Introduction

In today’s exceedingly competitive markets, the protection of proprietary information often foretells the
difference between a business’ success and failure. However, in order to conduct their business
effectively, companies often must share their competitive and proprietary information with several
persons. At the same time, it is vital that such information be kept confidential.

Intellectual property rights such as copyright, trademark and patent are ineffective where the
information is sought to be kept secret. They require governmental filings that are expensive to obtain
and enforce. Further, the scope of protection available from these statutory systems is in many respects
being narrowed. In this context, trade secret protection provides an effective and economically viable
remedy to businesses of all sizes.

Trade secrets consist of virtually any information developed by the company through the expenditure of
time and effort, unknown to others in competing businesses, and which gives an advantage to the
company over such competition. The formula for Coca-Cola and the Hyderabad fish cure for asthma are
well-known examples.

The law of trade secrets is derived from the basic principles of the law of torts, restitution, agency,
quasi-contract, property and contracts. There are sound economic reasons for trade secret protection.
Failure to protect obligations of confidentiality could inhibit both the quantity of information exchanged
and its quality. The “owner” of the secret will in most cases have expended substantial resources to
discover the secret and hence has a clear economic interest in its remaining secret.1 In addition, the
economic rationale behind such protection is to offer an incentive to invest in the creation of
information.2

However, there are also some economic disadvantages in the protection of secret information. The
producer will keep secret about the research until it can be protected by patent laws, thereby leading to
a great deal of duplicated research which is not efficient.3 These considerations have to be kept in mind
while deciding what information should be protected. In certain circumstances, it has been decided that
the misuse of secrets should be actionable. If the disadvantages outweighed the advantages, the civil
law should not intervene. This article discusses the efficacy of available civil remedies in case of an
infringement of a trade secret and makes a case for the codification of the common law of trade secrets.
Defining trade secrets

Trade secret law is directed towards promoting inventions and discoveries. Hence, it is vital that only
such information be protected that helps achieve this end. The common law has adopted a functional
approach to the definition of trade secrets. Courts have preferred to demarcate between information
that is in the public domain and that which is not.4 The Law Commission of England and Wales5 has,
however, laid down specific categories of information that can be regarded as trade secrets.

In contrast, in the United States, the Uniform Trade Secrets Act6 (“UTSA”), which has been adopted by
over forty States, identifies three essential elements of a trade secret. A trade secret:

must be information such as a formula, pattern, compilation, program, device, method, technique or
process;

that has independent economic value available from only one source; and

is the subject of reasonable efforts to maintain its secrecy.

This definition allows a business to protect, due to its potential value, information, which it does not
presently intend to utilise, or which it has not or cannot presently fully develop. Furthermore, a trade
secret need not necessarily be comprised of positive information, such as a specific formula, but can
include negative, inconclusive or sufficiently suggestive research data that would give a person, skilled in
the art, a competitive advantage he might not otherwise enjoy but for the knowledge gleaned from the
owner’s research investment.7

Secret information

Information that is publicly known or easily accessible to the public, cannot be held to be a trade secret.
However, most courts require only relative or qualified, and not absolute secrecy.8 Information may
thus go beyond its initial source to other persons while at the same time remaining confidential.9 It
ceases to be a secret only when it is known to a substantial number of persons.

Further, every part of the information need not be completely confidential to qualify for protection as a
trade secret. A trade secret can include a combination of elements that are in the public domain, if the
trade secret constitutes “a unique, effective, successful and valuable integration of the public domain
elements”.10 This principle simply recognises that the choice of individually known components and
techniques to create a working manufacturing process is often a difficult undertaking. Where at
individual steps of a process there are a variety of alternatives, the choice made through much effort of
specific ingredients, materials, conditions and steps in an actual working process constitutes a trade
secret.

Independent economic value

The test is not whether the information has independent economic value in general, but whether it has
independent economic value by not being known to other persons who can obtain economic value from
its disclosure.11 Hence, a customers’ list is considered a trade secret only where the identity of
customers has economic value.12 For example, where many firms are potential customers for a product
but only a few actually purchase it, their identities have economic value because compiling a list of
actual customers requires an investment of time and money. In contrast, a customers’ list does not
achieve trade secret status where the identity of actual customers is common knowledge in the market
at issue.13

Reasonable security measures

If a company wishes to protect information as a trade secret, it must implement reasonable measures to
safeguard against its disclosure. Under the common law, it was wise to do so not only in order to
maintain competitive advantage, but also to bolster arguments of protectability should trade secret
litigation become necessary. Under UTSA, in order to even meet the threshold qualifications as a trade
secret, information must be the “subject of efforts that are reasonable under the circumstances to
maintain its secrecy”. The extent of the security measures taken by the owner of the trade secret need
not be absolute, but must be reasonable under the circumstances.14

Trade secrets vis-à-vis other intellectual property rights

Trade secret protection presents no conflict with the patent law, as it is consistent with the patent policy
of encouraging inventions. However, for trade secret protection, uniqueness in the patent law sense is
not required. Further, the owner of a trade secret, unlike the holder of a patent, does not have an
absolute monopoly on the information or data that comprises the trade secret. Other companies and
individuals have the right to discover the elements of a trade secret through their own research and
hard work.15 Consequently, inventors of items that may meet the standards of patentability would
prefer to seek patent protection because such protection is far superior to the protection afforded by
trade secret laws.

As far as copyright protection is concerned, there is no copyright in ideas and hence copyright law
cannot protect confidential information. Section 16 of the Copyright Act, 1957 (“the Copyright Act”)
states that nothing in the Copyright Act should be considered as restraining an action for breach of
confidence or breach of trust. There is thus no copyright pre-emption of trade secret misappropriation
claims.

Tort of breach of confidence

A right of action for breach of confidence underpins and in many cases predates a more crystallised
intellectual property right. The nature of such an action was considered in the leading Spycatcher case16
where Lord Keith held that the obligation may exist independently of any contract, on the basis of an
equitable principle of confidence. The rationale for such an action seems to stem from the notion that
information can be regarded as a property right. However, this assertion has been the focus of intensive
debate.17

A trade secret has both monopoly value and use value, but only the former will normally be affected by
misuse of the secret. On this basis, some courts have held that information cannot be considered
property.18 Nevertheless, a comparison of the attributes of trade secrets with those of orthodox
property reveals that some of the key attributes of orthodox property rights to create, use, alter,
destroy, exchange etc. do seem to be shared by information.19 However, the problem arises due to the
fact that once the secret is revealed, the usual ideas of legal and equitable title cannot be applied.20

Hence, courts have based the action for breach of confidence on other legal theories such as the notion
of implied contract, the relationship of trust and confidence that existed between the parties and so
on.21 It is argued by some jurists that basing trade secret law on such concepts narrows its scope and
creates greater scope for conflict as the law can afford protection only when such a relationship
exists.22 In such a circumstance, courts have examined trade secret protection in a new light viz. as a
conflict between the freedom of the individual to support himself and the policy of encouraging
business enterprise.23

Elements of the tort

The law of breach of confidence is concerned not with the acquisition of information, but with its
subsequent “use or disclosure”.24 The basic test for imposing an obligation for breach of confidence
was laid down in Saltman Engg. Co. v. Campbell Engg. Co. Ltd.25 where Lord Greene stated: (All ER p.
414 I)

“If defendant is proved to have used confidential information, directly or indirectly obtained from a
plaintiff, without the consent, express or implied of the plaintiff, he will be guilty of an infringement of
the plaintiff’s rights.”

To this basic test, the additional requirements of “unfair advantage” to the party and detriment caused
by the unauthorised use were added.26 Thus, the plaintiff in an action for breach of confidence must
prove three things before he succeeds in his claim:

Information must be in itself of a confidential character.

Imparting of information must occur in a circumstance of or an occasion of confidence.

Information must be used in an unauthorised way to cause detriment to the plaintiff.

Confidential information
Initially, an objective test dependent on the expectations of reasonable men was adopted.27 A
subjective element was introduced by the decision in Thomas Marshall (Exports) Ltd. v. Guinle28 where
the plaintiff sought an injunction against the Managing Director who had set up a competing business.
The Court observed that information became confidential only when the owner of the information has a
reasonable belief that its release would be harmful to him and that it was outside the public domain.
This implies that the belief of the owner of the information must be taken into account while
determining whether information is confidential.

These decisions were reviewed by the House of Lords in the famous Spycatcher case29. A British spy
published a book containing confidential information he had learnt during his career. Although the
British Government sought an injunction, the action failed on the ground that the information had lost
its confidential character, as this book was available in other countries. Hence, information must remain
outside the public domain if it is to be protected.

However, the Court did not decide whether the above reasoning tantamounts to allowing the holder of
confidential information to rid himself of the obligation of confidence by disclosure. Lord Goff explained
the “springboard principle” and held that disclosure by a third party does not release the confidant from
his obligations. This reluctance shown by the courts to allow a confidant to benefit by breaching his
confidence prevents an unequivocal declaration that information, which is confidential, cannot be
public.30 Nonetheless, where the holder of the information himself discloses the information, no action
for breach of confidence will lie.31 A lapse of time may also result in breach of confidentiality.32

The obligation of confidence

The obligation of confidence does not arise where the information is divulged in public or in other
circumstances that negate the duty of holding it confidential.33 This test, which is an objective one,
focuses on the relationship between the parties. The types of relationships in which such an obligation is
said to arise can be divided into three broad categories:

1. Fiduciary relationships

The essence of a fiduciary relationship is that equity imposes an obligation on the trustee to act in the
best interest of the beneficiary. For instance, directors may owe an obligation to their company,
professionals such as auditors and solicitors may owe a duty to their clients and so on.34
2. Contractual relationships

Parties to the contract are free to make such provision as they deem fit for the use of confidential
information. It is common to stipulate that information would not be passed beyond the contract.35

Employee-employer relationship

The basic duty of fidelity arises throughout the course of employment and continues to a limited extent
even after the employment terminates. Thus, any employee who discloses confidential information is in
breach of confidence.36

The major drawbacks associated with an action for breach of confidence are that an adequate remedy is
unavailable against the person to whom the information is disclosed, as the holder of the secret may be
unable to prevent the continuing use of the confidential information by such person(s). Although
damages may be sought against the confidants, they generally do not have the economic capacity to pay
adequate damages. The question of liability of third parties assumes importance in this connection.

Misappropriation of trade secrets: liability of third parties

American courts have developed the tort of misappropriation, which imposes liability on third parties for
the use of trade secrets. This tort is not committed by a person who uses or publishes a trade secret
unless that person has used some unlawful means or breached some duty created by contract or
implied by law resulting from some employment or similar relationship.37 It is the use of improper
means to procure the trade secret, rather than the mere copying or use, which is the basis of liability.38

UTSA contains definitions of “misappropriation”39 and “improper means”.40 The American

Restatement of Laws has modernised the definition of “improper means” to include “the unauthorized
interception of communications”.41 This implies that even computer hacking is included in the
definition of improper means. The Restatement is clear that “improper means” that are “either wrongful
in themselves or wrongful under the circumstances of the case” come within the tort of
misappropriation.42
Though English courts have not framed the issue in terms of “improper means”, the rationale for
imposing liability on third parties seems to be the same in both English and American law. Courts have
held that even if there is no contractual nexus between the parties, liability arises if the confidentiality of
the information is obvious.43 It must be emphasised that third parties are liable only when the
information is not only known, but also known to be confidential in character.44

The Law Commission has recommended that the duty should be broader and prevent, for example, a
company that has received information in confidence during the course of licensing negotiations from
turning that information to its own use, though without disclosing it further.45 Thus, there is a need for
reforming the law in this regard.

In India, the tort of misappropriation has not gained judicial recognition. However, Indian courts can
adopt the common law approach and grant relief.

Non-disclosure agreements: an overview

To prevent the misuse of trade secrets, it is generally prudent business practice to enter into non-
disclosure agreements. Trade secrets are considered the master’s property, and therefore there is no
rule of public interest, which invalidates an agreement that prevents their transfer against the master’s
will. However, the validity of such agreements has to be examined at the altar of Section 27 of the
Indian Contract Act, 1872 (“the Contract Act”), which states that every agreement by which a person is
restrained from carrying on any trade, business or profession, is invalid.

The Supreme Court in Niranjan Shankar Golikari v. Century Spg. & Mfg. Co., Ltd.46 enumerated the tests
to determine the validity of agreements in terms of Section 27. A foreign producer collaborated with a
company manufacturing tyre cord yarn on the condition that the company would maintain secrecy of all
technical information and that it obtain corresponding secrecy arrangements from its employees. The
defendant was appointed for a period of five years on the condition that during this period he shall not
serve anywhere else even if he left the service earlier.

Shelat, J. held the agreement to be valid. The defendant was accordingly restrained from serving
anywhere else for the duration of the agreement. The restriction imposed in the present case was
limited as to time, the nature of employment and as to area, and cannot therefore be said to be too
wide or unreasonable or unnecessary for the protection of the interests of the respondent Company.
The Court held that there is an implied term in a contract of employment that a former employee may
not make use of his former employer’s trade secrets. But subject to this exception, he is entitled to
compete. Hence, even if the contract of employment had contained a covenant not to compete in
respect of future contracts, such covenants would have been an unreasonable restraint of trade and
void.47 However, several United States courts have recognised the “inevitable disclosure” rule, which
permits a former employer to enjoin an employee from working for a direct competitor where the “new
employment will inevitably lead the employee to rely on the former employer’s trade secrets”.48

Tort of malicious interference in contractual relations

Where the parties have entered into a non-disclosure agreement, and one of them reveals the secret to
a third party in breach thereof, the holder of the secret can obtain an injunction restraining the third
party from disclosing the information. English courts have developed the tort of malicious interference
in contractual relations.49 Under American law, UTSA lists inducement of a breach of the duty to
maintain secrecy as an “improper means” of discovery resulting in an action for misappropriation of
trade secrets.

Exceptions to liability

Disclosure of trade secrets is not actionable in all cases and courts have carved out a number of
defences.

The general knowledge exception

In common law, by a long-established principle of public policy, a former employee was free to utilise
the general skill and knowledge acquired during his or her employment.50 Similarly, in America, the
Economic Espionage Act does not apply to individuals who seek to capitalise on their lawfully developed
knowledge, skill or abilities. The exclusion applies not only to the exploitation of the information for the
employee’s own benefit, but also to the employee’s use of it for other employers.51
The clearest test for distinguishing between trade secrets on the one hand and general knowledge and
skill on the other, has been laid down by Cross, J. in Printers and Finishers Ltd. v. Holloway52. If the
information in question can be regarded as a separate part of the employee’s stock of knowledge, which
a man of honesty and intelligence would recognise to be the property of his former employer, then an
injunction could be granted. The apparent simplicity of this formula belies the practical difficulty in
demarcating between the two. The problem is accentuated by employers’ efforts to prevent disclosure
of information by means of restrictive covenants.

Parallel development

The owner of a trade secret does not possess a monopoly on the data that comprises the trade secret.
Other companies and individuals have the right to discover the elements of trade secret through their
own research and hard work.53 Thus, it is a defence if the defendant demonstrates that he
independently developed the trade secret.

Reverse engineering

The Legislative Comment to UTSA states, “Discovery by reverse engineering”, that is, starting with the
known product and working backward to find the method by which it was developed, is considered
proper means. Therefore, to avoid a successful claim by the defendant that he discovered the trade
secret by reverse engineering, prosecutors should establish the means by which the defendant
misappropriated the trade secret. For example, if the prosecution could show that the defendant
unlawfully obtained access to the trade secret, it would refute his claim that he learnt the trade secret
through reverse engineering. Further, a defendant cannot defeat a prosecution by claiming that the
trade secret could have been discovered by reverse engineering.54

Innocent acquisition of information

Information which the defendant acquired innocently, that is, without knowing that it was a trade secret
belonging to a person who did not consent to the defendant’s acquisition of it is not a trade secret
under English law.55 However, under American law, a person who learns of a trade secret innocently,
without notice, is liable after receipt of notice unless he can prove that he has in good faith paid value
for the secret or has so changed his position that to subject him to liability would be inequitable.56
The public interest exception

It is well established that no liability attaches to the use of information, which it was in the public
interest to use or disclose. Thus, a defendant in proceedings for breach of confidence shall not be liable
to the plaintiff in respect of any disclosure or use of information by the defendant in breach of an
obligation of confidence if (a) the defendant raises the issue of public interest in relation to that
disclosure or use; and (b) the plaintiff is unable to satisfy the court that the public interest relied on by
the defendant under that sub-section is outweighed by the public interest involved in upholding the
confidentiality of the information.

Statutory obligation/Exercise of power

If the information is used or disclosed in accordance with a statutory obligation or power, the defendant
is not liable. For instance, if the information is disclosed pursuant to a court order, or otherwise for the
purpose of legal proceedings, it comes within the exemption. Similarly, the use or disclosure in the
interests of national security or for the prevention, investigation or prosecution of crime is permissible.
However, the disclosure must be to someone who has a “proper interest” to receive the information in
question.57

Concluding remarks: a case for codification

In India, trade secret protection is still in a nascent stage, with no special legislation codifying the
principles of trade secret law. This is contrary to the global trend towards codification of the common
law. Though, the equitable principle of fiduciary relationships has been codified in the Securities
Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992, which renders the use and
disclosure of confidential information by an insider subject to prosecution under the Securities Exchange
Board of India Act, a third party who makes use of this information is not liable.

In this era of globalisation, multinational corporations want assurances that the national law will protect
their secrets. This is clear from the TRIPS Agreement, which refers to Article 10 of the Paris Convention,
and incorporates a duty on signatories to protect confidential information. The kind of protection
envisaged by the TRIPS Agreement is not afforded by the Indian law relating to trade secrets. The TRIPS
Agreement casts an obligation on India to codify the law on trade secrets. Even Asian countries like
Korea and Japan have codified the common law on trade secrets as far back as 1990. India should follow
their example in this regard.

Trade secret law can protect even an invention that is unpatentable because it does not meet the legal
requirements for patentability. Further, before a patent is obtained for a new idea, the inventor may
want to disclose it to a prospective user, purchaser or backer. Indian businessmen forced to bear the
high expense of patent litigation may be at a disadvantage when compared to their foreign
counterparts. Hence, the North-South debate that often arises when it comes to patent law has no
relevance in this regard. Indian businessmen relying on trade secrets will have a better protection if the
common law principles are given concrete shape. Trade secret law facilitates trade and hence it is high
time that the Indian Government wakes up to the need to reform the trade secret law.

———

* Fifth-year student of the National Law School of India University, Bangalore. Return to Text

** Associate, Udwadia, Udeshi & Bergis, Mumbai. Return to Text

1. Pace, C.R.J.: “The Case for a Federal Trade Secrets Act” 8 Harv. J. Law and Technology, 427, 438
(1995). Return to Text

2. Posner, R.A.: Economic Analysis of Law (3rd Edn., 1986), p. 200. Return to Text

3. Legislating the Criminal Code: Misuse of Trade Secrets, Law Commission of England and Wales,
Consultation Paper No. 150 (Her Majesty’s Stationary Office, 1997). Return to Text
4. The most concise definition is that by Megarry, V.C. in Thomas Marshall Ltd. v. Guinle, (1978) 3 All ER
193. The Court identified four factors to be considered: (i) the owner must believe that the release of
the information would be injurious to him or of advantage to his rivals or others; (ii) the owner must
believe that the information is confidential or secret, that is, not already in the public domain; (iii) the
owner’s belief must be reasonable; and (iv) the information must be judged in the light of the usage and
practice of the particular industry or trade concerned. Return to Text

5. Supra fn 3. The four categories of information laid down by the Law Commission are illustrative in
nature. These are secrets relating to highly specific products; technological secrets; strategic business
information; and private collations of individual items of highly public information. Return to Text

6. The definition reads as follows: “A trade secret means information, including a formula, pattern,
compilation, program, data, device, method, technique, or process, that: Return to Text

1. 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 Return to Text

2. Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.” Return
to Text

7. Glaxo Inc. v. Novopharm Ltd., 931 F Supp 1280, 1299 (EDNC 1996) Return to Text

8. K-2 Ski Co. v. Head Ski Co. Inc., 506 F 2d 471 (9th Cir. 1974) Return to Text

9. Stephens v. Avery, (1988) 2 All ER 477 Return to Text

10. Rivendell Forest Prods. Ltd. v. Georgia-Pacific Corp., 28 F 3d 1042, 1046 (10th Cir. 1994) Return to
Text
11. Wade Cook Seminars, Inc. v. Mellon, 1999 WL 211831 (Wash App Div 1 1999) Return to Text

12. For decisions on customer lists as trade secrets, see Avent Inc. v. Wyle Labs, 437 SE 2d 302 (1993);
Electro Optical Industries, Inc. v. White, 1999 WL 1986467 (Cal App 2 Dist 1999), c.f. R. Mark Halligan,
“Recent Developments in Trade Secret Law”, http://www.execpc.com/~mhallig visited on 10-10-2000.
Return to Text

13. ABBA Rubber Co. v. Seaquist, 235 Cal App 3d 1, 18-19 (1991) Return to Text

14. Pioneer Hi-Bred International v. Holden Found Seeds, 35 F 3d 1226, 1235 (8th Cir. 1994); Gates
Rubber Co. v. Bando Chem. Indus. Ltd., 9 F 3d 823, 848-49 (10th Cir. 1993) Return to Text

15. Kewanee Oil Co. v. Bicron Corpn., 416 US 470, 490-91 : 40 L Ed 2d 315 (1974) Return to Text

16. Attorney General v. Guardian Newspapers, (1988) 3 All ER 545 Return to Text

17. Cornish, W.R.: Intellectual Property (3rd Edn., 1996) at paras 8.49-8.53. See also Breach of
Confidence, Law Commission of England and Wales, Consultation Paper No. 110 (Her Majesty’s
Stationary Office, 1981), para 2.10. Return to Text

18. Oxford v. Moss, (1979) 68 Cri 482. See also Hammond, R.G.: “Theft of Information”, 100 LQR 252
(1984). Return to Text

19. Routh v. Jones, (1947) 1 All ER 179, 181 Return to Text

20. Note, “Nature of Trade Secrets and their Protection”, 42 Harv. L. Rev. 254, 257 (1928). Return to Text
21. Martin, J.E.: Hansbury and Martin’s Modern Equity (1st Edn., 1993), pp. 730-32. Return to Text

22. Note, “Equitable Protection of Trade Secrets”, 23 Colum. L. Rev. 164 (1923). Return to Text

23. Merchants Syndicate Catalogue Co. v. Retailer’s Factory Catalogue Co., 206 Fed 545 (1913) Return to
Text

24. Breach of Confidence, Law Commission of England and Wales, Working Paper No. 58 (Her Majesty’s
Stationary Office, 1981), para 5.1. Similarly, the American Restatement of Torts in Section 757(b)
imposes a duty for breach of confidence on a person who uses or discloses another person’s secret
without the privilege to do so. Return to Text

25. (1963) 3 All ER 413 (note) Return to Text

26. Seager v. Copydex Ltd., (1967) 2 All ER 415. See also Coco v. A.N. Clark Engineers Ltd., (1969) RPC 41.
In this case, there was a cooperative venture between the parties in respect of a new moped engine and
when the venture failed the defendants made use of the confidential information acquired during the
collaboration. There was no contractual relationship involved. However, the claim could not succeed
because it did not satisfy the test laid down. Return to Text

27. Holyoak, J. & Torremans, Paul: Intellectual Property Law (1st Edn., 1995), p. 384. Return to Text

28. (1978) 3 All ER 193 Return to Text

29. Attorney General v. Guardian Newspapers, (1988) 3 All ER 545 Return to Text

30. Supra fn 27, p. 387. Return to Text

31. Mustad & Son v. Dosen, (1963) 3 All ER 416 Return to Text
32. Attorney General v. Jonathan Cape Ltd., (1975) 3 All ER 484 Return to Text

33. Supra fn 26. A typical example would be where the information is of commercial value and is passed
on in a commercial context such as in a joint venture. Return to Text

34. Jarman & Platt Ltd. v. I. Barget Ltd., (1977) FSR 260 Return to Text

35. Irish, Vivien: Intellectual Property Rights for Engineers (1st Edn., 1994), p. 176. Return to Text

36. Hivac Ltd. v. Park Royal Scientific Instruments Ltd., (1946) 1 All ER 350 Return to Text

37. Smith v. Snap-On Tools Corpn., 833 F 2d 578, 581 (5th Cir. 1988) Return to Text

38. Trandes Corpn. v. Guy F. Atkinson, 996 F 2d 655, 660 (4th Cir. 1993). See also “Recent Developments
in Intellectual Property Law”, http://www.execkpc.com/~mhallig, visited on 1110-2000. Return to Text

39. “Misappropriation” means: Return to Text

(i) acquisition of a trade secret of another by a person who knows or has reason to know that the trade
secret was acquired by improper means; or

(ii) disclosure or use of a trade secret of another without express or implied consent by a person who

(A) used improper means to acquire knowledge of the trade secret; or

(B) at the time of disclosure or use knew or had reason to know that his knowledge of the trade secret
was

(I) derived from or through a person who has utilized improper means to acquire it;

(II) acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; or

(III) derived from or through a person who owed a duty to the person seeking relief to maintain its
secrecy or limit its use; or

(C) before a material change of his position, knew or had reason to know that it was a trade secret and
that knowledge of it had been acquired by accident or mistake.

40. “Improper means” is defined to include theft, bribery, misrepresentation, breach or inducement of a
breach of duty to maintain secrecy, or espionage through electronic or other means. Return to Text

41. American Restatement of Laws (1995, 3rd Edn.), § 43. Return to Text

42. Ibid. Return to Text

43. Saltman v. Campbell, (1963) 3 All ER 413n; Argyll v. Argyll, (1965) 1 All ER 611 Return to Text

44. Fraser v. Thames Television Ltd., (1983) 2 All ER 101 Return to Text

45. Supra fn 17, para 6.56. Return to Text

46. AIR 1967 SC 1098 Return to Text

47. See Poonuswami: “Public Interest and Restrictive Trade Practices in India”, Indian Yearbook Intl.
Affairs, 256, 280 (1963). Return to Text

48. Pepsi Co Inc. v. Redmont, 54 F 3d 1262, 1269 (7th Cir. 1995) Return to Text

49. The leading case is Lumley v. Gye, (1853) 2 E&B 216 : 118 ER 749, popularly known as Opera singer
case, where the Court recognised the tort. See A. Carpenter, “Interference with Contractual Relations”,
41 Harv. L. Rev. 728, 729-30 (1928). Return to Text

50. Mason v. Provident Clothing and Supply Co. Ltd., (1913) AC 724, 740-41; Herbert Morris Ltd. v.
Saxelby, (1916) 1 AC 688 Return to Text

51. Faccenda Chicken Ltd. v. Fowler, (1985) 1 All ER 724 Return to Text

52. (1965) RPC 239 : (1964) 3 All ER 54 and 731 Return to Text

53. Supra fn 15. Return to Text

54. Telerate Sys. Inc. v. Caro, 689 F Supp 221, 232 (SDNY 1988). The Court held that the proper focus of
inquiry is not whether an alleged trade secret can be deduced by reverse engineering but rather,
whether improper means are required to access it. Return to Text

55. Supra fn 3. Return to Text

56. American Restatement of Tort Laws (1939) § 758(b). Return to Text

57. Initial Services v. Putterill, (1968) 1 QB 396, 405 : (1967) 3 All ER 145 Return to Text