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Trade Secret Protection In India

By,
Ms Vintee Mishra
Brain League IP Services

Copyright Brain league IP Services Pvt. Ltd. 2008


Overview

Meaning

Acquisition of Information

Protection of Trade Secret

Confidentiality Agreements

Business strategies

Enforcement
Meaning
Basics:

Trade = Competitive Advantage + Potential to


Generate Revenues

Secret = Confidential Information Known to Few,


All Pledged to Secrecy

Confidential Information = Business or


Technical

Business = Financial, Commercial or Negative

Technical = Scientific
Principles:

1.Information

Readily Unascertainable
Unknown by Proper Means

Generally Known
Matters of common knowledge, library, public database,
journals, patent information, hardware designs and
software applications available in market
2. Independent Economic
Value

Determined by cost of development,


benefits
derived or May be derived

3. Reasonable Efforts

Security Measures, Agreements


Examples:

Pricing Information,
Customer Lists,
Business methods,
Strategic plans,
Marketing plan
Work product
Ideas,
Design,
Drawing,
Model,
Specification,
Surface data,
Notes,
Improvements.
Acquisition of
Information
Proper Means

Reverse Engineering

Independent Creation

Public Literature

Observance

License
Misappropriation
Conduct which results in obtaining Trade secret
Information by Improper Means

Improper Means
Theft

Bribery

Espionage

Misrepresentation

Breach of Contract

Inducement to breach a duty

Network attacks
Protection of Trade
Secret
Identification of Information as Trade Secret

Determinants:

Value of Information to Company

Who Should Know

Value and Access to Competitors (Ease to Copy, Duplicate etc.)

Measures Taken
Precautions:

Written Protection Policies – Clarity, Quantum of


Disclosure, Whom to
Disclose.

Information Security – Controlled Online Transactions, Password


Protection, USB Ports, Intranet, Anti Virus,
Firewalls.

Physical Security - Record Keeping, Docketing, Documentation,


Marking, Paper Shredding, Logs, Visitor’s
Passes, Clean Desk Policy.

Human Resources - Entrance and Exit Interviews, Current


Employees, Agreements, Periodic Training
and Audits, Restrict Access

Enforcement – Watch Compliances, Prosecute Violators

Agreements – Non Disclosure Agreement, Confidentiality


Agreements
Confidentiality
Agreements
Employer – Employee
Vendor
Supplier
Contractors, Sub Contractors
Consultants

Important Provisions
Define Confidential Information – Scope
Clarify Exclusions
Definite Obligations
Time Limit
Jurisdiction
Business Strategies
1. Patents and Trade Secrets

Patents Trade secrets

Registration Yes No
Availability Time Consuming Immediate

Longevity 20 Years No Limit


Public Disclosure Yes No
Protection Exclusive Limited
Enforcement Powerful Tool Difficult
Choice between Patents and Trade
Secrets on basis of Legal and Business
Perspective

Keep Information initially as Secret

If Patentable, disclose only what


enables person skilled in art to practice
the invention

May keep confidential till Publication


Date
2. Sale

Transfer by way of sale of entire business


Only

Partial sale not possible

3. Licensing

In combination with Patent and Software


Licenses

Clear, Explicit and Controlled Disclosure


Enforcement
 Statutes:
No Trade Secret Law in India

Contracts
Confidential arrangements between parties through
Non Disclosure Agreements and other Confidential
Agreements

Specific Relief
Claim specific performance or damages

Arbitration and Conciliation


Most of the dispute settlement prescribed in contracts,
agreements or otherwise dealt through arbitration
Copyrights
Blatant or substantial copying

Torts
Misappropriation, Theft, Espionage, Unfair
Competition

Criminal Laws
Indian Penal Code, Code of Criminal Procedure

Information Technology Laws


Hacking, Tampering with Computer, Computer
Source or Network
Court Decisions

1. Mundipharma v Wockhardt

License Agreement to sell pharmaceutical


preparations with discretion to adopt
such packaging design as it thinks
proper; contains copyrighted content
which is confidential information

Pharmaceutical Preparation and Product


became public information during
currency of Agreement

Dispute Arose

Section 27 of Contract Act invoked to


restrict rights after termination of
license

No actual or potential damages showed


Held: S. 27’s exception to restrain other’s trade due
to loss
of 1st party’s goodwill cannot be considered
here.

Information already Public, no goodwill loss

*Goodwill Loss – damages should be proved.


2. Alphamed v Arriva
Trade Secret Case between Competitors
Alphamed incorporated by ex employees of Arriva
Arriva used Unfair Competitive practices to destroy

Alphamed’s business
Arriva stole Alphamed’s Confidential documents
and
other Trade Secrets by appointing secret
detectives and used them for their business
advantage
Alphamed couldn’t provide actual or potential
damages

Held: Trade secret theft by unfair means is unfair


competition.

No remedy may be provided because of


lack
of proof on damages by Alphamed
3. VPS Global v Suprit
Employer-Employee Roy
Relationship
Memorandum of Understanding signed provides
Non
Competition Clauses
Confidential Information not defined in the
Memorandum
Employee resigns to join another company
Employer files to get injunction on employee’s
joining

Held: No confidential information defined

Proper relief is not asked, therefore suit


dismissed.

*Confidential Information should be explicitly


defined, else it is unfair to stop employee from
joining competitor.
Remedies

Injunction

Damages

Search and Cease Order

Precautionary Impoundment
Thank You