December 2, 2020

Trade Secret Laws in India

Introduction: Like other IPR’ s, Trade secrets are also valuable for the growth of the company and sometimes for its survival. In general words, trade secret is an information which is used by the business in trading and unknown to the general public. Trade secret is considered as a business confidential information which offers a competitive commercial advantage to the business. Trade secret can be a manufacturing or commercial secret. Trade secret means and can be in the form of process, formula, design, practice, pattern, instrument or a compilation of info.

Definition: In accordance with Black law’s dictionary Trade secret means A formula, device, process or business info. which is kept in confidential because to get an advantage out of it over other competitors in the market.

For instance-Till date, no one knows the secret recipe of KFC which makes their dish tastes so different and delicious[1]

International protection to trade secrets:

Trade Related Aspects of Intellectual Property Rights:

TRIPS is an international legal agreement which binds all the member states of world Trade Organization. TRIPS formulated certain regulations which have to be adopted and followed by its member states regarding intellectual properties. Article.39 of TRIPS agreement provides protection for trade secrets.

Factors:

The following are the factors which construe trade secret as a confidential information:

§ It is a secret which is not known to the general public.

§ It must have commercial value

§ The holder of trade secret must made efforts to maintain it as secret.[2]

Indian scenario:

In today’s world innovative thinking became a precondition for economic success. Trade secret gained a major essential importance in 21st century. As far as India concerned, there is no laws with regard to trade secret, it is sine-quo-non duty of the legislature to make an effective trade secret laws for well-functioning of the national innovative system.

As India being signatory to the TRIPS agreement, it is obligated with the duty to protect undisclosed information. Since India is a member country it can adopt either the principles of TRIPS or can have its sui generis system of law. India does not have any codified legislations with regard to trade secrets.[3]

Legislations pertaining to trade secrets:

As of now, there is no particular legislation as to trade secrets, however the IP Laws of India included a part of trade secret laws.

§ If the bearer of the trade secret shares his secret to any individual and thereafter if he commences a business and gives competition to the real owner, he is the violator of the copyright and shall be imprisoned for a period of six months to three months up on the gravity of the offence.

§ If a person intentionally loots a trade secret by tampering the computer code, security etc., he is punished in accordance with Information technology Act, 2000 with an imprisonment for a term of three years and five up to five lakhs or both

§ If an employee by means of dishonest and fraudulent intention provides trade secret to the other he will be punished under IPC for criminal breach of trust up to seven years or fine or both.

Remedies:

The only remedies available to the aggrieved party is civil and equitable remedies in nature.

§ Section.27 of the Indian Contract Act provides civil remedy

§ Injunction can be ordered by the court from preventing the third party from disclosing it.

§ If a trade secret holder suffered losses due to disclosure, the court can award damages.

§ Innovation bill, 2008 was enacted.

Indian law protects confidential information under the principle of equitable duty of confidence and Indian contract Act. Trade secret is a formula which helps a business to obtain an economic advantage over competitors.

Disadvantage when there is no laws:

One should keep their trade secrets in secrecy, because is any person else gets to know it, then the original owner will loose competitive advantage and marked will be flooded with too many similar products. As it is a result of labour and extensive hard work it should be kept in secrecy.

Term:

Unlike other forms of IP’ s, Trade secret does not expire, as it wont expire the owner can enjoy perpetual monopoly. This is the reason why coco cola formula has been kept as a trade secret ans not disclosed in patent, as it will expire after twenty years.

Registration: Trade secrets cannot be registered as the name suggests it should be in confidential. Publication of a trade secret will destroy confidentiality of such trade secret.

Indian courts adjudicates trade secret related disputes based up on the principle of equity. If any person with a fraudulent intention discloses the trade secret he breached the trust and confidence. A person is contractually bound not to disclose any information that is revealed to other person in confidence.

In John Richard Brady And Ors vs Chemical Process Equipments P. Ltd and Anr[4]

Plaintiff came with an idea to grow up the fresh green grass as a basic food for livestock through out the year(Fodder Production Unit) he sought quotations from the defendant for supply of thermal panels and the defendant agreed not to manufacture these panels for outers. However he did not produced the agreed panels for the plaintiff itself. The plaintiff alleged that the defendant had committed the breach of confidence. In between the defendant produced machines which is distinguished from plaintiff

The Delhi HC held that the defendant had the drawings of the machine and the court restrained the defendant from manufacturing and selling machines

Konrad Wield GmbH vs Standard Casting Pvt. Ltd[5]

The Apex court opined that, the information should be in confidential and the contract of trade secret should not have public knowledge.

Media Ltd vs ITE Group Plc and Ors-

If an individual receives any information in confidence, he is not allowed to use against him.[6]

Conclusion& Suggestions:

Due to increase in suits relating to trade secrets, the Govt. has the sine-quo-non duty of enacting an Act. Because the trade secrets cannot be disclosed, the holders of the trade secret must protect themselves and if they intend to disclose to the third party, it is advisable to enter into confidentiality agreement or a non disclosure agreement.

• The original trade secret holder must be protected against third party misappropriation

§ Criminal penalties must be imposed through an Act

§ The legislators should look into judicial pronouncements while enacting the trade secret laws not only Indian court but also the strong common law foundations of other countries also

§ There must be protection and confidentiality while litigation is going on


[1] ad.praveenkumar, Trade Secrets as an Intellectual Property Right Under Indian Law (last visited visited on 30/3/2020,2:00p.m),http://www.legalservicesindia.com/article/620/Trade-Secrets-as-an-Intellectual-Property-Right-Under-Indian-Law.html

[2] Kamakhya Srivastava, Trade Secrets In Indian Courts (last visited visited on 30/3/2020,2:30p.m),https://www.mondaq.com/india/Intellectual-Property/204598/Trade-Secrets-In-Indian-Courts Law

[3] BananaIP Reporter, Trade Secret Case Law Jurisprudence in India- 1,(last visited visited on 30/3/2020,3:10p.m), https://www.bananaip.com/ip-news-center/trade-secret-case-law-jurisprudence-in

[4]. AIR 1987 Delhi 372.

[5]. 1985 (10) IPLR 243

[6] Anubhav Pandey,What are Trade Secrets? How one can claim protection ,(last visited visited on 30/3/2020,7:50p.m), https://blog.ipleaders.in/trade-secret/

Author Details: K. Bhanu Sireesha and V. Mohan Vinay (Gitam School of Law, Gitam University)

The views of the author are personal only. (if any)

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