Trade Secret Protection in India

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