Walking out the door in Brazil: trade secrets, confidential information and post-employment obligations

Luiza Tângari Coelho
Madrona Advogados, São Paulo
luiza.tangari@madronaadvogados.com.br

Lucas Amaral Cunha Camargo
Madrona Advogados, São Paulo
lucas.camargo@madronaadvogados.com.br

Introduction

The departure of an employee always carries a degree of risk for the employer. When that employee holds access to sensitive technical knowledge, client portfolios, pricing strategies or proprietary processes, the risk becomes acute. In Brazil, the tension between an employee’s freedom to work and an employer’s legitimate interest in proprietary assets has generated a rich and still evolving body of law.

Brazil does not have a standalone trade secrets statute. Instead, protection is distributed across several normative layers: the Industrial Property Law (Lei De Propriedade Industrial or LPI) (Law No. 9,279/1996), the Consolidation of Labour Laws (Consolidação das Leis do Trabalho or CLT) (Decree Law No. 5,452/1943), the Brazilian Civil Code (Law No. 10,406/2002), the General Data Protection Law (Lei Geral de Proteção de Dados Pessoais or LGPD) (Law No. 13,709/2018) and the Brazilian Penal Code, to name just a few. Understanding how these instruments interact is essential for counsel advising either employers seeking to safeguard their intangible assets or employees navigating the obligations that survive after an employee’s resignation or dismissal.

A critical distinction must be drawn at the outset. Post-employment obligations relating to confidential information and trade secrets are grounded primarily in unfair competition law, not in the separate and conceptually distinct instrument of non-compete clauses. The difference is not merely analytical: unfair competition protection derives from statutory provisions and operates independently of any contractual relationship between the parties. Non-compete clauses, however, are purely contractual instruments whose enforceability depends on the existence, scope and validity of an agreement expressly restricting post-employment activity. Conflating the two risks analytical confusion and strategic missteps in litigation and contract drafting. Both the Superior Court of Justice (Superior Tribunal de Justiça or STJ), Brazil's highest court for non-constitutional federal law, and the Superior Labour Court (Tribunal Superior do Trabalho or TST), the apex court for employment disputes, have reinforced this distinction in different procedural contexts, as discussed in the sections that follow.

Defining trade secrets and confidential information under Brazilian law

The primary statutory provision for trade secret protection in Brazil is found in Article 195 of the LPI, which criminalises certain acts of unfair competition. Of particular relevance is item XI of that provision, which prohibits the disclosure, exploitation or use, without authorisation, of confidential information to which one had access by virtue of an employment relationship, contractual or pre-contractual relationship, even after its termination.

For protection to arise under Article 195 of the LPI, the information must satisfy three cumulative conditions, which the STJ has since consolidated into a corresponding three-element test: (1) effective secrecy, meaning the information is neither in the public domain nor readily accessible to professionals in the relevant sector; (2) commercial value derived from secrecy, such that the information confers a competitive advantage precisely because a firm’s competitors are unaware of it; and (3) reasonable protective measures have been adopted by the holder of such rights, including access controls, confidentiality agreements and document classification policies. This standard closely mirrors the international consensus reflected in Article 39.2 of the Agreement on Trade-Related Aspects of Intellectual Property Rights, otherwise known as the TRIPS Agreement, to which Brazil is a signatory, and provides a workable framework for counsel assessing whether a given category of information will attract statutory protection.

Obligations during the employment relationship

The CLT establishes a general duty of loyalty, which underpins the entire employment relationship. While the statute does not use the expression ‘duty of confidence’ explicitly, Brazilian labour courts have long derived from the good faith principle (Articles 421 and 422 of the Civil Code, applicable by analogy) an obligation for employees to refrain from disclosing or exploiting their employer’s sensitive information for personal gain or to the benefit of competitors.

In practice, employers reinforce these obligations through contractual mechanisms: confidentiality agreements and, in regard to technical roles, intellectual property assignment clauses. The TST has consistently validated such agreements, provided they do not impose disproportionate burdens on the employee or eliminate rights guaranteed under the CLT. Clauses that are overly broad or vague (for example, purporting to cover ‘all and any information to which the employee may have access’) have been judicially restricted in terms of their application, without full nullity of the clause. Precision in drafting the scope of protected information is therefore critical: both for its enforceability during employment and for evidence gathering after the employment relationship ends.

Where confidential business information intersects with personal data, additional obligations arise under the LGPD. The implications for post-employment enforcement are addressed later.

The unfair competition framework as the core post-employment mechanism

Once the employment relationship ends, the central legal mechanism available to protect confidential information is unfair competition under Article 195 of the LPI. This framework operates independently of any contractual obligation: even in the absence of a written non-disclosure agreement (NDA), a former employee who discloses or exploits information obtained in a position of confidence commits an act of unfair competition under item XI of Article 195. The statutory prohibition is, therefore, the baseline floor of protection, with contractual instruments serving to reinforce and specify it.

This point carries considerable practical importance:

• Protection does not depend on the existence of a written confidentiality agreement, although such an agreement strengthens the evidentiary position of the employer.
• The prohibition persists after the end of the employment relationship without the need to establish a separate post-contractual duty: the LPI itself imposes it.
• The same conduct may simultaneously give rise to civil liability (under the Civil Code’s general tort provisions), labour liability (where the breach occurs during employment) and criminal liability (as Article 195 defines trade secret misappropriation as a crime, punishable by detention of three months to one year or a fine).

It is within this framework that Brazilian law parts ways conceptually from the non-compete clause. A non-compete restriction asks: ‘may this individual work in this industry or for this competitor at all?’ The answer depends on any applicable agreement, compensation and temporal and geographic limits. The unfair competition framework asks a different question: ‘has this individual used or disclosed specific confidential information without authorisation?’ The answer depends on the nature of the information, the context of its acquisition and the conduct following their departure. The STJ has made this distinction explicit in cases where employers sought injunctive relief based solely on a non-compete clause, without identifying the specific confidential information at risk: the courts have reduced or denied the relief sought on the ground that competitive proximity alone does not constitute unfair competition within the meaning of Article 195. The two questions may arise simultaneously, but they are analytically independent and must be separately argued and proved.

Remedies available to employers

Civil remedies

Under the Civil Code and the Code of Civil Procedure, the employer may seek:

• cessation of the infringing conduct, including by means of an urgent preliminary injunction that may be granted on an ex parte basis in cases of demonstrable urgency and risk of irreparable harm;
• damages, including compensation for lost profits and for any direct losses caused by the breach;
• disgorgement of profits obtained by the infringer, in appropriate cases where damages are difficult to quantify but unjust enrichment is demonstrable; and/or
• moral damages to the legal entity, recognised by the STJ in cases where the misappropriation compromises the company’s commercial reputation.

The STJ has granted preliminary injunctions restraining former employees from using or disclosing specific categories of information, ordering the return or destruction of protected materials and, where the risk of irreparable dissemination is imminent, temporarily suspending the new employment relationship pending full adjudication. That last measure requires careful framing: it must be grounded in the specific risk of trade secret misappropriation, not merely in competitive proximity.

On quantum, the STJ admits three concurrent bases: lost profits, the infringer’s unjust enrichment where direct harm is difficult to isolate and moral damages to the legal entity where reputational harm is demonstrated.

Labour remedies

Article 482(g) of the CLT expressly includes ‘violation of a company secret’ as valid ground for dismissal for cause, relieving the employer from the severance payments typically due in a situation where a termination without cause occurs.

The TST, however, imposes a strict evidentiary standard for the characterisation of this type of misconduct, requiring the employer to demonstrate, cumulatively:

The identification of genuinely confidential information: the employer cannot invoke secrecy in generic terms. The specific information and the access restrictions applicable to it must be demonstrated.

• The employee’s awareness of its confidential nature: the TST requires that the employee knew or should have known that the information could not be disclosed. Internal confidentiality policies and signed NDAs are the primary instruments for establishing this element.
• The concrete act of disclosure or improper use: the TST generally requires evidence of actual disclosure to third parties or use of the information for improper or competitive purposes. Mere possession of confidential information by a departing employee, without proof of misuse, has been deemed insufficient to justify dismissal for cause.

In addition, the TST assesses whether the conduct constitutes a serious breach of trust, taking into account principles such as proportionality and immediacy.

These requirements have direct practical implications: robust information governance is not merely a compliance measure but a key litigation asset. Employers that implement and document access restrictions, maintain system logs and secure formal acknowledgments of confidentiality obligations are significantly better positioned to support dismissals for cause and to pursue injunctive and indemnification measures in civil proceedings.

Criminal remedies

Article 195 classifies trade secret misappropriation as a crime of unfair competition. Criminal proceedings may be initiated by the offended party, and the existence of a pending criminal complaint can lend procedural weight to civil injunction requests. That said, criminal prosecution in this area remains relatively scarce in Brazil: the burden of proof is demanding and such proceedings are slow. Civil injunctive relief remains the preferred and most effective enforcement route.

Evidentiary challenges and practical considerations

Brazilian employers frequently encounter difficulties in proving trade secret misappropriation. The secretive nature of the violation (typically involving the digital transfer of data, memorisation of information or lateral movement to a competitor) means that direct evidence is often unavailable.

Digital forensics has emerged as a critical tool: inspection of corporate devices, email servers and cloud storage accounts, conducted prior to or contemporaneously with the employee’s departure, can yield evidence of unusual data transfers. Courts have accepted digitally obtained evidence in injunction proceedings, provided it was lawfully gathered and the chain of custody is properly documented.

Employers are also advised to maintain robust information governance practices, such as clear classification of confidential materials, access restriction protocols and regular employee training on confidentiality obligations. As noted, these measures serve a dual purpose: they reinforce the ‘secrecy’ element required for statutory protection under the LPI’s three-element test as applied by the STJ, and they satisfy the TST’s awareness requirement in the context of dismissal for cause. Counsel should, however, note an emerging tension that the ANPD has yet to resolve administratively: the systematic monitoring of corporate devices and cloud accounts required for effective digital forensics may conflict with the data subject access rights established by Article 18 of the LGPD, making early legal oversight of any forensic investigation essential.

The LGPD as an emerging layer of protection

The full enforcement of the LGPD since 2021 has introduced a new dimension. Personal data processed in connection with the employer’s business (client records, employee data, proprietary profiling systems) is subject to strict governance obligations. When a former employee unlawfully appropriates such data, the employer faces dual exposure: as a data controller, it may be held accountable by the national data protection authority (Autoridade Nacional de Proteção de Dados or ANPD) for having insufficient security measures; and as victim, it holds an additional cause of action under Article 42 of the LGPD. Critically, this avenue does not require proof of intellectual property ownership, offering a distinct advantage in cases involving databases or customer information that may not qualify as trade secrets under the LPI, but that nonetheless represent valuable proprietary assets whose misappropriation causes measurable harm.

Conclusion

Brazil’s approach to protecting trade secrets and confidential information in the post-employment context reflects the broader tension between individual economic freedoms and the legitimate interests of businesses in safeguarding their intangible assets. The absence of a unified statute means that practitioners must navigate a multilayered legal landscape, drawing on the LPI, the CLT, the Civil Code and the LGPD simultaneously.

The analytical foundation of this framework is unfair competition law: Article 195 of the LPI provides the specific, post-employment prohibition on the exploitation of confidential information obtained in a position of trust, operating regardless of the contractual form. The STJ has reinforced this foundation by requiring precise identification of the protected information, demonstrable secrecy and reasonable protective measures. The TST has applied parallel rigour in the context of dismissal for cause under Article 482(g) of the CLT. Contractual instruments remain essential complements to these statutory protections but are not a substitute for them. Non-compete clauses occupy a conceptually separate space and must not be treated as a proxy for trade secret protection.

For companies operating in Brazil, the lesson is clear: protecting intellectual assets against misuse by departing employees requires proactive legal architecture rooted in the correct doctrinal framework, robust information governance and a litigation strategy that leads with unfair competition and injunctive relief rather than with the more uncertain terrain of post-employment restrictions on competition.