to facilities: Installation of camera systems, access control.