PROTECTION OF TRADE SECRETS
Trade Secrets are considered as a form of intellectual property. A trade secret refers to any information or data in relation to carrying out any business which is generally not in public domain. For instance, financial records, source codes, formulas and recipes, list of customers including their contact details and strategy or policy of company may be considered trade secrets by any organization for purpose of carrying out their business. For data or information to be classified as trade secret, it is imperative that an effort must be made to keep that information confidential. Thus to qualify as trade secret, the information must have commercial value, known to a limited group of people and must be kept confidential by taking reasonable steps. As per Article 39.2 of TRIPS (Trade Related Aspects of Intellectual Property Rights), there are three criteria for any information to fall within the definition of undisclosed information:-
- Information is not readily accessible by people who normally deal with the information.
- Information has commercial value and can be sold as well as licensed.
- Reasonable steps have been taken by person in control of such information to keep it a secret
We at Knowledgentia, which is the best corporate international law firm in India provide advisory opinion to many corporate , multinationals as well as organizations globally with regards to protection and enforcement of trade secrets through medium of contracts, NDA’s, IPR policies as well as other supplemental documents. We have an expert team dealing with who are specifically dealing with cybercrime and privacy issues , thus making the entire process of trade secret protection much more robust centered around trustworthy solutions.
TRADE SECRET LAW
Trade Secret laws are governed by national legislation just like other forms of Intellectual Property. However, international standards governing undisclosed information are enshrined under TRIPS (Trade Related Aspects of Intellectual Property Rights) Agreement. Legislations around trade secrets are usually drawn from case laws relating to breach of trust and breach of confidence with effective remedies.
TRADE SECRET PROTECTION IN INDIA
- LAW OF CONTRACTS
Trade Secrets are protected without registration. This means there are no procedural formalities required for protecting trade secrets. In India we do not have any legislation in place for protection and enforcement of trade secrets but they are mainly protected through instrument of contracts between parties. For instance, an employer is legally empowered to restrict employees from disclosing any information which he/she acquires at the time of his/her employment. An employer can also prohibit lawfully any of his employees accepting any job with employer’s competitor that involves using confidential information acquired during the course of his/her employment in the current place of work. In the case titled Niranjan Shankar Golikari v. The Century Spinning and Mfg. Co. Ltd., the Apex court held that an injunction to enforce a negative contract, restricted as per time can be definitely issued in order to protect the employer’s interests. In this case, the defendant was appointed for 5 years on a condition that he shall not take up employment elsewhere in case he leaves his service at an earlier point in time. Thereafter dispute arose when he was employed at a higher salary by a different organization. The Apex Court in this case while holding the knowledge acquired by him during course of his employment was confidential in nature and as such the restraining order on him from divulging any information was justified. The remedy in these cases being damages and compensation where prima facie case is made by plaintiff with balance of convenience in his favour and the extent of irreparable injury in case injunction not granted.
- CRIMINAL REMEDY
Indian legal system does not define stealing /misappropriation of trade secret as a criminal offence but the Indian Penal Code specifies punishment for criminal breach of trust, theft as well as cheating under which we can bring perpetrators to book with relevant punishment as prescribed.
- INFORMATION TECHNOLOGY ACT
Protection under this act is limited to electronic records where owners in specific cases and wherever required can prevent any employee or third party from disclosing any information by way of injunction or claim compensation for losses suffered on account of disclosure.
As the world is witnessing a transition towards a digital economy, there is a looming threat over protecting trade secrets stored in computers and other digital platforms on account of increasing cyberattacks. A lot of time and effort is being invested by corporate in putting in place cybersecurity systems to safeguard business processes and operations on digital platforms. We are one of the best law firm in India, providing solutions for global IPR protection and we comprehensively cover protecting trade secrets for our clients in the most smooth and hassle free manner. Our contract drafting team following best international practices is capable of handling complex legal issues and fixing them in the most appropriate manner.
PRACTICAL STEPS TO PROTECT TRADE SECRETS:-
- STRONG CONFIDENTIALITY AND NON DISCLOSURE AGREEMENTS
Confidentiality and non disclosure agreements with employees, third parties and all concerned must be strictly put in place as a part of organization/corporate policy. Further strict measures should be taken by companies and officials to ensure implementation of policies.
- CONTROL ON ELECTRONIC ACCESS
Proper cybersecurity systems must be put in place to ensure data protection as well as for protection of sensitive details concerning intellectual property.
- IDENTIFICATION AND TAKING STEPS TO MANAGE RISKS
Identifying trade secret theft and the source from where such activities originate can be a cumbersome task. Prior identification of vulnerable documents and data that can be breached must be done and additional measures must be taken to secure them.
- DUE DILIGENCE AND THIRD PARTY COLLABORATIONS
Third parties as well as many others can have access to confidential information so a review of entire process and chain must be regularly conducted with third parties. Clear cut communication as well as documentation of trade secrets, NDA’s and confidentiality agreements must be rechecked frequently at regular intervals.
- AWARENESS AND TRAINING OF EMPLOYEES
Proper training programmes elaborating on risks, procedures as well as sensitive information must be conducted from time to time. Security protection and IP asset management workshops as well as awareness sessions must form a part of regular business affairs in any organization with specific focus on core individuals who have responsibility for handling confidential information.
Introduction of draft bill National Innovation Policy in 2008 as well as National IP Rights Policy do aim at strengthening the regime of protecting trade secrets but without appropriate legal and expert advice as well as taking precautions from one’s own end, the losses suffered on account of trade secret theft as well as casual cybersecurity policies in place can cost damages beyond comprehension. At Knowledgentia, which is the best litigation firm india, we offer advice tailored to our client’s specific requirements and circumstances thereby ensuring foremost protection of our client’s interests at all time.
PUBLISHED BY MS. APARNA JAIN, MS. HARINDER NARVAN AND MS. AASHRIKA AHUJA