trade secrets in india
TRANSCRIPT
TRADE SECRETS IN INDIA
HOW ARE THEY PROTECTED?
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Angela Dsouza
The concept of property has
undergone a sea change over the
years. In the early days, machinery
and mechanism were considered to
be the most valuable assets of a
company and patents were a
prized possession. In the present
day, while estimating the value of
any company the highest value
is placed on its trade secrets. Today
we try to understand the nature of
trade secrets and the trade secret
protection regime in India.
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WHAT ARE TRADE SECRETS?A trade secret is a kind of information which has high commercial value
(owing to its confidentiality) and can be protected from misuse or
misappropriation under common law or contract law. The Agreement on
Trade Related Aspects of Intellectual Property Rights provides for the
protection of ‘undisclosed information’. Article 39 of the TRIPS Agreement
states that in order to ensure effective protection against unfair
competition, it is imperative to protect undisclosed information. Any
natural or legal person can protect information lawfully within their
control from being disclosed or acquired by others without their consent
in a manner contrary to honest commercial practices. www.intepat.com
However such information should be a secret
i.e. it should not be known or accessible to
persons who normally deal with that kind of
information. The information kept as a secret
should have commercial value and there
should have been reasonable efforts to keep
the information a secret.
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How is a Trade Secret different from other forms of Intellectual Property?
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Trade secrets have a much wider scope than patents,
trademarks or copyrights. For instance patents
require that the invention be novel, industrially
applicable and non obvious. In addition, it should be
open to public disclosure and needs to strictly fall
within the framework of patentable subject matter.
Lastly, patent protection is only granted for a
duration of 20 years. Likewise trademarks only
protect a printed word or an image representing a
product or service while copyright protects only the
manner of expression and not the content or idea.
Also the protection is limited in nature.
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Trade secrets, on the other
hand, do not mandate such
requirements. The primary
purpose of a trade secret being
protected is its utility-therefore
a trade mark should have some
utility. The most important
criteria of a trade secret is that
both the content and the
expression should remain a
secret.
ADVANTAGES v. DISADVATAGES OF A TRADE SECRET
Advantages of a Trade Secret:
• No registration costs.• No time limit for
protection.• Protection is immediately
effective.• It does not require any
disclosure or registration with the Government.
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Disadvantages of a Trade Secret:
• Protection ceases if the secret is
disclosed.
• If the secret is embodied in a
product, it can be discovered
through reverse engineering and
patented by another party.
• It is effective against only improper
acquisition and use. There is no
safeguard against fair discovery.
• Protection granted is weaker than
that of patents. www.intepat.com
THERE IS NO LAW IN INDIA THAT
PROTECTS TRADE SECRETS!!
However, this does not mean that trade
secrets are devoid of any form of
protection. In the absence of a statute,
several judicial decisions have
forwarded the cause of protecting trade
secrets. However the absence of a
legislative backing leaves a lot to be
desired.
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In India, the only means through which a trade secret can be protected is by way
of a contract. Non disclosure agreements and restrictive covenants are the usually
adopted means. However, this method is not fool-proof. First, such contracts are
usually not favored by the courts and are unenforceable by statute in some states.
Second, a criminal action cannot be brought against someone in the event of
disclosure of the secret. The only source of relief is a civil suit wherein damages
can be sought. However, despite the quantum of damages awarded to the Plaintiff
Company or individual, the economic loss caused to the plaintiff by the disclosure
of the trade secret is usually massive and results in irreparable damage.
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In such a scenario, India is in desperate need of a legislation that aims at
protecting trade secrets. With India being a host to various companies, both
national and international, a trade secret law is imperative. Absence of such a law
renders the trade secrets of such companies vulnerable and can have a crippling
effect on the business of the company as well as the Indian economy.
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