TRADE SECRETS

• What is a Trade Secret?

• The Definition for trade secrets varies in different Jurisdictions.

• WIPO Any confidential business information which provides an enterprise a

competitive edge may be considered a trade secret. Trade secrets encompass manufacturing or industrial secrets and commercial secrets. The unauthorized use of such information by persons other than the holder is regarded as an unfair practice and a violation of the trade secret.

• Trade Secret Definition under the Uniform Trade Secrets Act(US)

• Trade secret" means information, including a formula, pattern, compilation, program, device, method, technique, or process, that:

(i) derives independent economic value, actual or potential, from not 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, and

(ii) is the subject of efforts that are reasonable under the circumstances to maintain its

secrecy.

Behind the Concept• Two important aspects were considered as

the reason for trade secrets as an Intellectual Property Rights.

1. Incentives to Invent.• It gives the developer of new and valuable

information the right to restrict others from using it, and therefore the prospect of deriving supercompetitive profits from the information.

• Kewanee Oil Co. v. Bicron Corp, 416 U.S. 470 (1974).

The court held that“Trade secret law will encourage invention in areas where patent law does not reach, and will prompt the independent innovator to proceed with the discovery and exploitation of his invention. Competition is fostered and the public is not deprived of the use of valuable, if not quite patentable invention”.

• 2. Incentives to Disclose• Prevents more physical investment on

secrets• Prevents to a large extend the business

from being an insider Job

Methods of protecting Trade Secrets.

• Trade Secret Protection Procedures (TSPP)– Trade secret Access Restriction procedures

(AR)– Trade Secret Handling Procedures(HP).

• Position in United States.• Uniform Trade Secrets Act(UTSA) • The USTA provides for reliefs such as injunction

and Damages for Misappropriation or acquisition of trade secrets by improper means.(Section 2 and 3).

• Economic Espionage Act of 1996• This law provides makes theft or

misappropriation of a trade secret a federal crime

• Indian Position• As of Now India lacks a strong protection to the trade

secrets.• The only protection provided is through the Spring board

Doctrine applied in the case of Zee Telefilms v. Sundial Communications, 2003 (5) BomCR 404 in which the court held that “ if any person receives some information in confidence, such a person cannot take unfair advantage or make profit out of the disclosure or use of that information”.

• The Draft National Innovation Act of 2008.• Under the Draft Act Trade Secrets and

Confidential Information are provided under a separate chapter i.e. chapter VI.

• It Provides for mandatory Injunction and damages for breach of Confidential information.

Case Laws

• Coco v. A N Clark(Engineers) Ltd, Ch.D 1969• Held• Three elements apart from breach of contracts are

required to be established for breach of confidence to succeed, – The information itself should have the necessary quality

of confidence about it.– Information must have been imparted in circumstances

importing an obligation of confidence.– There has been an unauthorized use of that information

to the detriment of the party communicating it.

• Contour Designs Inc v. Chance Mold Steel Company Ltd. Nos. 12-1 110,121185.september 4 2012

• Two Appeals• One for Injunction to Specific Product the

Ergo roller.• Second for Damages.

• Held • Injunction granted to Ergo Roller removed, as

the product is entirely different in nature.• The design was independently developed and

not derived form Contour’s product.• Damages granted were affirmed.• it is not necessary that the product is

manufactured by themselves to grant dammages.