Trade secrets in Colombia: how to protect them legally

Colombian law, in accordance with Decision 486 of 2000 of the Commission of the Andean Community, defines a trade secret (also known as know-how) as any undisclosed information legitimately held by an individual or legal entity that can be used in productive, industrial or commercial activities. To qualify as a trade secret, the information must first satisfy three criteria: i) it must be secret, meaning it cannot be generally known or readily accessible; ii) it must have commercial value by providing its holder with a comparative advantage over competitors; and iii) its owner must have taken reasonable measures to keep it secret.

This protection matters for several reasons, regardless of differences in legal or economic thinking. It recognises the work of individuals and companies that adapt to changing markets by finding better ways to work. It also recognises the creativity involved in improving an existing process, even where truly new ideas are hard to develop. Finally — and central to the legal discussion here — it helps preserve that work by protecting its security and confidentiality against regulatory gaps and unfair competition.

We can therefore define a trade secret as the distinguishing feature that enables large and small businesses to fulfil their corporate purpose as effectively as possible. In many cases it is indispensable, which explains its importance in business law. It is the know-how, the knowledge of what to do and when to do it, of a company seeking to maintain its competitive advantage while adapting it to modern times.

The rules discussed below protect trade secrets, but legal protection alone is rarely enough. Companies also need business practices that preserve the confidentiality of the information that gives them an advantage.

Protection extends to various aspects of information, including the nature, characteristics or purposes of products, production methods or processes, and the means of distributing or marketing goods or services. It may therefore include skills acquired through training as well as a company’s internal commercial structures. In practice, protecting know-how often means establishing clear business procedures and agreements that protect the company when working with others. One example is a non-disclosure agreement (NDA), also known as a confidentiality agreement. Under Article 1602 of the Civil Code, these agreements allow the parties to agree on the protection and restricted use of industrial secrets within a commercial relationship.

Article 262 of the Decision establishes that anyone who lawfully controls a trade secret is protected against its disclosure, acquisition or use through unfair commercial practices. Protection therefore covers penalties for unauthorised exploitation, improper disclosure and unlawful acquisition. More specifically, unauthorised exploitation means using information without the consent of its lawful holder, particularly where access arose from a contractual or employment relationship that required the recipient to refrain from using it.

Similarly, improper disclosure involves exploiting privileged information with the intention of securing a benefit for oneself or a third party, or harming its lawful holder. One characteristic of a trade secret is its market value: it places its holder ahead of competitors by creating a comparative advantage, so its misuse may amount to unfair competition. We must also consider a major factor in the continued existence of an industrial secret: the diligence of its lawful holder in keeping it secret. This encompasses possible exclusions of liability and duties of diligence and vigilance, among other elements that ultimately rest with the person interested in preventing disclosure.

Lastly, unlawful acquisition means improperly obtaining information that constitutes a trade secret. Where information is obtained through unlawful means, such as industrial espionage, breach of contract or abuse of trust, the conduct is penalised by law because it violates intellectual property protection, itself a foundation and guarantee of a competitive market.

In addition to civil protection, Article 308 of the Colombian Criminal Code establishes criminal penalties for violations of know-how. These range from 32 to 90 months’ imprisonment, together with significant fines of between twenty-six point sixty-six (26.66) and three thousand (3,000) statutory monthly minimum wages. The penalties are increased if the offender obtains a benefit for themselves or a third party as a result. This raises a difficult legal question: could a legal entity that is party to a confidentiality agreement incur criminal liability by using, revealing or disclosing an industrial secret for its own benefit or that of a third party? The question must be examined under Colombian law. Businesses should nevertheless assess these risks before a specific legal requirement compels them to do so.