Trade secret can be defined as that data or information that is crucial for business to run and is not disclosed before the general public. Reasonable attempts being made to keep them confidential. This confidential information can include various proposals, databases of clients, devices, formulae or compilations, designs etc. Although definition of trade secret may differ also but it may have certain commonalities such as: not present in public knowledge, have commercial value and reasonable efforts should be made for secrecy. Since trade secret acts as back bone of many businesses therefore it becomes an obligation to protect trade secrets for business friendly environment. Various challenges to trade secret may include availability of easy data transfer tools in online and offline mode as well as internal threats from employees who have access to secret information.
Since India is signatory to Paris convention therefore under Article 1 clause 2 of TRIPS agreement says that intellectual property also includes protection for information that has not been disclosed. Under absence of any legislation to protect trade secret Indian courts have depended on the basis of equity, common law action in case of confidence breach as well as breach of contract. Some general remedies that are available to owner of trade secret are: injunction preventing the third party from disclosing trade secret, return of any confidential information to proprietor and compensation for losses suffered due to disclosure of trade secret.
Law of Contracts and Trade Secret: This law puts up contractual boundation on a person for not sharing any confidential information. Furthermore Section 27 of the act talks about any action that puts unlawful restrain on trade is void.
Copyright law and Trade secret: Since trade secret can comprise a database of clients therefore, in certain cases it has been held that client information can be protected under copyright. If we look at section 2(o) of copyright act then we will find that client databases can be protected as literary works under copyright law. Since, businesses indulge in data collection from time to time to improvise their businesses so the database is also a type of trade secret and should also be granted protection. In Govindan v. Gopalakrishnan case it has been held that despite low level of originality the compilation is protected under the law due to presence of skill, intelligence and labor.
Confidence Breach: Another basis under which Indian courts have relied to grant relief for trade secret protection is the original covenant of confidentiality to a third party. In case of Diljeet Titus v. Alfred Adevare & Ors and Zee Telefilms Ltd. v. Sundial Communications Pvt. Ltd., it has been held that confidence breach can be also determined on the basis of circumstances in order to categorize it as direct or indirect breach. And confidentiality may also depend on nature of relationship.
Equity: In case of John Richard Brady v. Chemical Process Equipments P. Ltd. Delhi high court held the view that even in the absence of any contract the circumstances may determine obligations related to confidentiality hence making the defendant liable for such breach. The concept of equity is based on the condition that after knowing the process the licensee is unable to maintain secrecy by his conduct.
Various Steps that can act as prevention for trade secret are:
- Labeling of information as “confidential”.
- Signing Non Disclosure Agreements with employees.
- Defining the scope of confidentiality agreement.
- Granting limited access to database containing secret information.
- Creating awareness for protection for protection of trade secret.
If we look at the overall Indian scenario we find that trade secret protection is completely based on amalgamation of law of contracts, torts and competition. But there still remains ambiguity on some aspects despite the effort of the Indian judiciary to give clarity. Such aspects that are unclear may include the extent of damage in case of leak of confidential data, trade secret theft by competitors and safeguards that are required during the proceedings in court. So we can conclude that trade secret protection in India is still in early stages and efforts should be made for making a business friendly environment. We also get hope from the drafting of the National Innovation Act that was implemented by Department of Science and Technology for protecting innovation and any confidential information relating to the same. It’s just a beginning but still there’s a long way to go.
Tushar Srivastava, 2nd Year LLB, Student at Law School, IIT Kharagpur