Trade secrets are protected in India under Indian Contract Act, 1872, under Section 27 which

provides for remedies and also restrict any person from disclosing any information which he
acquires at the time of employment or through contract. But in this provision there is only civil
remedy and no criminal remedies. According to this section any information must be highly
confidential to be constituted as Trade Secret. There are few criteria for deciding that whether any
information amounts to trade secret or not i.e.

 The status of the employee and nature of his work.

 The nature of information itself.

 Whether the information could easily be isolated from other information which the employee was
free to use.

In India, protection of trade secrets is largely based on common law. The law relies on

common law principles such as breach of trust and breach of confidence. The only

statutory provision that governs trade secrets is Section 27, Indian Contact Act, 1872,

which states that every agreement by which a person is restrained from carrying on

any trade, business or profession, is invalid. This provision brings within its ambit

non-disclosure, non-compete agreements, which are crucial for the protection of trade

secrets.

The definition of Trade secrets under the American Economic Espionage Act

(“EEA”) is even broader. These trade secrets may be misappropriated through

industrial espionage, which is the theft of trade secrets by removing, copying, or

recording them so that a competitor may use them. In the United States, these acts are

offences under the UTSA or the EEA. India however, does not have a formal

legislation governing the protection of trade secrets, the misappropriation of

confidential information, or industrial espionage

Confidential information and technical know-how are protected through contracts.

Traditionally, employers restrict employees from leaking trade secrets or confidential

information by having non-disclosure and confidentiality clauses in employment

agreements. However, Indian courts have been reluctant to enforce such restrictive

covenants and non-disclosure agreements, terming them as unenforceable under

Section 27 (Agreements in restraint of trade) of the Indian Contract Act, 1872. Even
if such clauses are valid, there is no prohibition on the disclosure of confidential

information and trade secrets, merely a contractual obligation