TRADE SECRETS

Introduction

TRADE SECRETS

Trade secrets are intellectual property rights that consist of confidential information. These can be sold or licensed by the holder of those trade secrets. To qualify as a trade secret, the information must satisfy the following conditions: 

- Commercially valuable information 

- Within the knowledge of a limited group of people only

- The holder has taken significant steps to protect the confidentiality of the information 

PROTECTION OF TRADE SECRETS IN INDIA

India lacks specific laws for trade secrets, but various legal provisions and principles offer indirect protection.

In India, Trade Secrets Can Usually Be Protected By Way Of;

Indian Contract Act, 1872;

Section 27: Although it declares agreements that restrain trade as void, it allows for enforceable non-compete clauses in specific cases. This can be essential in protecting trade secrets by restricting former employees from disclosing sensitive information.

Confidentiality Agreements: Parties can create agreements that define trade secret information and provide remedies in case of breaches, reinforcing legal protection.

Copyright Act, 1957

Section 51: Protects the contents of copyrighted works, which could include trade secret information if it is expressed in a way that qualifies for copyright.

Section 55: Allows for civil remedies such as injunctions and damages for copyright violations, providing a mechanism to address misuse of trade secrets if treated as copyrighted material.

Section 63: Criminalizes copyright infringement, deterring potential infringers from disclosing trade secrets that may also be copyrighted.

Information Technology Act, 2000

Section 65: Punishes tampering with computer source codes, which could relate to trade secrets stored in digital formats.

Section 72: Penalizes unauthorized disclosure of confidential or private information, which could encompass trade secrets that are revealed without consent.

Indian Penal Code, 1860

Section 408: Criminalizes breach of trust by employees, applicable to employees who may misuse or disclose trade secrets entrusted to them.

Section 415: Addresses acts of cheating and deception; this can relate to situations where someone employs deceptive practices to obtain trade secrets unlawfully.

Competition Act, 2002

Section 3: Restricts anti-competitive practices that could involve the unauthorized use of trade secrets to gain a competitive edge, thereby indirectly offering protection by promoting fair competition.

Other Protections

Indian courts rely on equity principles or breach of confidence claims to protect trade secrets. Remedies include injunctions, return of proprietary information, and compensation for damages caused by disclosure.

Together, these laws form a framework that helps protect trade secrets through various means, including civil and criminal remedies, contractual agreements, and principles of equity. Companies can use these legal provisions to safeguard their confidential information and seek recourse in case of breaches, even in the absence of specific trade secret legislation in India.  

ROLE OF AGREEMENTS

The role of confidentiality and non-compete agreements is to define sensitive information, outline conditions for disclosure, and establish remedies for any breaches.

Employees are required to maintain confidentiality and refrain from misusing sensitive information for up to two years after their employment ends.

CHALLENGES IN PROTECTING TRADEMARK SECRETS

·         No Dedicated Trade Secrets Law: India does not have a specific law for trade secrets and relies on existing laws like contract law, breach of confidence, and unfair competition principles for protection.

·         Dependence on Contracts and NDAs: India does not have a Trade Secrets Act which is present in many of the first world countries and hence depends on other laws to handle trade secrets cases. Trade Secret protection mainly relies on enforcing non-disclosure agreements and other contracts. Businesses must navigate these laws to address trade secret theft.

·         Burden of Proof on the Owner: The burden of proof to prove misappropriation or malpractice is upon the owner which can be difficult without strong evidence of the theft.

·         Challenges from Reverse Engineering: Protecting trade secrets is harder when others can reverse engineer or independently discover the information which makes it tougher to prove that theft occurred.