today world trade secrets are recognized as the intellectual right it is a very
important matter for every individual involved in international trade. Patent,
copyright, trademark has been most important form of intellectual property
right till now but there are some more intellectual property rights which are
gaining importance these days. A new
form of intellectual property which has gained importance these days or in the
last few decades is trade secrets to which we are going to discuss further.
is trade secretes :
to trade related aspect of intellectual property right (TRIPS). The countries
who are the members of the World Trade Organization (WTO) are subject to the
provisions of the Agreement on Trade-Related Aspects of Intellectual Property
Rights (TRIPS). The TRIPS Agreement was the first international agreement to
protect trade secrets expressly. The approach laid out in the TRIPS Agreement
is based on the notion that protection against unfair competition should
include protection for undisclosed information. In presenting this approach,
the TRIPS Agreement makes reference to the prior-existing protection against
unfair competition as presented in the Paris Convention for the Protection of
Industrial Property, a convention that is administered by the World
Intellectual Property Organization
has three important conditions which are needed to be satisfied before any
information to be considered under trade secrete or undisclosed information.
According to article 39 of trips these conditions are?
1. Secrecy: Such information must not be generally known
or easily accessible to the person other than the owner, partner and employee
trade secretes deals with the information which could not be easily accessible
to the general public under a condition that it will not be disclosed to broder
public this information can be shared.
Value : Trade secrete should have some value
mainly economic value in the market. Trade secrete act deals with the
information that must derive some utility from being kept secrete.
efforts in maintaining secrecy : The information must be subject to reasonable
efforts to keep that information secrete. A trade secrete claim only arises
when the proper measures were taken by the owner of secrete to protect that
secrete have been failed. However law require owner to make some efforts to
protect that secrete.
to North American Free Trade Agreement part 6 and chapter 17 of this agreement
deals with the trade secretes it define trade secretes as the information which
is kept secrets, having some commercial or economic value, and reasonable measures
must have been taken by the owner of secrete to protect that secrete.
to uniform trade secrets act 1970 “Trade secret” means information,
including a formula, pattern, compilation, program device, method, technique,
or process, that:
derives independent economic value,
actual or potential, from no 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,
is the subject of efforts that are reasonable under the circumstances to
maintain its secrecy.
significance of trade secrete :
the protection of intellectual property is questioned before us we all think
about the protection of copyright patent trademark etc but now the world has
changed the trade secrete is another type of intellectual property which can be
protected easily through secrecy like other intellectual properties it need not
to be registered. It is generally known as confidential can be helpful for a
business organization to grow it could be there formula sales strategy
reasons for increasing influence of Trade secrets
main reason for the introduction of trade secrets is the technology earlier the
records used to be stored in physical form but now due to the introduction of
new technology such as computer all such information are stored in the computer
which could be accessed by the person having good knowledge of computer. Now
picture the same blueprints in today’s digital world. Depending on the
sophistication of the trade secret owner, those blueprints would probably be
stored as a digital file on a computer network. The file may be encrypted,
password protected, and restricted to employees on a need-to-know basis. And
the network might reside on a secure server behind a firewall. But if someone,
such as a disgruntled employee, were to gain access to that file, she could
easily download it, e-mail it, post it on the Internet, or simply save it on a
flash drive and walk out the front door undetected, with thousands of pages of
information in her pocket. As noted by one commentator, “the digital world is
no friend to trade secrets.”1
reason is the changing work environment it has been proved by the study more
than 60% of the trade secrets cases are filled against current and former
employees. As it happen many time that former employees disclose the secrets of
their earlier owner to someone else to take revenge or to gain profit.
Increasing mobility of the employees is the factor as the person working for an
organization first and now working for any other organization will always think
for the benefit of the organization in which he is working it could be a
forcing factor for an employee to disclose the secrets.
reason is increasing value of trade secrets information it is because it helps
the economy to grow and researches have shown that it is the largest single
factor driving the economic growth and development. Every company and economy
has its secrets which they need to protect for their growth.
and expanding scope of trade secrets the definition of trade secrets that we
know is the information that is kept secrets that has commercial value or
economic value and the measures have been taken by the owner to protect that
secrets. But now it include so many other things such as for any chemical
formula, source code, method, prototype, contract terms, business plans, market
analysis, financial budget etc.
5. The rise of international threat as the
international trade is gaining importance the trade secrets are also gaining
importance they need to be protected as threat to these secrets are also
increasing. They need to be kept secret because they are important for the
growth of economy as well as the business.
Position of trade
secrets in India : there is no specific legislation in
India regarding trade secrets. Indian courts consider trade secrets on the
basis of principle of equity it is simply dealt under the common law obligation
of breach of contract. The remedies available to the owner is to obtain
injunction preventing licensee from disclosing secretes and to compensate any
loss suffered due to disclose of such information.
In India the person is
contractually bound for not disclosing the trade secrets or any such
information which was known to him/her in confidence. In India it is seen as an
neglected field. it is most important intellectual property in India it has not
gain much importance so far now the government need to work for making people
aware of such intellectual property. Indian people need to know that this I.P.
will help them to increase their foreign investment in India and giving boost
to Indian economy. A proper policy and law need to be made by the government to
protect trade secrets in India as India being the signatory of Trade related
aspect of intellectual property right (TRIPS)India is under an obligation to
amend its law to protest trade secrets of various business.
Some cases related to
trade secret in India are
American express bank
Ltd v. Ms priya puri2 in
this case delhi high court tried to defined the trade secret court said the
trade secret is a formula or technique which is known to employ of the company
and unknown to the general public.
Mr. Anil Gupta v. Mr.
delhi high court in this case held that the one who has invented any new
material has a right over it does not matter weather he used the material which
he has used for general public or not.
protection in India : In India we do not have any legislation
specially for protection of trade secrete but there are some act concerning the
aspect of trade secret in India. S they are such as copyright act 1957,
Competition act 2002, Indian penal code 1860 e.t.c. to establish a violation of
trade secret are
The information was indeed secret
The information has economic value
The reasonable steps must be taken by
the owner to keep that information safe
secret is most isolated field because there is no proper law for the protection
of trade secret in India trade secret are protected in India under the Indian
contract act 1872 section 27 which restrict any person from disclosing any
information which he knows is valuable for the organization and also provide
remedies. But hear this act provide only civil remedy not criminal remedy
according to this act the information must be highly confidential to be
constituted as trade secret. There are some criteria for information to be
constituted as trade secret
The status of employee and nature of his
The nature of information itself
Whether the information could easily be
isolated from other information which the employee was free to use
trade secret protection in India first step was taken by the parliament in 2008
by making Indian innovation act its main objective was to codify the law for
protecting confidential information in India. Chapter 4 of this act deals with
trade secret protection in India on contractual basis and also provide remedies
and protect the information from being misappropriated so far now this act is
not proved useful the government should make separate law for the protection of
trade secret in India. In the case of V.N. Deshpande V. Arvind Mill4
there was a clause in an agreement which prevent appellant from reveling any
secret of nature mentioned in that clause after termination of his service. It
was held that words used in contract was proper and injunction was granted.
Infringement of trade
secret and remedies in India: A
trade secret owner has a right to protect his secret from being misappropriated
trade secret discloser is a result of up’s and down in business a trade secret
discloser can only take place if the owner has failed to take reasonable steps
to protect that secret. In trade secret cases generally the former employee and
the current employees are involved there are some essential conditions which
need to be satisfied for constituting the discloser of trade secret the
information must be secret the information must have commercial value the owner
must have taken reasonable steps to protect that secret from being disclosed. There
are some defenses available to the defendant in case of trade secret they are
Knowledge: An employee is free to utilize his
special skills and knowledge which he has acquired while working in an organization.
Development: The owner have the rights over the
trades secret but he does not have any right over the elements by the use of
which the secret was developed so the other organizations are free to use those
element to discover that secret by their hard work and research.
Interest: As it is well established principle in
common law that no liability arises if the wrong is done for public welfare in
this case if the secret is disclosed for the welfare of general public the defendant
shall not be made liable.
obligation: If the information is disclosed in accordance
with the statutory power provided the defendant cannot be made liable. For example
if the information is disclosed as per the court order or the information needed
in court proceeding e.t.c