PROTECTION OF TRADE SECRETS IN INDIA

Introduction

According to Black's Law dictionary, Trade secret can be defined as a "formula, process, device or other business information that is kept confidential to maintain an advantage over competitors; information including a formula, pattern, compilation, program, device, method, technique or process : 

1) That derives independent economic value, actual or potential, from not being generally known or readily ascertainable by others who can obtain economic value from its disclosure or use, and ; 

2) That is the subject of reasonable efforts, under the circumstances, to maintain it's secrecy".

Trade Secrets as an Intellectual Property Rights is an essential part of a company. They are directly related to the company's growth. Trade Secrets are process, formula, design, information, data and other valuable information related to the company. Trade Secrets ensure economic advantage over competitors. Trade Secrets possess commercial value and they are not generally accessible by normal people. The secrecy of such secrets must be maintained by the legal owner. For instance, the formula of coca-cola ( popular beverage company) is a kind of trade secret. Protection of such trade secrets is essential as they help in Foreign Direct Investment. In the case of Indian Farmer's fertilizer v. Commissioner of central excise 2007, trade secrets can be defined as a sought of information, that confers some sought of economic benefit on its holder and which is the subject of reasonable efforts to maintain it's secrecy.

COMMON LAW ACTION

In India, common law principles are applied to protect trade secrets. Trade Secrets are protected in India based on the principles of equity, contractual obligations and breach of trust. Indian courts treat ' trade secrets' as equitable rights as per the common law tradition. In India there is is no particular legislation which includes trade Secrets as an Intellectual property right. As a signatory of (TRIPs) the agreement on the trade-related aspect of intellectual property rights, Indian courts protect undisclosed information. Non-disclosure agreements, restrictive covenants and other contractual means are some ways to protect trade secrets in India. 

LEGAL FRAMEWORK

Indian courts usually protect business secrets based on contract law. Indian contract Act 1872 deals with rules for formation and regulation of contract in India. Section 27 of the act implies that any person cannot disclose any information which he acquires as a result of a contract. In Saltman Engineering co. Ltd vs Campbell engineering co. Ltd 1948, it was held that the maintenance of secrecy in a contract is either governed by the principle of equity or by the common law action for breach of confidence. Thus, liability can arise in the following cases : 

1) Where an employee carelessly passes information which is confidential to some other unauthorised person.

2) When there is an incitement by an unauthorized person to provide him such information.

3) When a licensee under a license fails to maintain the secrecy of business secrets.

Section 72 of IT Act 2000, also provides for criminal punishment where a person has secured access to any book, register, electronic record or other information documents, without the consent of the person concerned. Apart from this, Section 65A of the Copyright ( Amendment) Act 2012 also deals with the concept of circumvention of technological measures implemented for the protection of works in which copyright subsist. The Securities Exchange Board of India ( Prohibition of insider trading) Regulations, 1992 also provides prosecution in the case of disclosure of confidential information by an insider.