Business Law and its Conflict with Trade Secrets – by Sejal Chaturvedi


In the contemporary world business is about innovation, upgradation, and creating a new product or service. To do that, people try to make new formulations for existing products or create new ones from scratch. Nevertheless, all of this requires intellectual property right protection, and one such IP is Trade Secrets. Trade secrets are one of the unknown and unspoken kinds of IPR. Trade secrets, however, often come at loggerheads with the laws of making profits and doing business.


A trade secret, is a form of IP. A trade secret refers to any confidential information, formulation, or design that is unique to your business. This information is confidential, unique, and exclusive to its owner/company. the owner or company marks efforts and arrangements to maintain its confidential status. This confidential information is crucial and of immense commercial value, as this forms the core of the business. For example- the formulation of COCO COLA is a trade secret. If the recipe of that soft drink is leaked to the competitors, it shall lose its uniqueness. Thereby, losing the market share and profits.


Any data or information relating to enterprises that are not known to the general public, as well as reasonable efforts to keep such information confidential, qualifies as a trade secret. “A trade secret is any knowledge having an economic value that is not in the public domain and for which reasonable efforts have been taken to safeguard its secrecy,” according to the North American Free Trade Agreement (NAFTA). In Burlington Home Shopping Pvt. Ltd. v. Rajnish Chibber, the court determined that a trade secret is a knowledge that, if divulged to a rival, would cause real or serious harm to the owner. It can comprise equations not just for product manufacture, but also, in some cases, the names of clients and the commodities they purchase.


Numerous employees work in a business organization, and these employees keep switching their jobs. As a result, often the information of one business organization gets transmitted to other. In such scenarios protecting your trade secret becomes a challenge. For instance, Coca-Cola goes so far as to make the recipe a trade secret that only two persons in the firm are aware of the constituent quantities in their drink. Because of the ever-changing world and the possibility that trade secrets will be discovered by others on their own, firms are frequently encouraged to continue to alter and further develop their trade secrets to keep competition in place and protect their trade secrets from being found.

The risks of recruiting are inherent for organizations that operate and employ people in India. It’s challenging to come up with new concepts for trade secrets in an ever-changing and inventive world. Some businesses make shady attempts to steal projects from competitors to acquire access to their artistic talents and information about their competitors’ success secrets.

In principle, an employee’s capacity to use the talents and experience he obtained during his job cannot be limited by contract after he is fired. free to apply newly acquired skills and knowledge for personal advantage or the benefit of others An employee, on the other hand, may expose or utilize secret information received during his employment, either while or after it has finished. A former employee may be forbidden from disclosing a chemical formula or a memorized client list. There is a distinction between an employee and an ex-employee when it comes to the duty of loyalty.

Keeping and growing market share demands the protection of trade secrets. Current and former employees are the most dangerous to trade secrets. One source of trade secret theft is current and former workers, who have a trusting connection with the firm. Trade secret theft is strongly ingrained in the distinctive nature of the employer-employee relationship.


While conducting business, it is essential to stand out in the market and have a brand reputation. For this, one has to ensure its trade secrets remain hidden, however, one also needs expert employees for running an enterprise. Hence, businesses have to find a mid path, to protect their IP and ensure the retaining and hiring of expert employees.  


The views are that of author’s own and not necessarily the views of IPTSE Academy. This blog is a platform for academic discussions and hence authors have been given flexibility to convey their thought process.


Sejal Chaturvedi


Symbiosis Law School, Hyderabad


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