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
MeaningBasics:
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 – EmployeeVendorSupplierContractors, Sub ContractorsConsultants
Important ProvisionsDefine Confidential Information – ScopeClarify ExclusionsDefinite ObligationsTime LimitJurisdiction
Business Strategies
1. Patents and Trade Secrets
Patents Trade secrets
Registration Yes NoAvailability Time Consuming Immediate
Longevity 20 Years No Limit Public Disclosure Yes NoProtection Exclusive LimitedEnforcement 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.
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
*Actual or potential damages proof necessary
2. Alphamed v Arriva
Employer-Employee RelationshipMemorandum of Understanding signed provides Non Competition ClausesConfidential Information not defined in the MemorandumEmployee resigns to join another companyEmployer 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.
3. VPS Global v Suprit Roy
Remedies
Injunction
Damages
Search and Cease Order
Precautionary Impoundment
Thank You