Trade Secret law in India
Keywords:
confidential information, common law, global market, trade secrets, protection, policies and procedures, foreign lawsAbstract
Confidential information and trade secrets are protected under the common law and there are no statutes that specifically govern the protection of the same. In order to protect trade secrets and confidential information, watertight agreements should be agreed upon, and they should be supported by sound policies and procedures. Protection of Confidential Information in the Hands of Employees In this information age, it’s imperative that a business protects its new formula, product, technology, customer lists, or future business plans. In the global marketplace, Indian corporations are often required to comply with foreign laws and are likely to be exposed to liabilities for violation of confidential information or trade secrets of their business partners or third parties. The standards for protection have to be tailored to address the risks associated with rapid advancement in technology and communications. The standards accepted today may become inadequate tomorrow. However, one constant factor is the presence of a corporate culture imbued with information protection values. The employees of an organization are privy to confidential information and trade secrets on a daily basis. In the absence of any specific Indian statute conferring protection on such information in the hands of employees, recourse has to be taken to common law rights and contractual obligations.
References
1. Pace, C.R.J. The Case for a Federal Trade Secrets Act . 8 Harv. J. Law and Technology, 427, 438 (1995).
2. Posner, R.A.: Economic Analysis of Law 3rd Edn., 1986, p. 200.
3. Legislating the Criminal Code: Misuse of Trade Secrets, Law Commission of England and Wales, Consultation Paper No. 150 (Her Majesty’s Stationary Office, 1997)
4. The most concise definition is that by Megarry, V.C. in Thomas Marshall Ltd. v. Guinle, (1978) 3 All ER 193. The Court identified four factors to be considered: (i) the owner must believe that the release of the information would be injurious to him or of advantage to his rivals or others; (ii) the owner must believe that the information is confidential or secret, that is, not already in the public domain; (iii) the owner’s belief must be reasonable; and (iv) the information must be judged in the light of the usage and practice of the particular industry or trade concerned.
5. Legislating the Criminal Code: Misuse of Trade Secrets, Law Commission of England and Wales, Consultation Paper No. 150 (Her Majesty’s Stationary Office, 1997). The four categories of information laid down by the Law Commission are illustrative in nature. These are secrets relating to highly specific products; technological secrets; strategic business information; and private collations of individual items of highly public information.
6. The definition reads as follows: “A trade secret means information, including a formula, pattern, compilation, program, data, device, method, technique, or JCGIBL (2020) 43–51 © Law Journals 2020. All Rights Reserved Page 50 process, that: 1. Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and 2. Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.”
7. Glaxo Inc. v. Novopharm Ltd., 931 F Supp 1280, 1299 (EDNC 1996)
8. K-2 Ski Co. v. Head Ski Co. Inc., 506 F 2d 471 (9th Cir. 1974)
9. Stephens v. Avery, (1988) 2 All ER 477
10. Rivendell Forest Prods. Ltd. v. Georgia - Pacific Corp., 28 F 3d 1042, 1046 (10th Cir. 1994)
11. Wade Cook Seminars, Inc. v. Mellon, 1999 WL 211831 (Wash App Div 1 1999)
12. For decisions on customer lists as trade secrets, see Avent Inc. v. Wyle Labs, 437 SE 2d 302 (1993); Electro Optical Industries, Inc. v. White, 1999 WL 1986467 (Cal App 2 Dist 1999), c.f. R. Mark Halligan, “Recent Developments in Trade Secret Law”, http://www.execpc. com/~mhallig visited on 10-10-2000.
13. ABBA Rubber Co. v. Seaquist, 235 Cal App 3d 1, 18-19 (1991)
14. Pioneer Hi -Bred International v. Holden Found Seeds, 35 F 3d 1226, 1235 (8th Cir. 1994); Gates Rubber Co. v. Bando Chem. Indus. Ltd., 9 F 3d 823, 848 -49 (10th Cir. 1993)
15. Kewanee Oil Co. v. Bicron Corpn., 416 US 470, 490-91 : 40 L Ed 2d 315 (1974)
16. Attorney General v. Guardian Newspapers, (1988) 3 All ER 545
17. Cornish, W.R.: Intellectual Property (3rd Edn., 1996) at paras 8.49 -8.53. See also Breach of Confidence, Law Commission of England and Wales, Consultation Paper No. 110 (Her Majesty’s Stationary Office, 1981), para 2.10.
18. Oxford v. Moss, (1979) 68 Cri 482. See also Hammond, R.G.: “Theft of Information”, 100 LQR 252 (1984).
19. Routh v. Jones, (1947) 1 All ER 179, 181
20. “Nature of Trade Secrets and their Protection”, 42 Harv. L. Rev. 254, 257 (1928).
21. Martin, J.E.: Hansbury and Martin’s Modern Equity (1st Edn., 1993), pp. 730-32.
22. Equitable Protection of Trade Secrets”, 23 Colum. L. Rev. 164 (1923).
23. Merchants Syndicate Catalogue Co. v. Retailer’s Factory Catalogue Co., 206 Fed 545 (1913)
24. Breach of Confidence, Law Commission of England and Wales, Working Paper No. 58 (Her Majesty’s Stationary Office, 1981), para 5.1. Similarly, the American Restatement of Torts in Section 757(b) imposes a duty for breach of confidence on a person who uses or discloses another person’s secret without the privilege to do so.
25. . (1963) 3 All ER 413 (note)
26. Seager v. Copydex Ltd., (1967) 2 All ER Engineers Ltd., (1969) RPC 41. In this case, there was a cooperative venture between the parties in respect of a new moped engine and when the venture failed the defendants made use of the confidential information acquired during the collaboration. There was no contractual relationship involved. However, the claim could not succeed because it did not satisfy the test laid down.
27. Holyoak, J. & Torremans, Paul: Intellectual Property Law (1st Edn., 1995), p. 384.
28. (1978) 3 All ER 193
29. Attorney General v. Guardian Newspapers, (1988) 3 All ER 545
30. Holyoak, J. & Torremans, Paul: Intellectual Property Law (1st Edn., 1995), p. 384- 387
31. Mustad & Son v. Dosen, (1963) 3 All ER 416
32. Attorney General v. Jonathan Cape Ltd., (1975) 3 All ER 484
33. Seager v. Copydex Ltd., (1967) 2 All ER Engineers Ltd., (1969) RPC 41. In this case, there was a cooperative venture between the parties in respect of a new moped engine and when the venture failed the defendants made use of the confidential information acquired during the collaboration. There was no contractual relationship involved. However, the claim could not succeed because it did not satisfy the test laid JCGIBL (2020) 43–51 © Law Journals 2020. All Rights Reserved Page 51 down. A typical example would be where the information is of commercial value and is passed on in a commercial context such as in a joint venture.
34. Jarman & Platt Ltd. v. I. Barget Ltd., (1977) FSR 260
35. Irish, Vivien: Intellectual Property Rights for Engineers (1st Edn., 1994), p. 176.
36. Hivac Ltd. v. Park Royal Scientific Instruments Ltd., (1946) 1 All ER 350
37. Smith v. Snap-On Tools Corpn., 833 F 2d 578, 581 (5th Cir. 1988)
38. Trandes Corpn. v. Guy F. Atkinson, 996 F 2d 655, 660 (4th Cir. 1993). See also “Recent Developments in Intellectual Property Law”, http://www.execkpc.com/~mhallig, visited on 1110-2000.
39. UTSA contains definitions of misappropriation
40. Improper means is defined to include theft, bribery, misrepresentation, breach or inducement of a breach of duty to maintain secrecy, or espionage through electronic or other means.
41. American Restatement of Laws (1995, 3rd Edn.), p 43.
42. Saltman v. Campbell, (1963) 3 All ER 413n; Argyll v. Argyll, (1965) 1 All ER 611
43. Fraser v. Thames Television Ltd., (1983) 2 All ER 101
44. Cornish, W.R.: Intellectual Property (3rd Edn., 1996) at paras 8.49-8.53. See also Breach of Confidence, Law Commission of England and Wales, Consultation Paper No. 110 (Her Majesty’s Stationary Office, 1981), para 2.10. para 6.56.
45. Section 27 of the Indian Contract Act, 1872
46. AIR 1967 SC 1098
47. Poonuswami: “Public Interest and Restrictive Trade Practices in India”, Indian Yearbook Intl. Affairs, 256, 280 (1963).
48. Pepsi Co Inc. v. Redmont, 54 F 3d 1262, 1269 (7th Cir. 1995)
49. The leading case is Lumley v. Gye, (1853) 2 E&B 216: 118 ER 749, popularly known as Opera singer case, where the Court recognised the tort. See A. Carpenter, “Interference with Contractual Relations”, 41 Harv. L. Rev. 728, 729-30 (1928).
50. Mason v. Provident Clothing and Supply Co. Ltd., (1913) AC 724, 740 -41; Herbert Morris Ltd. v. Saxelby, (1916) 1 AC 688
51. Faccenda Chicken Ltd. v. Fowler, (1985) 1 All ER 724
52. (1965) RPC 239 : (1964) 3 All ER 54 and 731
53. Kewanee Oil Co. v. Bi cron Corpn., 416 US 470, 490 -91: 40 L Ed 2d 315 (1974) 53.
54. Telerate Sys. Inc. v. Caro, 689 F Supp 221, 232 (SDNY 1988). The Court held that the proper focus of inquiry is not whether an alleged trade secret can be deduced by reverse engineering but rather, whether improper means are required to access it.
55. Legislating the Criminal Code: Misuse of Trade Secrets, Law Commission of England and Wales, Consultation Paper No. 150 (Her Majesty’s Stationary Office, 1997).
56. American Restatement of Tort Laws (1939) § 758(b).
57. Initial Services v. Putterill, (1968) 1 QB 396, 405: (1967) 3 All ER 145 Cite this Article Monika Jain . International Business Law . June 2020; 3(1): 43–51p.
