Dr.

RAM MANOHAR LOHIYA NATIONAL LAW UNIVERSITY

2019-20

Final Draft
of

Intellectual Property Rights II

on

Protection of Trade Secrets in India

SUBMITTED BY: UNDER THE GUIDANCE OF:

PRAKHAR AGARWAL Dr. VIKAS BHATI
Enrolment Number : 160101107 Assistant Professor
Section ‘B’ Dr. RMLNLU
B.A.LL.B. (Hons.)
Semester - VIII
  
Dr. Ram Manohar Lohiya National Law University, Lucknow 

TABLE OF CONTENTS

Table of Contents 2
Acknowledgement 3
Certificate 4
Introduction 5
Protection under various Laws 6
Contract Law 6
Copyright Law 7
Interface between Trade Secrets and Copyright Law 7
Proving Confidentiality of Information 8
Breach of Confidence 9
Future of Trade Secrets in India 10
Conclusion 12
Bibliography 13

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Dr. Ram Manohar Lohiya National Law University, Lucknow 

ACKNOWLEDGEMENT

I have taken efforts in this project. However, it would not have been possible without the kind
support and help of many individuals and organizations. I would like to extend my sincere
thanks to all of them.

I am highly indebted to Dr. Vikas Bhati for his guidance and constant supervision as well as
for providing necessary information regarding the project & also for his support in
completing the project.

I would like to express my gratitude towards my parents & members of ‘Dr. Ram Manohar
Lohia National Law University’ for their kind cooperation and encouragement which helped
me in completion of this project.

My thanks and appreciation also goes to my colleagues in developing the project and people
who have willingly helped me out with their abilities.

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Dr. Ram Manohar Lohiya National Law University, Lucknow 

CERTIFICATE

This is to certify that the project entitled, Protection of Trade Secrets in India submitted by
Prakhar Agarwal in complete fulfillment of the requirements for the project in
B.A.LL.B.(Hons.) at the Dr. Ram Manohar Lohiya National Law University is an
authentic work carried out by him under my supervision and guidance.

To the best of my knowledge, the matter embodied in the project is original and due care has
been taken by him for its completion.

Dr. Vikas Bhati

Assistant Professor (Dr. RMLNLU)

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Dr. Ram Manohar Lohiya National Law University, Lucknow 

INTRODUCTION

With recent advances in technology, as well as the ease of sharing, copying and storing
information in the digital world, one of the biggest challenges that businesses face is the
protection of their confidential business information. This information can include business
strategies, proposals, client databases and information, compilations, designs, programmes,
drawings, devices, formulae or compositions. Not all types of information qualify for
protection under the patent and copyright laws; further, certain data arises out of a company’s
day-to-day operations for which formal protection is not sought, but which remains valuable.

Many businesses are finding it challenging to safeguard their crucial information, due to the
various online and physical tools available to ease the transfer of data. The threat they face is
not only external, but can also come from internal sources such as employees and contractors
who have access to important business information.

It is increasingly common for employees to switch jobs. When they do, they sometimes take
confidential information with them or even set up competing businesses based on their
previous employer’s stolen data, including technical information, business methods and
strategies. Contractors sometimes infringe on drawings, designs, recipes and compositions
that have been shared with them by a client(or produced under a client’s technical guidance),
by offering the same or similar products at a cheaper price and under a different label.

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PROTECTION UNDER VARIOUS LAWS

Although India has no specific trade secrets law, Indian courts have upheld trade secrets
protection under various statutes, including contract law, copyright law, the principles of
equity and – at times – the common law action of breach of confidence(which in effect
amounts to a breach of contractual obligation). Section 72 of the Information Technology Act
2000 also provides certain protection, although this is limited to electronic records.

The remedies available to the owners of trade secrets are:

● an injunction preventing a licensee, employee, vendor or other party from disclosing a

trade secret;

● the return of all confidential and proprietary information; and

● compensation for any losses suffered due to the disclosure of trade secrets.

CONTRACT LAW

In India, a person can be contractually bound not to disclose information that is revealed to
him or her in confidence.

However, in Richard Brady v Chemical Process Equipments Pvt. Ltd.,1 the court went further
by invoking a wider equitable jurisdiction and awarding an injunction in the absence of a
contract. The plaintiff had invented a fodder production unit and, for indigenous production
of the same, had sought a supply of thermal panels from the defendant. The plaintiff shared
technical material, detailed know-how, drawings and specifications concerning the fodder
production unit with the defendant. An agreement was set out between the parties for the
supply of specialised thermal panels; however, the plaintiffs later discovered that the
defendants were unable to supply the required thermal panels and did not place an order.
After learning about the defendant's own fodder production unit, the plaintiff filed a suit for
misappropriation of know-how, drawings, designs and specifications disclosed to the
defendant.

1
AIR 1987 Delhi 372.

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COPYRIGHT LAW

In some cases, the courts have recognised client information stored in the form of databases
as copyrightable material.

During the course of their operation, businesses regularly collect data which they arrange
systematically or methodically and can be accessed electronically – for example, in order to
analyse business profitability or customer behaviour, or simply to maintain an inventory of
goods. Thus, databases are an important tool for businesses, allowing them to run smoothly
and plan their future development. Databases are protectable under copyright law. Section
2(o) of the Copyright Act 1957 defines compilations, including computer databases, as
“literary works”.

In Govindan v Gopalakrishna,2 which concerned a compilation, it was held that although the
amount of originality in a compilation is small, it is still protected by law. Hence, no party
may steal or appropriate the result of another's intelligence, skills or labour, even in such
works.

The present legal position mandates that every effort, industry or expense of skill results in
copyrightable work, but only those works are protectable which:

● are somewhat different in character;

● involve some intellectual effort; and

● involve a minimum degree of creativity.

Interface between Trade Secrets and Copyright Law

In theory at least, the treatment of databases as trade secrets can be a stronger form of
protection, since it helps to protect the underlying or inherent data rather than the mere form
of expression or layout protected by copyright law.

In Burlington Home Shopping Pvt Ltd v Rajnish Chibber,3 the Delhi High Court observed
that although trade secrets protection applies to a wide range of business data, customer lists
and other compilations of business data may be copyrightable as works of fact. In theory,

2
AIR 1955 Mad 391.
3
61(1995)DLT6.

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copyright and trade secrets law protect different elements of compiled business data, with
copyright protecting the expression in these compilations and trade secrets law protecting the
underlying data. However, copyright and trade secrets protection for compilations of business
data in fact frequently converge: copyright protection for business directories often extends to
the underlying data and trade secrets protection may extend to particular expressive
arrangements of data.

In the Burlington Home Shopping case, the court dealt with an application for interim relief
in a suit by a mail order service company against its employee for an injunction restraining
“breach of copyright and confidentiality”. The court held that although its sources may be
commonly situated, a compilation of addresses developed by devoting time, money, labour
and skill amounts to a literary work in which the author has a copyright. Finding that the
defendant’s database was substantially a copy of the plaintiff’s database, the court granted the
interim injunction.

Proving confidentiality of information

In Ritika Pvt Ltd v Biba Apparels Pvt. Ltd.,4 where a suit was filed for infringement of the
plaintiff’s clothing designs, the court took the view that if an injunction order were sought
with respect to trade secrets, the specific trade secrets would have to be mentioned, as well as
how the plaintiff had ownership of them; only then would the court consider granting an
injunction order. A general order in respect of an unspecified trade secret could not be passed
against the defendant. Further, no relief under the Copyright Act could be granted, since
Section 15(2) of the act provides that once a drawing, sketch or design has been used for
creation of more than 50 garments, no copyright can subsist in it.

In Genetics India Pvt. Ltd. v Shailendra Shiv,5 the court observed: “Pleadings of the nature
and quality of information which is confidential are crucial and in the absence thereof there is
no question of confidentiality.”

Thus, a trade secret suit should make amply clear that the subject information is confidential.
Apart from pleading that the information is confidential, the plaintiff must prove that

4
Del HC DE 0784 2016.
5
2011 (47) PTC 494.

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Dr. Ram Manohar Lohiya National Law University, Lucknow 

reasonable efforts have been made to keep it confidential. If the owner of the information
cannot prove as much, the information risks losing the quality of confidentiality.

Further, if the information and technique are neither unique nor novel, and the database is
merely a documentation or compilation of existing material or techniques which are freely
available or widely practised, there is no question of confidentiality. Thus, the mere fact that
information is documented in the form of a database does not make it confidential: it must
also have the requisite exclusivity. If a court were to accept, uncritically and without any
statutory regime, a plaintiff’s blanket assumption that it possessed confidential information in
something which was plainly part of the public’s material resources, that court would
overstep the mandate of the Constitution – specifically, the rights to occupation
(Article19(1)(g)) and livelihood (Article 21).

Breach of confidence

In Diljeet Titus, Advocate v Alfred A Adebare,6 it was held that the courts must step in to
restrain a breach of confidence independent of any right under law. The court held that in the
context of a law firm, copyright existed in a list which had been specially designed by an
advocate and contained details of the firm’s clients, along with the nature of work and contact
person for each one. Notably, this obligation need not be expressed, but need only be implied.

6
130 (2006) DLT 330.

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Dr. Ram Manohar Lohiya National Law University, Lucknow 

FUTURE OF TRADE SECRETS IN INDIA

Since India is a signatory to the Paris Convention, it is relevant to mention that Article 1(2) of
the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPs) states that
intellectual property shall include protection of undisclosed information. Further, Article 39
of TRIPs states concerns ensuring effective protection against unfair competition as provided
in Article 10 of the Paris Convention, with respect to information which:

● is a secret not generally known or readily accessible;

● has commercial value by virtue of secrecy; and

● has been subjected to reasonable steps for ensuring its secrecy.

Article 39 states that member nations must ensure that natural and legal persons have the
“possibility” of preventing such information, within their control, from being disclosed,
acquired or used by others without their consent, in a manner contrary to honest commercial
practice. It can be inferred that the “possibility” referred to here implies that trade secrets
should be accorded protection within the legal system and not necessarily in the IP legislative
framework of the member nation.

The 1989 General Agreement on Tariffs and Trade discussion paper on India establishes that
trade secrets cannot be considered IP rights, because the fundamental basis of an IP right rests
in its disclosure, publication and registration, while trade secrets are premised on secrecy and
confidentiality. The paper goes on to state that the observance and enforcement of secrecy
and confidentiality should be governed by contractual obligations and the provisions of
appropriate civil law, not by IP law.

On May 12,, 2016, India approved the National IP Rights Policy, which has seven objectives.
One of these objectives is to ensure an effective legal and legislative framework for the
protection of IP rights. The steps to be taken towards achieving this objective include the
identification of important areas of study and research for future policy development; one
such area identified was the protection of trade secrets.

In a discussion paper on IP rights at the subsequent US-India Trade Policy Forum held on
October 20, 2016, in New Delhi, India’s representatives noted that India protects trade secrets

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through a common law approach and reiterated the country’s commitment to the strong
protection of trade secrets. It was agreed that a toolkit would be prepared for industry,
especially small to medium-sized enterprises, to highlight applicable laws and policies that
may enable businesses to protect their trade secrets in India. A training module for judicial
academies on trade secrets may also be considered. A further study of various legal
approaches to the protection of trade secrets will also be undertaken in India.

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Dr. Ram Manohar Lohiya National Law University, Lucknow 

CONCLUSION

At present, Indian trade secrets law is a judiciary-made law, based on the principle of equity
and common law actions against breach of confidence, with the jurisprudence as a whole
revolving around an employee’s obligations and duties towards the employer regarding
confidential information gained during the course of employment. Indian jurisprudence
regarding trade secrets is unclear on a number of important aspects, including:

● the scope of damages in the case of a breach of confidential information;

● theft of trade secrets by business competitors; and

● procedural safeguards during court litigation.

Further, in the absence of a specific trade secrets law, the courts have ruled in favour of the
proprietor of information as literary work as defined under copyright law.

The recent creation of the National IP Rights Policy has raised hopes for the enactment of a
trade secrets law, since this is one of the objectives of the policy. Although no timeframe has
been provided for the achievement of this objective, one can be certain that there will be a
trade secrets law in the near future.

Practical tips to protect Trade Secrets

● Label the information to be protected as “confidential”, so that employees are aware

that they are dealing with sensitive business information.

● Restrict access to databases, servers and computer programs that store trade secrets.

● Ensure that access to servers is password protected and that a suitable notice is
displayed on computer screens when accessing sensitive areas.

● Educate employees on why protecting trade secrets is important for business.

● Sign non-disclosure agreements with any third parties with which commercial
business information is shared.

● Use a combination of technical and legal solutions to protect databases.

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BIBLIOGRAPHY

● Narayanan, P., Intellectual Property Law, Eastern Book House.

● Padmanabhan, Ananth, Intellectual Property Rights: Infringement and Remedies, 1st

Ed., LexisNexis, Butterworths, Wadhwa, 2012.

● www.indianbarassociation.org

● www.legalserviceindia.com

● www.tradesecretslaw.com

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