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Trade Secrets and its protection in India

Trade Secrets and its protection in India

Posted on: April 26, 2018

Secrets are something which is influencing every human being, secrets make anyone curious. Trade secrets are something which is a secret device, technique or recipes used by any companies to keep their position in the market. Trade secrets are a combination industrial secrets or commercial secrets. The unauthorized use of such information by persons other than the holder is regarded as a violation of the trade secret.

Indians are always admired for their brilliant culture which won’t be revealed to the outsiders as it’s a trade secret what they follow which has been passed to their new generation. It is universally important that the information that is to be guarded as a trade secret must be kept ‘secret’. Trade Secrets are something which needs to be protected from the hands of the competitors. Earlier the competitors were the outside people but now the situation changes as people opt for nuclear families. This makes a conflict between the family members related to business or trade secrets. There is no law with which trade secrets can’t be protected, as they are secrets, but they can surely be protected by various other laws such as criminal law, the laws governing employee/employer relations and fiduciary obligations, unfair competition law and contract law. If a producer or a company reveals information to a third party that is a trade secret, it can only be considered as a breach of contract or breach of trust in legal terms.

Now a days a lot of cases are getting filed than in earlier days, as people were following the traditions in customs, rituals, business etc. But In this emerging environment/ nuclear family environment people wants to become independent and wants to start their own business than joint family business. This will affect existing business as all cannot use the same technics or trade secrets used/using earlier. This will make it is very important that the party should have made an agreement that includes of what constitutes a trade secret and who owns that proprietary material.

Trade secrets are protected in India either through contract law or through the equitable doctrine of breach of confidentiality. It is common to insert clauses that protect the confidentiality of the secrets of the company/business in the agreement with the employees not only during their employment period but also after they are terminated.

New Delhi Court provides a list of what can be said to be a trade secret. It says that a trade secret “can be a formula, technical know-how or a peculiar mode or method of business adopted by an employer which is unknown to others.”

In India, the only way to protect trade secrets are civil or equitable remedies for a breach of confidence cause of action.  They include: preventing the third party from disclosing the trade secrets and confidential and proprietary information.

    According to the Trade Related Aspects of Intellectual Property Rights (TRIPS) there are three essential conditions which are to be satisfied by any information before it can be considered as undisclosed information (trade secret) are:

1.    Such information must be secret; not generally accessible to persons within the circles that normally deal with the kinds of information in question,

2.    The information must have commercial value because it is secret and,

3.    The information must be the subject of reasonable steps by its owners to keep its secret.

Steps by which one can classify any information as confidential information (Trade Secret):

1.    Define Trade Secrets under confidential information and give it the same protection as all confidential information exchange with your employees, business partner’s business clients.

2.    Sign agreement with all the stakeholders mentioned in point 1 so that trade secrets are protected contractually.

3.    Sign Non-Disclosure Agreements (NDA) specifically wherever possible and include protection within them.

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