Trade Secrets 2021

Last Updated April 28, 2021

Dominican Republic

Law and Practice

Authors



Delgado Malagón – Veras Vargas is based in Santo Domingo and was founded in 1977. DMVV provides clients with a wide range of legal advice in a number of fields. The firm’s team of nine lawyers regularly represents large privately owned banks and insurance providers, leading businesses in pharmaceutics, construction, hospitality and gambling, and private equity-holders. The firm’s services include advice on corporate, real estate and tax affairs, as well as serving as a strategic counsel in civil and commercial litigation, constitutional reviews, arbitration, electoral, labour, and criminal proceedings. As well as serving Dominican companies in their IP needs, the firm has a long-lasting relationship with prominent European international firms specialised in IP, and whose multinational clients are referred to DMVV in order to handle all their IP needs and affairs in DR, including patent box regimes and tax planification.

The Dominican Republic is a country of positive, written law. The main texts of law that regulate trade secrets in this jurisdiction are:

  • Law No 20-00 on industrial property;
  • Law No 42-08 on the defence of competition; and
  • the Labour Code (Law No 16 -92), in relation to the obviously unauthorised disclosure of commercial and industrial secrets by workers.

The text of Dominican law does not seem to be very demanding with regard to the type of information that can be protected under the legal regime of trade secrets, since it is content to establish that it can consist of “any undisclosed commercial information that a natural or legal person possesses, that can be used in any productive, industrial or commercial activity, and that is capable of being transmitted to a third party”. As long as it is undisclosed information, in respect of which measures have probably been taken to keep it out of the indiscriminate reach of third parties, the text does not require per se any condition regarding the quality of the information. It mentions “any commercial information”, capable of being used –without indicating what form or type of use – in a productive, industrial or commercial activity. Under this ambiguous cloak, any information could qualify. However, the majority of international authors agree on the following requirements: that they grant the owner a competitive advantage in the market and that it be treated in a way that constitutes a reasonable prevention against its disclosure to the public or to competitors.

After more than 20 years of application of current regulations, there is not a single precedent emanating from the Supreme Court of Justice which refers to trade secrets. In contractual practice, there is a tendency to confuse the instrument that supports the information protected by the trade secrets regime with the protected information itself. This occurs for strategic convenience, so that the document that establishes the obligation of confidentiality regarding the commercial secret does not refer to the protected information, which would be kept secret from whoever reads the document. Given the aforementioned flexibility of the legislation, in principle, practically any commercial information – with respect to which the measure to be kept confidential has been adopted – qualifies as a commercial secret in this jurisdiction.

Based on the text of the applicable law, it would be sufficient –to qualify as a commercial secret in the Dominican Republic – that the information is undisclosed (that is, secret), that it is in the possession of a natural or legal person (its owner), which may be transferable to a third party and that can be used in any productive activity, whether industrial or commercial. We reiterate that the majority of international authors are not satisfied with the criteria expressed in Dominican law, but add as requirements: that they grant the owner a competitive advantage in the market and that it be treated in a way that constitutes reasonable prevention against disclosure to the public or competitors.

The standard for evaluating whether or not the owner of the trade secret has taken reasonable measures to protect its secret varies in taking into consideration the situation of the potential infringer of its rights. The standard for the worker in relation to the technical, commercial, or manufacturing secrets of his employer, is lower, since the law requires the worker not to disclose them neither for the duration of the employment contract nor after its termination. Regarding workers, the only thing then would be to determine whether or not the information constituted a technical, commercial or manufacturing secret.

That is why it is convenient, but not essential, that workers sign documents acknowledging having come into contact with certain confidential information and its support, and reiterate the obligation not to disclose it in any way or copy it. In cases of technology transfer (know-how) and licences for the use of trade secrets, it is necessary to take contractual measures so that the recipients of the secret information keep it in this way, and that all the people in their organisations access to this reserved information is also obliged to keep a reservation and not to copy it.

When the worker agrees to a trade secret because of the work he performs, the obligation to maintain confidentiality about the trade secret is imposed by the labour law. Different is the situation of any other worker, that is, of one who does not need to access that information to be able to fulfill his work responsibilities. Obviously, in the latter case, the protection of the trade secret is put at risk since its owner would be disclosing it to people who are not required to know it, which undermines the first condition of its legal protection regime: that the information is not within the reach of anyone.

Obviously, independent discoveries and deductions and inferences through reverse engineering –and scientific or market studies –do not infringe the rights of the owner of the secret, who lacks preventative actions aimed at preventing others from accessing the information through science or investigation. Protection is only against spurious means of obtaining information protected as a trade secret.

In the Dominican Republic, computer programs are normally protected by copyright (Law No 65-00). Copyright, in this jurisdiction, is inherent to protected creation – independent of its registration in a public registry. Therefore, it is perfectly possible that a computer program, whose code is protected by adopting measures to keep it as a secret, enjoy simultaneously the protection of Dominican Republic copyright laws and laws relating to intellectual property and competition.

Obviously, the protection of the trade secret will be effective as long as its owner is successful in keeping the information a secret. This implies the rigorous establishment of a protocol for the handling of information by internal collaborators and external allies. Accidental disclosure of trade secrets places them legitimately in the hands of the receiver.

If the disclosure places the trade secrets in the public domain, the protection along with the secret ends. On the other hand, the controlled disclosure –under the subscription of the appropriate documents – of the commercial secrets to a greater number of people in the organisation offers the opportunity to keep the commercial secret under control and to open up greater possibilities of approaching the justice system in search of a court order that prevents the unauthorised disclosure and use of the trade secret, which will always be possible before the information is made public.

One way to earn money from trade secrets is their licensing, for the benefit of third parties, in exchange for remuneration. These types of agreements tend to be limited to specific time periods and also in terms of their purposes.

The protection of trade secrets is quite different from the protection of other intellectual property rights. The former only enjoys protection as long as it is kept as "secret" information, whereas in the latter the registry –public – is either the starting point of protection or a suitable pre-constituted proof of the right.

Normally, trade secrets and patents are mutually repelled. This is because while the trade secrets regime is based on the need to keep protected information secret, the patent responds to the opposite logic: it is the publication and registration that generates rights for the patent holder. The case of computer programs was previously mentioned which, in this jurisdiction, can be protected by both copyright and trade secrets, insofar as copyright does not arise in the Dominican Republic with the registration of the work in a public registry.

In principle, nothing opposes the possibility of filing claims related to trade secrets which are not based on misappropriation. Additionally, nothing opposes the filing of a legal action tending to oblige an employee or a former employee to fulfill their fiduciary duties, refraining from disclosing the trade secret to which they have legally or illegally accessed. Given the nature of the action for unfair competition in the Dominican Republic – an action in civil liability in any case – it is possible to sue whoever interfered by inducing an employee to reveal a trade secret, as a co-responsible and accomplice of the violation of a contractual or legal obligation.

The penal code of 1884 makes the misappropriation of trade secrets an offence – punishable by imprisonment from three months to a year – to seize papers or letters from a person to access and disclose their secrets. The same legislation sanctions – with imprisonment from one to six months – all persons who access the secrets of others by reason of their profession or trade (this applies to workers), and who disclose them to third parties (except in cases where the law obliges them).

It is obvious that the purpose of this rule was not to prevent or dissuade people from accessing a company's trade secrets in order to benefit from them. These tools will be useful every time the secret has been revealed to third parties, but they are not applicable when the person stealing the secret uses the information for their personal gain and without disclosing it to third parties.

Both Law No 20-00 on industrial property and Law No 42-08 on the defence of competition qualify the act of accessing commercial and business secrets as one of unfair competition. This gives rise to file a legal action in civil liability for acts of unfair competition, but said norm does not contain any special criminal offence on the matter.

Civil liability legal actions in Dominican law are personal actions. Therefore, the domicile of the defendant is that which establishes the territorial jurisdiction to hear the claim. The place wherein the event generating the damage took place is irrelevant in the hypothetical situation of the improper appropriation of a commercial secret. For the national courts to be able to hear an action in civil liability , for the commission of acts of unfair competition, it is enough that the defendant has a domicile or a branch in the Dominican Republic. If the defendant does not have a domicile in the Dominican Republic, the Dominican courts are, in principle, unable to hear the civil action.

In accordance with Law No 20-00: “A business secret will be considered acquired by means contrary to honest uses and practices when the acquisition results, among others, from industrial espionage, breach of a contract or other obligation, abuse of trust, infidelity, breach of a duty of loyalty or instigation to carry out any of these acts”. Law No 42-08 makes it clear that the unauthorised appropriation of protected information is sufficient for a claim of trade secret misappropriation, without it being necessary to prove the use by the offender. When the infringer has had access by virtue of a contract or by their participation in a key position of the company that has allowed them to access the secret, then it is the obligation of the owner of the secret to prove the unauthorised use. When the infringing person has not had legitimate contact with the reserved information, it is sufficient to prove that said person has had access to this information –while in charge of either the person under suspicion or the defendant –to demonstrate that he has had access to the information through a lawful way.

When the infringing person has not had legitimate access to the reserved information, it is then sufficient for the plaintiff to simply prove that the defendant has had access to it. It is then the burden of the person under suspicion, or the defendant, to prove that the access they had to the protected information was lawful.

In accordance with the Labour Code, it is a duty of every worker, vis-à-vis their employer: “To rigorously keep the technical, commercial or manufacturing secrets of the products to which they directly or indirectly produce, or of which they have knowledge for good reason. Of the work they carry out, as well as of reserved administrative matters whose disclosure may cause damage to the employer, both during the duration of the employment contract and after its termination”.

This duty of reserve does not usually entail a time limit, so it theoretically extends to the entire duration of the secret or the life of the worker or ex-worker. Violation of this obligation by the worker is also a cause for justified dismissal, that is, termination for just cause, based on the misappropriation by fault of the worker's.

There is expressly no provision in the Dominican commercial partnership law, nor in the civil code that refers to the obligation of a partner, not to disclose the commercial secrets of the partnership in which they are participants.

However, there are provisions in said law that prevent an administrator of a partnership from performing acts that concur with the partnership they administer. Therefore, if acts of so-called fair competition are forbidden to the director, with respect of the company they themselves manage, it is even more forbidden for them to perform acts of unfair competition, such as the disclosure of business secrets for the benefit of third parties.

Strangely, this rule only exists for the administrators, who may or may not be partners of the entity. It does not apply to the partners.

Law No 20-00 only mentions the term “industrial espionage” once, without defining it, as an unfair means of access to a business secret. In principle, this would only give rise to a legal action of civil liability for an act of unfair competition. However, the act of espionage could also fit within those of theft and disclosure of secrets, which are foreseen and sanctioned by the penal code with a penalty of three months to one year in prison.

The influence of multinational companies and their lawyers has enriched local practice. Some of the best practices are those whose purpose is to restrict or limit the number of people with access to each trade secret by enforcing the requirement of signing a confidential information nondisclosure agreement to be able to access it. This type of document must define the instruments that contain the reserved information and prevent the latter from being copied in any way or disclosed. The establishment of manuals with restricted access –and marked as confidential – for the performance of specific operations, formulas and their mixtures, among others, tends to create a documentary trace that always helps identify who has had access, and by what means, to the whole or part of trade secrets.

In the computer programming industry, programmers must know the code, but should not have access to the ability of copying it. In the chemical industry, it is convenient to relabel the most relevant ingredients and name them in code, so that only the highest level technicians know about the use of these ingredients and their proportions in the formulas.

It is not customary in the firm's jurisdiction to conduct exit interviews with employees whose contracts have been terminated. It is, however, an increasingly widespread practice to require the signing of a confidentiality and non-competition agreement that coerce the outgoing worker into not using trade secrets for the benefit of a competitor. However, this is totally illusory when the employment contract has ended under conditions of disagreement between the parties. But, as already mentioned, the Labour Code forces the worker to respect the employer's trade secrets both during the term of the employment contract and after its termination.

The jurisdiction in question knows no distinction between the general knowledge and skills of the worker and a trade secret subject to protection. This does not mean, however, that doctrine and common sense do not lead us to make this distinction. The inevitable discovery is not contemplated in the law either, but all experts are aware of said doctrine and its implications. It is thus foreseeable that it will eventually be recognised by jurisprudence.

It is clear that "the table is set" so that, in the near future, litigation based on the alleged misappropriation –through former employees – of trade secrets. However, on many occasions, previous work experience within a competing organisation constitutes one of the greatest attractions for the company that is hiring the new worker.

The disclosure by the recruited worker of their having accessed privileged information in their former job, and their duty to reserve, should be a generalised practice. This should be encouraged and promoted by the hiring company, to obtain pre-constituted proof that the recruitment does not take a view on the commercial secrets that the recruited person possesses, which must be kept under strict confidentiality.

Normally, when the theft of a trade secret occurs, the firm is in the presence of a situation that generates a civil liability litigation. There is no prior, mandatory or essential procedure at the beginning of a civil liability action. This is regardless of the fact that it is possible to criminally prosecute people who by reason of their profession are depositories of other people's secrets and reveal them, as well as those who, in order to discover others' secrets, seize their papers or letters and disclose the the secrets. The Dominican Republic's legal system provides for the possibility of accessing precautionary measures aimed at stopping illicit disturbances, such as situations that endanger a trade secret.

Part of the strength of the adopted solution consists of abandoning the brief statute limitation of extra contractual civil liability actions, which is normally one year, computed from the commission of the generating event. Law No 20-00 established a four-year statute of limitation period for this civil action.

Dominican law does not establish any requirements or steps prior to filing a lawsuit for the violation of trade secrets. Common sense indicates that it is convenient to collect all the available evidence on the reasonable measures adopted to guarantee that the protected information is kept secret, and also the evidence that the offender has irregularly accessed the trade secret, either for personal use or for the benefit of a third party. An intimation or prior warning would always be very convenient to demonstrate the bad faith of the person who infringes the trade secret.

Despite the fact that Dominican law divides the court of first instance into chambers (specialised by subject), in the tradition of local judicial organisation, civil and commercial matters are heard by the same judge (the civil and commercial chamber). The establishment of independent commercial courts never happened, became a project that was continuously postponed by Congress.

Notwithstanding the foregoing, the Council of the Judiciary has established the practice – in the main judicial districts of the country – of specialising a few of the civil and commercial chambers of the court of first instance to exclusively hear matters of a commercial nature, such as, obviously, a civil liability claim for misappropriation or undue disclosure of a trade secret.

In the Dominican legal system, the burden of proof is on the plaintiff. The old Roman legal adage actori incumbit probatio denies any possibility of success to a claim that is based on simple information and beliefs without solid concrete evidence. However, not all the evidence has to be available at the time the claim is filed. The production of some evidence and the performance of certain investigative measures may be requested and ordered by the court in the course of the process.

The Dominican Republic's antitrust Law No 42-08 grants the power to the National Antitrust Commission to issue precautionary measures, when these are in accordance with the law and are not likely to cause irreparable damage. However, said law does not seem very coherent. Despite contemplating the possibility of adopting precautionary measures, it only retains the ability to impose administrative sanctions against some anti-competitive practices, which does not include the inappropriate obtaining or disclosure of trade secrets.

The knowledge and decision of the judicial actions for violation of commercial secrets will be,in principle, competence of the civil and commercial chamber of the court of first instance. The president of the court also has the power to adopt precautionary measures in provisional and urgent cases, but not in accordance with the legislation specialising in trade secrets if not by the rules of common law. However, the seizure of products produced in violation of a trade secret does not appear to be supported by Dominican Republic legislation.

With regard to the differences between civil/commercial and criminal procedures, the latter aims more to conduct inquiries that point at obtaining evidence of the violation of a trade secret, provided there is a suspicion it was carried out from the disclosure of the secret by an unauthorised person who accessed it during their professional activity, or who obtained it by stealing letters or other documents owned by the owner of the secret.

The raids, kidnappings of documents and computer equipment, smartphones and interception of communications are possible within the framework of any criminal investigation. In commercial matters, there are no equivalent mechanisms to achieve this type of measure.

The first Dominican legal provision that prohibited the protection of trade secrets in the course of litigation was the 1992 Labour Code. Both Law No 20-00 on Industrial Property and Law No 42-08 on the Defence of Competition provide mechanisms aimed at maintaining the secret nature of trade secrets during the investigation and acquiring of knowledge of a case in which this type of information is handled, in administrative headquarters, before the National Office of Industrial Property and before the National Commission of Defence of Competition.

In all three cases, the owner of the secret is required to declare that the information contained in certain evidence contains business secrets and a resolution that recognises it, adopting mechanisms so that other litigants cannot access the protected content. Outside of these three matters, Dominican Republic judicial organisation law, which dates from 1927, would seem to govern, and establishes as a rule that all judicial files are public,except those for which special laws have voted exceptions based on the preservation of interests of the family.

Although in the firm's experience there are not many cases in which the litigants have tried to make use of this power, it is plausible that the judges of the judicial order, in any matter, order the pertinent measures –the law does not define them – to avoid that an unauthorised disclosure of a commercial secret occurs during the instruction of a process. Notwithstanding the foregoing, it is worth clarifying that ultimately it is the court employees who will ensure compliance or not with the declaration of reserve made by the judge in relation to any information that may be considered a trade secret.

Dominican Republic law does not foresee a closed catalogue of defence means for specific types of cases.

Defences are usually classified as incidental and merits of the case. Incidental defences have a procedural cut, as they tend to prevent the trial proceedings from advancing. The exception of incompetence and that of connectedness, the nullity of some specific procedural activity, the incidents regarding the evidences, among others, tend to hinder the normal course of the instance and the issuance of a sentence.

The same occurs with the means of inadmissibility, tending to establish that the plaintiff has no quality or interest to sue, that the matter is res judicata or that the matter is prescribed (statute limitation).

On the other hand, defences on the merits tend to demonstrate either that the events did not occur in the manner alleged by the plaintiff or that the legal norms invoked are not those applicable to resolve the dispute.

There are no best practices that the legal community has recognised as the best options when it comes to defending these types of lawsuits.

Dominican Republic legislation does not provide that a plaintiff or defendant has the right to bring a dispositive motion, prior to trial, that would resolve the case if granted.

Contingent fees are provided for in the firm's legislation, but the majority of international clients prefer to avoid this type of remuneration, just as lawyers have adopted the practice of accepting contingent remuneration only if their client makes non-refundable advances, although eventually compensable – in the case of successful litigation – with contingent fees, that no case can exceed 30% of the amount litigated.

The authors are not currently aware of any financial institution, formal or informal, that is engaged in financing litigation in the jurisdiction in question. Given the different alternative routes that the owner of a trade secret can choose when they feel that their right has been violated, the authors consider it impossible to estimate the costs of a possible litigation.

There are no jury trials in the Dominican Republic. All processes are decided, in the first instance, by a single judge, with the exception of criminal cases that entail penalties of at least five years in prison, which are decided on by a court composed of three judges. Appeals are heard by the Courts of Appeal which is made up of five judges, but whose quorum is completed by three of them.

While criminal trials in Dominican Republic are quite similar to what is seen on television and in American movies, which feature a dynamic oral-adversarial process and where oral litigation techniques and objections are fully used, the procedure before the Commercial jurisdiction is an antiquity, where the writings prevail. The parties hardly read the request for their conclusions and present their arguments in writing.

The code of civil procedure of 1884, whose last relevant reforms on the evidence regime dates from 1978, does not foresee the figure of the expert witness. Therefore, in principle and in the framework of commercial procedures, witnesses could only testify who perceived through their senses.

This jurisdiction does not present the option of preliminary precautionary measures during the process, specifically designed for the case of commercial secrets. Only the classic precautionary measures could be used: the referimiento –of French origin – is available for all provisional and urgent matters. The precautionary measures of common law do not require the provision of a guarantee for their execution. The judge will always be careful not to specify a conclusion of their response, limiting themselves to issuing "waiting" measures.

Contrary to what happened with other intellectual property assets whose protection is recognised by Dominican Republic legislation, in which the law offers parameters and criteria for the compensation of the owner in case of infringement of their rights, the law does not offer any parameters for the compensation that can be claimed by the victim of an unauthorised appropriation or disclosure of their trade secrets.

In terms of extra-contractual civil liability, the remuneration must be in full and is not limited to foreseeable damage. When the violation comes from a co-contracting party, except in the case of malicious acts, the compensation must be limited to the foreseeable damage, which the parties normally estimate in estimating and limiting liability clauses. In no case are there punitive damages in the legal system, which clings to the criterion that there can be no enrichment without cause, since compensation is compensation for damage – patrimonial in this case – and not a sanction.

However, the amount of damage does not imply the loss of access to the information by the victim, but rather that it goes into the hands of specific competitors or into the public domain, losing a competitive advantage.

The criteria for compensation in comparative law could eventually be upheld by local courts. In the meantime, it will be necessary to assess,as in any civil liability action, the loss of business opportunities and loss of profits that emerge, for the victim, from the violation of their trade secret.

In the Dominican Republic, there is no permanent injunction available to a trade secret claimant. There is no specific legal provision that allows a court to order that a product be taken off the market for being produced in violation of a claimant's trade secret. Although it was previously said that the labour code obliges workers to maintain secrecy regarding trade secrets that have been revealed to them by their employers, both during the duration of the employment contract and after its termination and without a time limit, there is no ex ante solution to the possible violation of this duty by the worker. Any measure before a worker would have to be ex post, since the right to employment and salary is a fundamental human right which no judge could limit when considering potential violations of a trade secret.

As a general rule, each party covers the professional fees of the attorneys who have represented it. Another thing happens with the expenses of the process, which can be recovered by the party that has obtained a profit. This is the so-called award of costs. In daily practice, lawyers request – as Dominican Republic law allows it, when they advance them – that the condemnation of costs be diverted directly to the benefit of them, and not of their clients. However, it is reasonable to assume the full costs of a process, including professional fees, as part of the harm suffered by the person whose trade secrets have been breached. Once there is a sentence on costs, either for the benefit of the anxious party or their lawyer, the settlement is carried out by presenting a state to the judge who issued the sentence. It is a simple and expeditious mechanism. The party that is not satisfied can challenge the approved state of costs, before the competent Court of Appeal, through a fairly simple procedure as well.

Contrary to what happened with other intellectual property assets whose protection is recognised by Dominican Republic legislation, in which the law offers parameters and criteria for the owner to recover the costs of the process, the law does not offer any parameter regarding the costs for the victim of an unauthorised appropriation or disclosure of trade secrets. In force, then, are the parameters of common law, according to which are the costs of the process eg, service fees, court fees, transfers from/to the court, stationery. They can be encompassed within the category of legal costs, claiming the condemnation of the losing party for the benefit of the party that obtains a gain from the cause. This excludes, in principle, the professional fees of the lawyers of each party.

The appeal against judgments issued in civil and commercial matters takes place, by means of the notification of a summons within a period of one month from the notification of the judgment. The most diligent party is the one that notifies the judgment in this matter. Any party that does not agree with the sentence issued in the first degree has the right to appeal it. Preparatory judgments, such as those that order investigation measures, can only be appealed together with the judgment on the merits. Interlocutory judgments and final judgments on incidents can be appealed immediately are issued. The practice of the courts, of trying to accumulate all the incidents whose appeal must be decided together with the merits, could  delay the process. The process to hear the appeal could take between six months and a year.

In the case of sentences handed down in criminal matters, the appeal is also open to all parties. Appeals must be made within 20 business days from their issuance. Normally, the Courts of Appeal take around eight months to hear the appeal of a criminal sentence. In this matter, by express provision of the law, the appeal of incidental judgments prior to the issuance of the decision on the merits should, at least in theory, should not interrupt the process.

The Dominican legal system has, as a rule, the double degree of jurisdiction. With few exceptions, the vast majority of cases are reviewed, always both in fact and in law and in the second instance, by a Court of Appeal. In Dominican law, there are no standards for the review of first degree sentences. Questions of fact and law can be presented for the first time on appeal and without any limitation. It is even possible to call third parties into intervention, on appeal, without having brought them into action in the first degree. In commercial matters, the procedure is, as in civil matters, written. The reading of the petitions or conclusions in a public hearing is a mere formality, since the parties must present a written statement of the grounds of their case, in fact and in law.

As previously mentioned, when a person who has obtained a secret of another – commercial or not – on the occasion of his trade or profession, discloses it, he is liable to a penalty of three to six months in prison. On the other hand, the individual who steals papers or correspondence of another to obtain the secrets, commercial or of any other nature, and divulges them is punished with a sentence of three months to one year in prison. Criminal proceedings in the Dominican Republic are initiated through the filing of a complaint or a complaint before the competent tax attorney, which is the place where the offence has been committed.

Obviously, these old provisions of the penal code are narrower in describing the conduct than those behaviours classified as acts of unfair competition by the industrial property law and the antitrust law. These provisions do not establish penalties of a criminal nature, but exclusively serve as a possible basis for a civil liability action for unfair competition.

When a criminal investigation is initiated, it is possible to request the District Attorney to carry out investigation procedures. Some of these may require prior judicial authorisation, but it is normally the prosecutor and not the offended party who can request these measures or proceedings, including raids, seizure of equipment and documents, and seizure of products made using the victim's trade secrets.

Dominican law provides mechanisms for alternative dispute resolution, including mediation, conciliation, and arbitration. Arbitration can be institutional before one of the conflict resolution centres (CRC) attached to one of the official Chambers of Commerce and Industry, or ad hoc, before arbitrators chosen by the parties, not attached to any CRCs. The most widely used option tends to be the convention that submits eventual disputes to institutional arbitration, in law or in equity, before an arbitration panel appointed to judge the regulations of the CRC in question.

The advantages of an institutional arbitration are evident, since the law establishes that the awards issued by the arbitrators assigned to a CRC are enforceable without the need of a court's approval, in addition to the fact that the arbitration awards are not susceptible to being challenged through neither ordinary nor extraordinary resources. But, there is the unique possibility of attacking them in nullity, in a single instance, before the civil and commercial chamber of the competent Court of Appeal; the means of nullity provided by law being exhaustive and limited.

All institutional arbitrations are confidential by mandate of law. There are no particular rules in this jurisdiction for arbitrations on trade secrets. Arbitral tribunals may request judicial assistance, asking the judge to order – at their request – all provisional and investigative measures that they deem pertinent. In the firm's opinion, this constitutes a great advantage since this type of petition – where the tribunals come from an arbitration panel – does not receive the same treatment as those which come from the interested party.

Delgado Malagón – Veras Vargas

No. 54 of 27 de Febrero Av.
Galerías Comerciales building
Suite 412, El Vergel
Santo Domingo
Distrito Nacional
Dominican Republic
10107

809 565 5356

809 472 1600

contact@dmvvlaw.com www.dmvvlaw.com
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Delgado Malagón – Veras Vargas is based in Santo Domingo and was founded in 1977. DMVV provides clients with a wide range of legal advice in a number of fields. The firm’s team of nine lawyers regularly represents large privately owned banks and insurance providers, leading businesses in pharmaceutics, construction, hospitality and gambling, and private equity-holders. The firm’s services include advice on corporate, real estate and tax affairs, as well as serving as a strategic counsel in civil and commercial litigation, constitutional reviews, arbitration, electoral, labour, and criminal proceedings. As well as serving Dominican companies in their IP needs, the firm has a long-lasting relationship with prominent European international firms specialised in IP, and whose multinational clients are referred to DMVV in order to handle all their IP needs and affairs in DR, including patent box regimes and tax planification.

Protection of Data as a Trade Secret: A Dominican Perspective

The digitisation of the economy at a global level – as a consequence of the development of communication networks, processing services and web technologies – has brought about a revolution in the creation of new companies, business models and business operations, and has forced traditional companies to adapt their production processes to this new economic, social and political context. This new ecosystem of companies, business models, production processes and regulations is called the digital economy, and it is here to stay.

Within the digital economy, data emerges as one of the main assets to be protected by natural and legal persons. The data within its technological meaning comprises both the personal data provided by the clients and users of the companies, as well as the information generated by said companies in their production processes. The latter includes patterns of behavior of customers and users, as well as the efficiency of companies in their internal processes. This information, which is collected, stored and exploited by entities that operate in the context of the digital economy, allows them to make intelligent decisions; commonly known as “data-based decisions”. These decisions improve operations and, therefore, profitability.

In the Dominican Republic, the data that a natural or legal person collects, generates and stores can be considered a commercial secret as long as it complies with the requirements established in Law No 20-00 on Industrial Property: that said data, as a whole or in its configuration, has not been generally known by the public, nor easily accessible by those in the circles that normally handle the respective information and, furthermore, that the data has been the object of reasonable protection measures by its owner.

Regarding the requirement that the data has been the object of reasonable measures of protection by its owner, an interesting question arises: what is considered a reasonable measure of protection of a trade secret? 

In the authors' opinion, the standard for evaluating whether or not the owner of the trade secret has taken reasonable measures to protect its secret varies, taking into consideration the situation of the potential infringer of his rights. For example, in the Dominican Republic, the standard for the worker, in relation to the technical, commercial, or manufacturing secrets of his employer, is lower since the law requires the worker not to disclose them during the employment contract nor after its termination. Regarding workers, the only other thing left to do then would be to determine whether or not the information constituted a technical, commercial or manufacturing secret. Because of this, it is convenient – but not essential – that workers write documents acknowledging their having come into contact with certain confidential information and its support, and reiterate the obligation not to disclose it in any way or copy it.

On the other hand, in cases of technology transfer (know-how) and licenses for the use of trade secrets, it is necessary to take contractual measures so that the recipients of the secret information keep it this way, and that all persons in their organizations that have access to this reserved information are also obliged to maintain this reservation and not copy it.  

In contractual practice, there is a tendency to confuse the instrument that supports the information protected by the trade secrets regime with the protected information itself. This occurs for strategic convenience so that the document that establishes the obligation of confidentiality regarding the commercial secret does not refer to the protected information, which would be kept secret from those who read the document. Given the aforementioned flexibility of the legislation, in principle, practically any commercial information – with respect to which the measure to keep confidential has been adopted – qualifies as a commercial secret in this jurisdiction.

Once the data protection requirements have been resolved by the holder, in accordance with the aforementioned scenarios and so that it can be considered as a trade secret, other interesting questions arise: What legal consequences are derived from the violation of a trade secret? What legal ways are open to take action against a natural or legal person who discloses or exploits a trade secret without the consent of its holder?

The unauthorised disclosure or exploitation of data as a trade secret constitutes an unfair practice in the Dominican Republic in accordance with the provisions of Law No 20-00 on Industrial Property and Law No 42-08 on the Defence of Competition.

In this sense, Law No 20-00 on Industrial Property establishes the following as an unfair commercial practice:

  • exploitation without the authorisation of the legitimate owner of a trade secret, when access to said trade secret has resulted from a contractual or employment relationship;                    
  • disclosure or communication of a trade secret without the authorisation of its legitimate owner, either for personal gain or that of a third party, or to harm the owner or owner of the trade secret; and
  • acquisition of a trade secret by illegal or unfair means, as well as exploitation, communication or disclosure of said trade secret, for which purposes, the acquisition of a trade secret through industrial espionage, breach of a contract or an obligation, breach of trust, infidelity, or breach of a duty of loyalty is considered an unfair mean.               

Unlike the sanctions established by Law No 20-00 on Industrial Property for violations related to patents, industrial designs and distinctive signs (trademarks, trade names, commercial slogans, etc) which carry important and well-defined criminal and financial sanctions, the Dominican legislator was lax in defining the sanctions related to unfair competitive practices, such as violations of trade secrets. In this sense, said law is limited to refer the natural or legal person considered harmed by an act of unfair competition to the civil and commercial courts, and – the only differentiating characteristic to the action in repair of damages of common law – extends the statute of limitations of the action in claim for damages from one to four years.

For its part, Law No 42-08 on the Defence of Competition considers as an unfair practice the appropriation, disclosure or exploitation without the authorisation of the owner of business and industrial secrets, constituting the data – as previously stated and under adequate protection by part of its owner – a trade secret.

Unlike what is enshrined in Law No 20-00 on Industrial Property in relation to the legal actions contemplated for unfair practices, Law No 42-08 on the Defence of Competition contemplates a series of legal actions that can be brought by the owner of a trade secret when their legal rights are affected. Said actions must be filed before the civil and commercial court of first instance of the defendant's domicile, and are:

  • declaratory action of the disloyalty of the act, where the judge may, as an accessory to said action, order the cessation of the unfair act if the disturbance created by it subsists; and
  • action to repair the damages caused by the act, if fraud or fault of the economic agent (unauthorised disseminator or exploiter) has intervened.                  

Although it can be deduced from the above that the legislator wanted to contemplate a special regime of legal actions aimed at the protection of trade secrets and reparation of damages to its owner, specifically within the scope of competition law, the reality is that these legal actions are contemplated in the Civil Code and the Civil Procedural Code for any natural or legal person that is understood to be affected in their rights. The authors subsequently consider the inclusion of said regime of legal actions in Law No 42-08 to be superfluous. In this sense, the Dominican legal system provides for the possibility of accessing precautionary measures aimed at stopping illicit disturbances, such as situations that endanger a trade secret, which can be ordered by the referral judge.

Another interesting legal field for the protection of data as a trade secret is related to the labour field, say, the duty of protection of trade secrets that workers have to their employers. In this sense, in accordance with the Labour Code, it is established as a duty of every worker, vis-à-vis their employer: “To rigorously keep the technical, commercial or manufacturing secrets of the products to which they directly or indirectly produce, or of which have knowledge by reason of the work they perform, as well as the reserved administrative matters whose disclosure may cause damage to the employer, both while the employment contract lasts and after its termination”. 

This duty of reserve does not usually acknowledge a time limit, so it theoretically extends to the entire duration of the secret or the life of the worker or ex-worker. Violation of this obligation by the worker is also a cause for justified dismissal, that is, termination for just cause.

Additionally, and under some very specific scenarios, the possible ability of the possessor to initiate criminal actions against the natural person who discloses a trade secret without authorisation is possible. The Dominican penal code of 1884 makes it an offense, punishable by imprisonment from three months to a year, to seize papers or letters from a person to gain access to their secrets and disclose them. The same legislation sanctions – with imprisonment from one to six months – all persons who access the secrets of others by reason of their profession or trade (this applies to workers), and who disclose them to third parties (except in cases where the law obliges them to). 

It is obvious, from the date this penal code was enacted and entered into force, that the purpose of this law was not to prevent or deter people from accessing a company's trade secrets to benefit from them. However, this legal regime of consequences will be useful every time the secret is revealed to third parties, although they are not applicable when the person stealing the secret uses the information for their personal gain without disclosing it to third parties.

As previously stated, both Law No 20-00 on Industrial Property and Law No 42-08 on the Defence of Competition qualify the fact of accessing commercial and trade secrets as an act of unfair competition, which gives place to the exercising of a civil liability action for acts of unfair competition. Said rule, however, does not contain any special criminal offense on the matter.

The jurisprudential development in this country in relation to the protection of commercial and trade secrets has been scant and scarce. To date, there is no single precedent emanating from the Supreme Court of Justice that refers to the protection of trade secrets, unlike, for example, in the United States of North America and Europe, where there is a long tradition protection of this type of assets.

Although the Dominican legal regime created and established the protection of data as a trade secret, and its exploitation or disclosure as an act of unfair competition, it is inconsistent and flexible as the same is not the case when it comes to compilations of data or databases, which are considered as property that can be protected by copyright, in accordance with Law No 65-00 on Copyright, and entails a regime of special sanctions, protection and reparation.

In accordance with Law No 65-00, for a database to be protected by copyright it must constitute a creation of the intellect by virtue of the selection or arrangement of its content and it must be readable by machine or in any other way. In that sense, this copyright regime does not protect the data or materials themselves, but rather their selection and organisation on a specific compilation or basis – hence the ambiguity and ease of escaping its provisions when the asset disclosed or exploited without authorisation is the data itself and not the compilation of data or database that contains them. Additionally – and though not mandatory to benefit from the legal regime of said law – Law 65-00 orders the public registration of databases before the National Copyright Registry of the National Copyright Office, to give certainty to the protected property, which would cause precisely the opposite effect of what is intended with the protection of a trade secret which, as its name indicates, is of a confidential nature.

Due to such controversies and ambiguities, the authors prefer not to elaborate in this essay on the provisions of Law No 65-00 regarding the regime of consequences and legal actions established by said norm for intellectual property assets protected under its umbrella, including databases.

In conclusion, the authors are of the opinion that a protectionist trend of trade secrets should be developed in the Dominican Republic both legislatively and doctrinally – and, specifically, due to the preponderance of data – as an essential asset for all legal and natural persons in their production processes and business models within the digital economy. Regulations should be established to sanction, in a more burdensome way, the disclosure and exploitation of data without the consent of the owner, just as patents, distinctive signs and commercial designs are protected by Law No 20-00. Similarly, precautionary and provisional measures for embargoes and seizures must be established to protect the owner of the data, in a preventive manner, until a judicial decision intervenes.

Delgado Malagón – Veras Vargas

No. 54 of 27 de Febrero Av.
Galerías Comerciales building
Suite 412, El Vergel
Santo Domingo
Distrito Nacional
Dominican Republic
10107

809 565 5356

809 472 1600

contact@dmvvlaw.com www.dmvvlaw.com
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Law and Practice

Authors



Delgado Malagón – Veras Vargas is based in Santo Domingo and was founded in 1977. DMVV provides clients with a wide range of legal advice in a number of fields. The firm’s team of nine lawyers regularly represents large privately owned banks and insurance providers, leading businesses in pharmaceutics, construction, hospitality and gambling, and private equity-holders. The firm’s services include advice on corporate, real estate and tax affairs, as well as serving as a strategic counsel in civil and commercial litigation, constitutional reviews, arbitration, electoral, labour, and criminal proceedings. As well as serving Dominican companies in their IP needs, the firm has a long-lasting relationship with prominent European international firms specialised in IP, and whose multinational clients are referred to DMVV in order to handle all their IP needs and affairs in DR, including patent box regimes and tax planification.

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Authors



Delgado Malagón – Veras Vargas is based in Santo Domingo and was founded in 1977. DMVV provides clients with a wide range of legal advice in a number of fields. The firm’s team of nine lawyers regularly represents large privately owned banks and insurance providers, leading businesses in pharmaceutics, construction, hospitality and gambling, and private equity-holders. The firm’s services include advice on corporate, real estate and tax affairs, as well as serving as a strategic counsel in civil and commercial litigation, constitutional reviews, arbitration, electoral, labour, and criminal proceedings. As well as serving Dominican companies in their IP needs, the firm has a long-lasting relationship with prominent European international firms specialised in IP, and whose multinational clients are referred to DMVV in order to handle all their IP needs and affairs in DR, including patent box regimes and tax planification.

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