The 21st century is the era of technology. Every now or then-new technology is coming to make our life more comfortable and easier. We can say that the 21st century is also the era of great competition where everyone wants to be at the top of their game. Whether it’s a small business or a multi-international business, everyone has a secret that makes them distinguishable which is commonly known as a trade secret or confidential information. At some point or the other, we thought about what that trade secret means, what is its importance and why a company/organization invests so much to protect their trade secret, and what will happen when the trade secret will be public?
A
trade secret is a practice or process of a company that is not known by the
other company. Trade secrets provide the economic benefits to the company over
their competitors to stand out from the completion. Some of the most famous
examples of trade secrets are the algorithm used by Google in their google
search engine, coca-cola recipe, Listerine, etc. In India, we don’t have proper
law governing trade secrets. Instead, Indian courts have upheld trade secrets
protection under various statutes, including contract law, information
technology law, copyright law, the principles of equity, and common law. In
India, the concept of confidential information is used as a substitution of the
trade secret. Confidential information includes information that is vital to a
company but has nothing to do with its products or its manufacturing processes.
It includes documents like Accounting Statements, Employment Agreements, a list
of customers/suppliers, trade strategies, etc. Indian courts work on the three
principles to protect the information of the company that is:
- The people dealing with this type of information shall not voluntarily access or be known to anyone outside the company.
- The information must have trade value as a secret.
- The owner of the information must be subject to reasonable effort to maintain the secrecy of that information.
By
applying these three principles the Indian court provides its decision in
various cases. In the case of American Express Bank Ltd. v. Ms. Priya Puriz[1],
The Court defines a trade secret as “Formulae, technical know-how or a peculiar
mode or method of business adopted by an employer which is unknown to others.”
In another case of Brahmaputra Tea Co v. E Scarth[2], the
Calcutta High Court said that: “Contracts
by which persons are restrained from competing, after the term of their
agreement is over, with their former employers within reasonable limits, are
well known in English Law, and the omission to make any such contract an
exception to the general prohibition contained in Section 27 indicates that it
was not intended to give them legal effect in this country”.
In
case of trade secret infringement, Indian laws often focus on the two main
issues i.e.
●
Was the information truly secret?
●
Were reasonable steps taken by the company to
maintain the secrecy or not?
If the trade secret infringement is established, the owner of a company must be able to prove the following:
- The company/person obtain the secret information by unfair means to gain a competitive advantage
- Every reasonable step was taken by the owner to keep it secret.
- There is a misuse of the obtained information or disclosed in violation of honest commercial practices.
In
India contractual remedies (civil or equitable remedies) are provided in the
case of trade secret infringement for the breach of faith. A permanent or temporary injunction is provided to the other party as a remedy. Injunction
generally consists of:
●
Restricting the third party from disclosing
trade secrets, or
●
The return of all the confidential reports and
information, or
●
The compensation or damages if any loss
suffered due to the disclosure of trade secrets.
Other
than injunction there are few other legislations that grant remedy in case of
trade secret infringement:
●
Section 27 of the Indian Contract Act
●
Section 51, 55, and 63 of Copyright Act, 1957
●
Section 65 and 72 of the Information
Technology Act, 2000
●
Section 408 and 416 of the Indian Penal Code,
1860
●
The Designs Act, 2000.
As
India is one of the members of the Paris convention Trade-Related Aspects of Intellectual Property Rights (TRIPs), Indian
law states that intellectual property shall include protection of undisclosed
information, as provided under Article
1(2) of the TRIPs. Moreover, Article
39 of TRIPs ensures effective protection against unfair competition as
provided in Article 10 of the
Convention.
The India bill was introduced in the year 2008 known as the National Innovation Bill to protect trade secrets under the pressure of TRIPS. On 12th May 2016, India also approved the National IP Rights Policy, out of the seven objectives, one such area was identified for the protection of trade secrets. National IP Rights Policy gives hope for the enactment of a trade secrets law, as it is one of the objectives of the policy. Trade secret laws are to protect, maintain and promote standards of commercial ethics and fair dealing and it encourages innovations as well.
By: Harshita Bansal
(Legal Intern, WCSF)
Want the updates of blogs & news on your email or
WhatsApp? Please fill: https://forms.gle/NtGu27N8vfFyZp3XA
To stay connected with us, please visit: https://www.worldcybersecurities.com
Comments
Post a Comment