Trade Secrets: Its Protection as an Intellectual Property

Trade Secrets are confidential information relating to business and are not available for public use and the owner of such information always tries to keep it confidential so as to protect the business interests. This article talks about how these trade secrets are protected as they were intellectual property and why they deserve to be protected thus by using case laws and references to various legislations.

Trade Secrets are confidential information relating to business and it is not available for public use and the owner of such information tries to keep it confidential. A trade secret can be any data, equipment, and computer program. The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), administered by the World Trade Organization (WTO), regarding any information as Trade Secrets lays down under its own Article 39 that: “Trade secret must not be generally known or readily accessible by people who normally deal with such type of information. A trade secret must have commercial value as a secret”. It is well established that there exists is no copyright in ideas or information and there’s no remedy available under the copyright law for illegal use of such trade secrets. In these cases, relief can be obtained by way of an injunction and damages.

Protection of Trade Secrets or Confidential Information in India

It is established fact that if the information was obtained by a person and he is aware of the fact that if he publishes the information, it will be a breach of good faith and he has no cause to do so then the court will grant an injunction against him. It is a well-settled law that if the information is given in confidence then, in that case, it must be protected. Courts will also prohibit the use of such information if it amounts to a breach of good faith. In this regard, the law is not dependent on any implied contract. It will be based on the principle of equity that the person, who received such confidential information, shall not take unfair advantage of it.

In Saltman Engineering Co. Ltd. v. Campbell Engineering Co. Ltd, It was held that due to the lack of law for the guard of trade secrets, the Indian court trusts on the common law remedies for the protection. Dependence is placed by Indian courts in the Saltman Engineering case.[1]

Also Read  Female Foeticide: An Atrocious Truth of the Society

In further words, “In India, the law of contract has to be trusted for the guard of the confidences.” However, “in India, the law that is used is the law of tort of ‘breach of confidence’.”[2]

In Ambiance India Pvt. Ltd. v. Shri Naveen Jain, New Delhi Court provides a list of what can be said to be a trade secret. It says that a trade secret “can be a formula, technical know-how or a peculiar mode or method of business adopted by an employer which is unknown to others.”[3]

However in India Trade secrets are protected under The Indian Contract Act, 1872, u/s 27 which arrange for remedies and also confine any person from revealing any data which he obtains at the time of employment or through contract. But unfortunately u/s 27 of the said Act there is an only civil remedy and no criminal remedies available. According to this section, any information must be extremely personal to be constituted as Trade Secret.

Nature of information

The information might be trade secret, e.g. a method of production is not protected by a patent, or a business secret, such as the finical arrangements of the undertaking or a piece of domestic information like the salary scale of the clerk.

Essential Requirements for Breach of Confidence

In Coco v. Clark, Firstly, Information must be confidential. Secondly, it was given to a person to keep it a secret. Thirdly, there must be an unlawful use of such confidential information.[4]

Remedies in case of breach of confidence

In India, the only remedies available for the security of trade secrets are civil or equitable remedies for a breach of confidence cause of action.  They include:

  • an award of an injunction “preventing the third party from disclosing the trade secrets,” and “confidential and proprietary information,” and,
  • In the case of “for any losses suffered due to disclosure of trade secrets.” The court may order any damages or compensation to be given to the plaintiff. The court may also order the party at fault to “deliver up” such materials.
Also Read  Whether a Magistrate can authorize the detention of an accused in Police Custody without the accused being produced before him under Section 167 Crpc

However, if an injunction is decided, the detail or the material is measured personal only for a limited period till which the injunction is given.  If the factor the information is claimed to be confidential, but only for a specific time, then temporary injunction will be granted only for a period which will be contingent on the conditions and nature of the personal information.

In Gujarat Bottling Co. Ltd. v. Coca-Cola Co., Such interlocutory injunction is granted when the ligation is undecided. The court in order to grant interlocutory injunction has to apply the following tests: (a) whether there is a prima facie case, (b) whether the balance of convenience is in favor of the plaintiff, (c) whether the rejection of the injunction would result in an irreparable injury to the plaintiff.

The objective of such relief is for the guard of the complainant against his damage for which he could not be sufficiently remunerated if the doubt were determined in his favor at the trial. Damage in such cases can be strong-minded based on the “market value of the confidential information based on a notional sale between a willing seller and a willing purchaser.”

Conclusion

The rule of trade secret law is to safeguard, uphold and endorse values of profitable morals and reasonable dealing and it inspires revolutions as well. The law for guarding the trade secret is developed from the common law of unfair competition developed in the 19th century by English Courts. Ever since the benefits in the information economy are promptly rising it is giving rise to the trade secrets to becoming Intellectual Property of Choice. The unlawful use of such information by persons other than the holder is observed as a prejudicial practice and abuse of trade secrets. The revelation of the trade secret would cause damage to the real owner of the Secret. Once trade secrets have been exposed to the public, they cannot be evoked even in the case if the use of the product itself causes disclosure. There will be no protection of trade secret if, in the process of using, it gets disclosed. So in order to attain the efficient transparency in the commercial transactions, there is an urgent need for drafting the legislation so to properly safeguard the trade secret in India as for the good functioning and fair competition of a company in the market. Getting protection will help the country’s economy to grow. Being a signatory to Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), India has already framed law for the protection of all Intellectual Property Rights like Copyright Act, Trademark Act, and Patent Act but still, the legislation for the protection of Trade Secrets are left out. India is obliged to frame comprehensive rules and regulations to remove uncertainty with regard to Trade Secrets Protection. Hence there is a need for the safeguard of the trade secret.

Also read Legal Protection for Trade Secrets : The Indian scenario.

[1] 1948 (65) R.P.C. 203.

Also Read  Whether the President of India is bound to accept the advice given by the care-taker government

[2] Sonia Baldia, Offshoring to India: Are Your Trade Secrets and Confidential Information Adequately Protected? Mayer Brown Bus. & Tech. Sourcing Rev., Mar. 1, 2008, at 10.

[3] 122 (2005) D.L.T. 421, para. 6.

[4] (1969) R.P.C 41 at 47.