Keeping it quiet – Protection of trade secrets in India

The World Intellectual Property Organization (WIPO) has defined trade secret as “any confidential business information which provides an enterprise a competitive edge. The unauthorized use of such information by persons other than the holder is regarded as an unfair practice and a violation of the trade secret”‘[1]

When compared to other types of intellectual property, the ambit and scope given to the protection of trade secrets is very wide. It can range from technical and scientific information to commercial and financial information, recipes, algorithms, customer lists, etc. Further, the scope is so wide that even ‘negative’ information such as abandoned solutions and research done without any conclusions can be protected as a trade secret.

It is important to note that trade secrets are also covered under the TRIPS agreement. However, the TRIPS agreement, in Article 39, uses the term “undisclosed information” as a substitute for the traditional “trade secrets”. The TRIPS agreement has even gone on to state the essentials of an undisclosed information, i.e., the information is secret, due to the secrecy, it has a commercial value and that the secret has been subject to reasonable steps to keep it a secret by the holder of such secret.

 

Even before the TRIPS agreement came in effect, India, in its discussion paper at the 1989 General Agreement on Tariffs and Trade meeting, stated that it did not consider trade secret to be an intellectual property right. The reasoning cited was that trade secrets relied on secrecy and confidentiality, unlike other intellectual property that depend on publication, registration and knowledge of the general public. The discussion paper further stated that protection of such confidential information should be governed by contracts and civil law.[2]

The Delhi High Court has defined trade secret as “formulae, technical know-how or a method of business adopted by an employer which is unknown to others “[3].

In Bombay Dyeing and Manufacturing Co. Ltd. v. Mehar Karan Singh, the Bombay High Court has used the following six factors to determine whether information under consideration qualified for trade secret protection[4]

  • The extent to which the information is known outside the business
  • The extent to which the information is known inside the business i.e. the employees
  • The precautions taken by the holder of trade secret to guard the secrecy
  • The savings effected and the value to the holder in having the information as against the competitors
  • The amount of effort or money spent in obtaining and developing the information.
  • The amount of time and exercise it would take others to acquire and duplicate the information.

One of the most important judgments on the topic of trade secret protection came in the case of Diljeet Titus v. Alfred Adevare & Ors[5]In this case, it was held that “the court has an obligation to stop a breach of confidence from happening and such obligation is independent of any other right”. Therefore, it can be inferred that the trade secret protection does not come from the holder having a right per se, but also from the obligation to maintain confidentiality due to the nature of trade secrets.

Here, it is important to note that there is no straitjacket formula when it comes to protection of trade secrets each case will be looked at through the telescope of its own specific merits, facts and circumstances under contract law, copyright law or other applicable law.

With the growth of innovative and unconventional intellectual property, the protection of trade secrets is becoming increasingly important. As can be seen from the above, while India does not have a specific statute in place, the judiciary has again stepped up to the plate and shown positive intent in protecting confidential information which has clearly come as a relief to many businesses whose success relies upon family secrets passed on from one generation to other.

Furthermore, keeping in mind the recent Huawei case and the fact that the USA is constantly urging countries to enact statutes for trade secret protection, it won’t be an exaggeration to say that India may very soon see a statute aimed specifically at protection of confidential information/trade secrets. However, till then, let’s just keep it a well-kept secret!

[1] “What is a Trade Secret?”, available at http://www.wipo.int/sme/en/ip_business/trade_secrets/trade_secrets.htm (viewed on 6-02-2018)

[2] Pratik Das, India’s protection to secrets of trade, available at http://www.khuranaandkhurana.com/2017/08/26/indias-protection-to-secrets-of-trade/#_edn5 (viewed on 31-03-2018)

[3] American Express Bank Ltd. v. Priya Puri, (2006) IIILLJ 540 Del

[4]2010 (112) BOM LR 3759

[5]2006(32) PTC609(Del)