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

Meaning Basics: 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 – Employee Vendor Supplier Contractors, Sub Contractors Consultants Important Provisions

Define Confidential Information – Scope Clarify Exclusions Definite Obligations Time Limit Jurisdiction

Business Strategies 1. Patents and Trade Secrets Patents

Trade secrets

Registration Availability

Yes Time Consuming

No Immediate

Longevity Public Disclosure Protection Enforcement

20 Years Yes Exclusive Powerful Tool

No Limit No Limited 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.

2. Alphamed v Arriva

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

3. VPS Global v Suprit Roy Employer-Employee Relationship Memorandum of Understanding signed provides Non Competition Clauses Confidential Information not defined in the Memorandum Employee resigns to join another company Employer 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.

Remedies Injunction Damages Search and Cease Order Precautionary Impoundment

Thank You