The phrase “trade secret” is rather self-explanatory. As the name suggests, “trade secrets” simply speaking, are secrets used in the course of trade. A trade secret may be formula, a recipe, a process, a device or any other information, which is used in a particular trade, which makes it unique. It is that information pertaining to a business, which gives the business an advantage on account of it being inaccessible to anyone else; that the businessman wants to protect, by keeping it out of the reach of public domain, specifically from competitors
Characteristics of Trade Secrets
While there is no formal codified definition of trade secrets in India, for us to cull out essential characteristics from; there are three characteristics that are common to all definitions of trade secret:
1. It must not be generally known or readily accessible by people who normally deal with such type of information;
2. It must have commercial value as a secret; and
3. The lawful owner must take reasonable efforts to maintain its secrecy.
In order for any piece of information to constitute a trade secret, it must comprise all the
three aforementioned features.
In order for a Plaintiff to succeed in a suit for injunction, the Plaintiff must not only make amply clear that the subject matter under consideration was confidential, but also prove that reasonable efforts have been made to keep it confidential. The Delhi High Court, in the case of Emergent Genetics India Pvt. Ltd vs Shailendra Shivam And Ors. opined as under:
If the trade secret or information owner proves that reasonable efforts were made to keep the information confidential, it (the information) remains a trade secret and is legally protected. If, on the other hand, trade secret owners cannot establish reasonable efforts to protect confidential information, they risk losing the quality of confidentiality of the information even if its information is obtained by rivals without permission.
Protection of Trade Secrets in India
India is a signatory to Trade Related Aspects of Intellectual Property (“TRIPS”), Article 1(2) of which states that intellectual property shall include protection of undisclosed information. Further, Article 39 of TRIPs states concerns ensuring effective protection against unfair competition as provided in Article 10*bis* of the Paris Convention, with respect to information which:
- is a secret not generally known or readily accessible;
- has commercial value by virtue of secrecy; and
- has been subjected to reasonable steps for ensuring its secrecy.
Article 39 mandates that member nations must ensure that natural and legal persons have the “possibility” of protecting such information, by preventing it from being disclosed, acquired or used without their own consent.
Further, on May 12 2016 India approved the National IP Rights Policy, which has seven objectives. One of these objectives is to ensure an effective legal and legislative framework for the protection of IP rights. The steps to be taken towards achieving this objective include the identification of important areas of study and research for future policy development; one such area identified was the protection of trade secrets. Despite these international obligations, India does not have a codified legislation for the protection of trade secrets.
7 RNA Technology & IP Attorneys, “Protecting Trade Secrets in India”, Lexology, May 1, 2018 In a discussion paper on Intellectual Property rights at the subsequent US-India Trade Policy Forum held on October 20, 2016 in New Delhi, India’s representatives noted that India protects trade secrets through a common law approach and reiterated the country’s commitment to the strong protection of trade secrets.
Trade secrets are protected in India, solely on the basis on judicial pronouncements and judicial creativity. Courts often rule in favour of the proprietor of information, by treating it as a “literary work” under the Copyright Act, 1957. In 2008, the Ministry of Science and Technology, published a draft legislation titled the National Innovation Act, 2008 (‘Innovation Bill’) that sought to codify and consolidate the law of confidentiality and aid in protecting confidential information, trade secrets and innovation. However, the Parliament, till date, has not directed its attention to the Innovation Bill, and consequently, trade secrets in India, remain unregulated.
Indian Courts borrow from the principles of contract law, copyright laws and the general principles of equity to afford justice to the affected party. However, in the absence of a legislation India’s jurisprudence remains ambiguous on certain aspects of trade secrets, such as:
- The scope of damages in the case of a breach of confidential information;
- Theft of trade secrets by business competitors; and
- Procedural safeguards during court litigation.
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