One frequently comes across meal recipes that appear to use basic components. However, the chef would refer to the recipe as a secret one. Why is it being kept a secret since the ingredients are so widely used? The article provides some insight into the importance of Confidential Information and Trade Secrets for a successful firm and how they are covered by the IP regime's protections. It focuses on the scope of confidential information and trade secrets in India and other nations. It talks about the necessity of passing a particular law in India to safeguard this intellectual property right.
Trade secrets are a vital part of the Intellectual Property rights of a company. These trade secrets have a direct relationship with the growth of the company. Usually, these refer to various aspects such as device, instrument, data, design, formula, practice, etc. depending on the genre of business, and are not meant to be disclosed to any third person. You will understand the importance of protecting trade secrets from here.
Trade secrets are considered to be a part of the Intellectual Property of the company as it amounts to the company’s growth. Generally, a trade secret is referred to as a practice, process, formula, design, device, instrument, or a collection of data or information regarding the business which will not be disclosed to the public. The owner tries to keep it a secret and confidential as it derives economic value and advantage among other competitors in the market. Thus, a trade secret is defined as a secret that is not generally accessible by people and must have a commercial value as a secret and the owner should take steps to maintain it. For instance, in the popular beverage company, Coco Cola’s Coke formula; KFC’s fried chicken the company says “secret herbs” is a formula that is maintained as a trade secret.
What Is Confidential Information?
One party may disclose confidential information to the other party in the course of business, but it must not be disclosed to the public. The idea of “confidential information” is based on the doctrine of the law of confidence and the equitable principle, which states that the person who receives the information may not use it unfairly to their disadvantage or the disadvantage of the person who provided it without that person’s consent.
Define Trade Secrets
Trade secrets are secrets of any trade or industry that are known only to a small number of people and have a commercial worth. Trade secrets are intellectual property rights on sensitive information that can be sold or licensed, according to WIPO (World Intellectual Property Organization). Contrary to other Intellectual Property Rights, trade secrets are not subject to registration.
The Components Of A Trade Secret
- Being a secret, it ought to be valuable in the marketplace
- Only a small number of people connected to the firm should be aware of it
- The owner has taken appropriate measures to protect the information’s secrecy.
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The protection of trade secrets is one of the important aspects in any country as it helps in Foreign Direct Investment too. Foreign investors ensure their trade secrets are well maintained before they make any investment in the country. The protection of this trade secret is challenging for the Indian Government as there is no proper legislation for the protection of trade secrets and hence India follows the old common law principles.
Common Law Principles
Yes, trade secrets can be protected in India. Trade secrets protection is approached on the basis of equity principle, breach of confidence, and contractual obligations.
- If the owner has revealed the trade secret to another independent person for the purpose to run the business in his absence, that person is not allowed to take advantage of it and involve in unfair trade practices. Thus, the employees who have access to trade secrets should be educated on the protection of trade secrets on the basis of equity principle
- The other person may be a business partner or in a key position, who knows the trade secret should also maintain it as a secret as the owner had full confidence and revealed the trade secrets; he is obliged to maintain it. Thus the protection of the trade secret is not restricted to the owner alone but also to the other person who knows it. If any person makes an attempt to breach that confidence, an injunction will be sent by the court.
- The employer should enter into a non-disclosure agreement or NDA with the person who knows the business secret so that he will be under contractual obligations not to reveal them.
Also, the Indian court – https://ecourts.gov.in/ecourts_home/ to protect the trade secret through the law of contracts. So the company usually enters into a contract with its employees stating that they are not supposed to reveal the trade secrets during the course of employment or even after their termination. In case of the absence of trade secrets in the contracts, an injunction will be issued on the basis of equity rule by the courts
The Various Legislations That Involve The Protection Of Business Secrets Are As Follows:
- If the data containing the details of the clients used in the literary work, if the person lets others use his work but has not revealed the facts then the other person uses the same concept and idea, it leads to copyright infringement. On the other hand, when the person to whom the trade secrets are shared starts a business and gives competition to the real owner, it amounts to copyright infringement. In this entire scenario, the trade secrets are revealed, the court will punish them under the Copyrights Act, 1957 with imprisonment for a minimum of 6 months to three months.
- If a person intentionally loots the trade secret by tampering with the computer languages, code, security, or program, then the court may punish them under the Information Technology Act, 2000 with imprisonment up to 3 years or with a fine of five lakh rupees or both.
- Any data which contains the trade secret is moved to others by way of dishonesty or fraudulent behavior of the employee. It amounts to a criminal breach of trust and will be punished under IPC for not more than seven years or a fine or both.
The Following Documents Should Be Signed For Protecting The Trade Secrets
- Non-competition agreement and employee confidentiality agreement
- Applicability of post-employment agreement
- Non-disclosure agreement
- Authorised disclosure by the Board of directors of the company
- Termination of agreement and statement
- Invention assignment agreement and its applicability
- Injunction relief agreement
Conclusion:
Well, trade secrets have to be safeguarded in India according to the Intellectual Property law practiced in the country. The Indian court protects trade secrets via the law of contracts. There are a few sets of documents associated with the protection of trade secrets. You should have these agreements intact and adhere to the law. If you need any legal help to do the procedure, Vakilsearch will be the right option. They are the number one experts in India.
Also Read,
- What You Should Check In Non-Disclosure Agreement ?
- What Happens When Someone Breaks a Non-Disclosure Agreement ?
