2.

Finding laws and cases

Are trade secrets and undisclosed information protected under Philippine law? The 1987 Philippine Constitution provide in its Article III or in its Bill of Rights Section 1 that no person shall be deprived of life, liberty, or property without due process of law, nor shall any person be denied the equal protection of the laws. In the Philippines, the most particular law that protects trade secrets and undisclosed information is the Republic Act No. 8293 otherwise known as Intellectual Property Code of the Philippines (IP Code). Section 4 of the Philippine Intellectual Property Code (IP Code) recognizes that the term intellectual-property rights includes the protection of undisclosed information, however, the law does not provide for any specific provision protecting undisclosed information or trade secrets just a provision that requires courts to adopt measures to protect the manufacturing and business secrets of the defendant in a patent infringement case. Primarily, Trade secret is recognized under the Philippine Laws as a privilege in nature. This is apparent from the following laws: Securities Regulation Code of 2000, sec. 66.2, that provides that the revelation of trade secrets or processes in any application, report or document filed with the Securities and Exchange Commission is not required. Tax Reform Act of 1997 (the NIRC), section 278, penalizes the revelation of trade secrets by internal revenue officers or employees. Toxic Substances and Hazardous and Nuclear Wastes Control Act of 1990 (R.A. 6969),sec. 12, limits the right of the public to have access to records, reports or information concerning chemical substances and mixtures if the matter is confidential such that it would divulge trade secrets.

Interim Rules Governing Corporate Rehabilitation, Rule 3, sec. 4, On provide that courts may issue an order to protect trade secrets or other confidential research, development, or commercial information belonging to the debtor. Also, Trade secrets is defined by the Supreme Court ruling from the case of Air Philippines Corp. v. Pennswell Inc., G.R. 172835, 13 December 2007, that adopted the following definition of the term in Blacks Law Dictionary: A trade secret is defined as a plan or process, tool, mechanism or compound known only to its owner and those of his employees to whom it is necessary to confide it. The ruling also stated that trade secrets also extends to a secret formula or process not patented, but known only to certain individuals using it in compounding some article of trade having a commercial value. In violation of these laws, Article 292 of the Revised Penal Code provides that revealing the industrial or trade secrets of an employer by an employee is a crime. However, this criminal provision is weak as a compelling force to deter the revelation of trade secrets by employees because of lack of jurisprudence and fir this reason, company seeking to protect its trade secrets in the Philippines to resort to contractual law.

May an employer company lawfully enforce a policy and contract that prohibits employees from entering into a relationship with competitor companies? Businesses first line of defense of their trade secrets: employment contracts. The Labor Code prohibits certain terms or conditions of employment to be stipulated on employment contracts. Any such stipulation, even if freely and voluntarily agreed upon by the parties, is void. For example, the prospective employer and employee may not validly agree that the latter shall be paid a salary below the minimum wage prescribed by law, or that the employee shall be required to work more than 8 hours per day without overtime pay. Such stipulation, even if mutually consented to by the parties is null and without force and effect. Nonetheless, Philippine laws recognize the right of enterprises to adopt and enforce policies to protect its right to reasonable returns on investments and to expansion and growth. Trade secrets being integral to a business, it cannot be overemphasized that employment contracts and written company policies serve as critical deterrents against the revelation of trade secrets by an employee. The Non- Involvement clause in a contract is a protection of trade secret. A business entity is only as good as its human resources. This is the reason why companies invest in trainings and seminars for their employees. This is also one of the reasons why employers provide for non-competition clause to prevent their employees from working with a competitor or engaging in a similar business within a certain period. The Supreme Court has, in fact, upheld the validity of a company policy prohibiting employees from entering into a relationship with an employee of a competitor company. In Duncan Association of Detailman-PTGWO v. Glaxo Wellcome, G.R. No. 162994, 17 September 2004, the Supreme Court upheld a contractual prohibition prohibiting employees from maintaining personal or marital relationships with employees of other competitor companies. The Supreme Court held that this was a reasonable contractual prohibition because a company has a right to guard its trade secrets, manufacturing formulas, marketing strategies and other confidential programs and information from competitors, especially as against rival companies in a highly competitive industry.

In Daisy Tiu v. Platinum Plans, Inc., G.R. No. 163512, February 28, 2007, the Supreme Court held that a non-involvement clause is not necessarily void for being in restraint of trade as long as there are reasonable limitations as to time, trade, and place. In contracts, Article 1306 of the Civil Code the parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy. The obligations arising from contracts, Article 1159 of the Civil Code, have the force of law between the contracting parties and should be complied with in good faith.