TRADE SECRETS AND THEIR PROTECTION UNDER THE LAWS OF INTELLECTUAL PROPERTY

TRADE SECRET

Data or information about a business that is not commonly known to the public and that the owner desires to keep hidden is referred to as a trade secret. The owner of the trade secret must also gain financially from the secret for it to be considered a trade secret. Typically, it is such data or information that gives its owner a competitive advantage in whatever way is feasible. Any information must meet three requirements to be classified as a trade secret under the Trade-Related Aspects of Intellectual Property Rights Agreement:

  • The information must be kept secret, meaning that only those “inside the circle, which regularly deals with certain kinds of information” should have access to it.
  • The information must be of commercial worth, and its owner must take reasonable precautions to keep it confidential.

The Uniform Trades Secrets Act, 1970 likewise accommodates the meaning of proprietary advantages, which is as per the following:-

“Data, including an equation, design, gathering, programme gadget, strategy, method, or cycle, that: (I) determines free financial worth, genuine or potential, from now being for the most part known to, and not being promptly ascertainable by legitimate means by, different people who can get monetary worth from its revelation or use, and (ii) is the subject of endeavours that are sensible considering the present situation to keep up with its mystery.”

Data that can be maintained as an exchange mystery incorporates recipes, designs, gatherings, programs, gadgets, strategies, procedures, or cycles. A few instances of proprietary innovations incorporate client records and assembling processes. The monetary value of the data can be real or potential. For example, even if you have not yet begun developing a specific useful gadget based on an outline, you can still protect the diagram as a proprietary innovation because it has monetary worth.

Some legal declarations with regard to trade secrets are

American Express Bank Ltd. vs. Ms Priya Puri[1]

Mr Anil Gupta & Anr. vs. Mr Kunal Dasgupta & Ors.[2]

Shree Gopal Paper Mills Ltd. vs. Surendra K. Ganeshdas Malhotra[3]

SIGNIFICANCE

For a variety of reasons, proprietary advantages in the modern economy have grown dramatically in the last few years.There are predominantly two purposes behind that. One of them is that different types of protected innovation like patents, trademarks, and copyright have a component of vulnerability when contrasted with trade secrets. Furthermore, proprietary advantages have acquired significance on the grounds that, in many fields, innovation is changing quickly to the point that it has outperformed the current regulations expected to energise and safeguard developments and advancements.

One more huge component which has increased the value of proprietary advantages is the general simplicity of making and controlling proprietary advantage freedoms. There are no regulatory postponements and no long-term hanging tight for government awards, like those for licenses. Conversely, proprietary advantage privileges can be established by an unequivocal direct arrangement of the closely involved individuals. A proprietary innovation right begins with the creation of the thought in some substantial structure and continues for however long the mystery is maintained. For example, thoughts or data that doesn’t meet all requirements to be safeguarded as licenced innovation inside the legitimate system of Intellectual Property Laws of the land can be safeguarded by Trade Secrets. They additionally enjoy the benefit of enduring forever, once more, for however long the mystery is kept up.

Proprietary advantages have negative perspectives. They are an unstable type of property, and they end when the mystery is lost. Likewise, they require steady watchfulness to safeguard them. In any case, proprietary advantages play a significant part in safeguarding developments and laying out freedoms to utilise innovation. The protected innovation specialist genuinely must be aware of the complexities of this huge collection of proprietary advantage regulations.

In any emerging nation, the security of protected innovation is quite possibly the main issue, as it supports uncharted interests in many fields. India has no legitimate regulations for the security of trade secrets. We actually rely upon the old customary common law principles for the protection of trade secrets; these common law principles have lost their importance in the situation of the developing economy. There is a critical requirement for a proper policy framework to direct the protection of trade secrets. There are a tonne of companies, particularly multinational organizations, who favour trade secrets as a type of security for their intellectual property; these organisations are hesitant to put resources into India since India can’t offer legitimate insurance for their trade secrets. India is losing out on a great deal of foreign direct investment along these lines.

Prohibition of Trade Secrets

As referenced above, in India, no meaningful legitimate text or case regulations are accessible to decide the nature of the ambit of proprietary advantages. However, the Indian courts have taken a stab at putting the proprietary innovations of different organisations under the domain of different regulations to safeguard them, and they have attempted to characterise what a proprietary innovation is in different cases.

Creators, fashioners, engineers, and other creators can safeguard the thoughts they have created, for example through copyright or licenses. The point is to keep others from wrongly benefiting from their manifestations or developments. It also allows them to recoup the money they invested in developing a product. Contingent upon the general set of laws, the legitimate assurance of business mysteries frames part of the overall idea of insurance against out-of-line rivalry or depends on unambiguous arrangements or case regulation on the security of classified data.

While the last assurance of whether proprietary advantage security is disregarded relies upon the conditions of every individual case, as a general rule, uncalled-for rehearses regarding privileged data incorporate modern or business reconnaissance, break of agreement and break of certainty. The following cases illustrate the numerous attempts made to safeguard trade secrets within the auspices of the relevant legal frameworks:

The Copyright Act of 1957[4]

Rajnish Chibber v. A. Burlington Home Shopping Pvt. Ltd.[5]The key question in this case was whether a database made up of a list of customers’ postal addresses could be protected by a copyright and if the defendant violated the plaintiff’s copyright. According to the court, “a database consisting of a compilation of client mailing addresses can be subject to a copyright and, if used by the defendant, will amount to an infringement.”

Design Act

Tractors and Farm Equipment Ltd. v. Green Field Farm Equipment Pvt. Ltd. and Others.[6]The conclusion that may be drawn from the aforementioned case law is that the court will only consider an injunction if it is protected by copyright or design and a non-disclosure agreement.

Criminal Liability Attraction

Pramod So Laxmikant Sisamkar v. Uday Narayanrao Kirpekar v. Garware Plastics and Polyester Ltd. and Anr[7]

The respondent filed a criminal complaint, claiming that the petitioner’s actions constituted a criminal breach of trust and fraud since the technological know-how acquired by the respondents constituted “property.” Because the case had not met the other criteria for triggering criminal culpability, the court declined to rule on the issue of whether a trade secret qualifies as property. The plaintiffs were unable to establish the appellants’ deceitful intent. In considering whether it would constitute “property,” the court avoids making a decision. However, the court noted that sections 408 and 420 can be invoked if the petitioners exploit the technological know-how against the terms of the service agreement.

What should we do to protect trade secrets?

Physical security, digital or network security, and legal safeguards including confidentiality, non-compete, and non-disclosure agreements are the three main categories of protective measures (NDAs). Physical security measures could include keeping the confidential data in a safe location and allowing only people with special permission to access it. An example of such physical security is the Coca-Cola vault. Other businesses safeguard their trade secrets by limiting access to specific areas of their physical infrastructure, monitoring entry to specific rooms with key cards, and restricting access to those who truly need it.

Firewalls, strong passwords, and restrictions on employee access to particular networks or websites are just a few examples of digital security measures that may be used. As one of the simplest ways for a dissatisfied employee to steal information, portable flash drive use within a firm may also be encrypted, restricted in use, or banned entirely. A business may also choose to provide its staff with exclusive cell phones and portable computers for business use in order to restrict the distribution of sensitive information, such as customer contact information.

In addition to the confidentiality agreements, non-compete clauses, and non-disclosure agreements listed above, further legal safeguards for information secrecy include the adoption of appropriate operational processes that will safeguard both the sensitive information and the business as a whole. For instance, businesses should make sure that every trade secret is labelled “Confidential.”

Author(s) Name: Priyanka Priydarshini

Reference(s):

[1] American Express Bank Ltd. vs Ms Priya Puri (2006) III LLJ 540Del

[2] Mr. Anil Gupta & Anr. vs. Mr. Kunal Dasgupta & Ors. (2002) Appeal No. 8883 of 2001

[3] Shree Gopal Paper Mills Ltd. vs. Surendra K. Ganeshdas Malhotra (1960), AIR 1962 Cal 61

[4] Copyright Act 1957, s 51,55,63

[5] Rajnish Chibber v. A. Burlington Home Shopping Pvt. Ltd. 1995 PTC(15)

[6] Tractors and Farm Equipment Ltd. v. Green Field Farm Equipment Pvt. Ltd. and Others.

[7] Pramod So Laxmikant Sisamkar v. Uday Narayanrao Kirpekar v. Garware Plastics and Polyester Ltd. and Anr 1986  (3) Bom.C R411