SSRN Id1614222

1
Trade Secret: Protection & Remedies

Neelam Satija2
ABSTRACT: This article presents the importance of trade secret protection and what are the several ways to protect the trade secret at national as well as
international level. To understand the importance of trade secret protection one should know what actually trade secret means and what type of the information constitute
trade secret. The article begins with a brief general definition of the trade secret and different types of the trade secret. After it will explain the essential elements or
requirement that information must fulfill to be protected under trade secret right. Thereafter, some silent features of the trade secret protection system will be provided that
makes trade secret different from other IP forms especially patent, as both protect the Innovations. The trade secrets are preliminary form of every intellectual property
rights and have a great need of protection, which will be explained along with significance of protecting the information as trade secrets. It also provides a complete picture
about the various ways of protecting the trade including the legal system, sui generis system, and international agreement bearing trade secret protection. This article also
1 The authors assume no legal responsibility for the views/information expressed in this paper. The references from the information has been taken is given in last section.
Author respect the copyright of other writers.
2 Author can be reached at satija.neelam@gmail.com
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explains protection of trade secret at national level; this gives an idea about different laws enacted in different countries to protect the information under trade secret. Then
it will be necessary to explain, what the possible remedies available are for a person whose trade secrets are either infringed or prone to infringement in the future.
Wherever it is found necessary, I have tried best to make the subject matter clear with the help of case studies. In short the present author wants to give a deep insight of the
trade secret protection system starting from their definition to the judicial relief for the infringement of trade secret.
INTRODUCTION: Intellectual property rights protection is one of the most important and current legal issue in national as well as in international trade
area. As international trade and investment increases around the world, trademarks, patent, copyrights and trade secret need to be a subject of more global prospective.
Every intellectual property starts with trade secret as it needs protection from the competition till, the rights are granted to the owner by the government. The law of the
trade secret protection getting international attention because of its potential to become an effective legal tool when other regimes like patents or copyrights is not suited to
offer the satisfactory or desired protection for investors.
In the present scenario of aggressive competition, industrialization and liberalization every corporate house has certain information with regard to technological know-how,
idea and technology. Companies some tines overlook their trade secret as intellectual property assets both their creation and continued existence depend upon the secrecy of
the information. It is unlikely that a company will issue announcements or press releases that a trade secret has been created. The important distinguishing feature of the
trade secret from other intellectual property protection is that they are not publicly recognized or registered with the government. The main point here is to understand what
information constitutes a trade secret that can be judged by the criteria set up in the statute for the protection of information as trade secret. There is no global law for the
protection of trade secret or even a definition of trade secret. Almost 40 countries of the world rely on Uniform Trade secret Act for the protection of trade secret. The
protection of trade secret start with the enactment of Paris convention, the article 10 bis of the convention provide protection to the undisclosed information. Other
agreements which provide global protection to the trade secrets are TRIPS and NAFTA. The Restatement of TORTS provides a definition for a fairly good approximation
of the international censuses: “as a general rule, a trade secret can be any information not commonly known in the relevant industry that is use in connection with a business
to obtain a competitive advantage and the information is secret, is identifiable, and is not readily ascertainable”. This general rule being stated, it is cautioned that the

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subject matter that can be protected as a trade secret will differ in nations, with some3 providing no protection for the trade secret at all. This tries to make the definitions of
trade secret relevant to all the countries of the world. But still different nation have some what different trade secret protection law. As the leading exporter of technology
worldwide, the US is increasingly concerned with strengthening international standard for the protection of trade secrets. The United States has been aggressive in
demanding stronger trade secret protection of American technology by the foreign countries. These efforts are successful and provide a privilege in bringing intellectual
property issue under the rubric of the international trade and GATT. In addition many Asian nations have enacted new trade secret laws as a result of threats by the United
States to impose trade sanctions for failing to provide adequate protection of their intellectual property within their borders. India is also one of the countries which protect
the trade secret by the common law and also rely on the UTSA for the protection. The Indian parliament proposes a new act for the protection of trade secret entitled
“National Innovation act of 2008”, once it come in to force the trade secret in Indian will have a statutory protection.
While the information economy has made the trade secret more important, it has also made them more likely to be stolen. A more mobile work environment of the present
scenario, the increased use of contractors and consultant and increased infrastructure outsourcing all the provide opportunities for the trade secret information to leave the
company’s control. Information technology itself contributed to the theft of the trade secret and also helpful in the storage of information in the easily copied computers and
internet connectivity. This all lead to theft of the trade secret which is commonly known as misappropriation of trade secret. The various national provides the criminal,
administrative, and civil remedies for the theft of the trade secret. As the trade secret are the primary creator of the innovation so must be protected all over the world.
WHAT IS TRADE SECRET? Trade secret could be traced to Roman law, whereas under such ancient legal system a competitor’s corruption of
a slave to divulge his master’s commercial affairs was punished. The modern trade secret law evolved in England during the industrial revolution.
3 Philippines provide no protection to trade secret.

A trade secret is an item of non-public information concerning the commercial practices of proprietary knowledge of a business and is subject to reasonable efforts to
preserve the confidentiality. Public disclosure of trade secrets may sometimes be illegal. Other terms used for the trade secret are “confidential information”, “proprietary
information”, and “know how”. In some jurisdictions, they are referred to as “classified information”. Trade secrets are actually any information that can be used in the
operation of a business or other enterprises that is sufficiently valuable and secret to afford an actual or potential advantage.
A trade secret can be any useful information that is not generally known. A popular definition is “anything the owner of useful information doesn’t want the competitors to
know”.
Almost anything can be a trade secret. As the English court of Appeal stated4:
“It is clearly impossible to provide a list of matters which will qualify as a trade secrets or their equivalent. Secret processes of manufactures provide obvious examples,
through the secrecy of some information may be short lived”
The precise language by which trade secret is defined varies by jurisdiction. The UTSA also provides for the definition of trade secret which is as follow:-
Information including formula, pattern, compilation, program device, method, techniques or process that: derives independent economic value, actual or potential, from no
being generally known to, and not being readily ascertainable by the proper means, other person who obtain economic value from its disclosure or use and is subject of
efforts that are reasonable under the circumstances to maintain its secrecy.
Trade secrets are generally divided in to two categories:
Technical Trade in research and development, secret formulas, designs, computer source code, manufacturing tools and the like.
4 Held in case Faccenda Chicken v. Fowler, [1986] 1 A11 E.R. 617 (C.A.) 623 AT 627

Business Trade Secret: These provide a broader category and cover the vast pool of marketing, sales, and financial and administrative data used to manage a business.
Examples of such business trade secrets include customer lists, marketing plans, financial and accounting data, and information about the employees.
It is necessary that above two types of the trade secret must fulfill the requirement of protection of the trade secret. Trade secret can not cover the information that is
generally known to the professional in the field of generalized know how for example an information necessary for a chemist to complete their synthesis of the drug
efficiently and smoothly like the temperature conditions, amount of the reagent used etc. Such information can not constitute the trade secret. So drawing a line between
what belongs to the employer and what are personnel to the employee is very difficult. In some states there are inventor protection laws that give the employees rights to the
invention made their Secret, Such trade secrets are found their own time.
DETERMINATION OF THE INFORMATION AS TRADE SECRET: Trade secrets are like other
intellectual property rights and have three main elements: information must be secret itself, it should have economic value, and the holder must show reasonable efforts to
keep the information secrets. These three main elements are described here which determine whether the information is a trade secret or not. These are as:-
(I) Unknown requirement: The information is secret when it is not generally known or readily accessible. Such an objective standard means that the information already
in the public domain can not be treated as a trade secret. Moreover this unknown requirement is defined in contact with the persons who normally deal with the secret
information in question. This seems to attach a relative standard of secrecy meaning that information generally known or readily accessible to the persons dealing in a
particular industry or a business is not a trade secret. Thus, in the international trade context, information is not trade secret if it is within a particular industry or business
public domain. It is very necessary to find out the extent to which the information is known outside of the business, by the employees and other involved in the business.

This is similar to that of kept-secret requirement because the more the measures taken by the owner to kept their information secret, less it is known to the person outside
the business.
(II) Kept-Secret requirement: To become a trade secret, the information should be kept secret. The business should implement certain procedure to maintain the secrecy
of their important information. Because of intangible nature of trade secret, the extent of the property defined therein is defined by the extent to which the owner of the
secret protects his interest from disclosure to others5. The owner must take reasonable steps to protect trade secrets 6.The various steps that can be taken by the owner to
keep their information secret, some of them are given below:
Non-disclosure agreement (NDA)7: A non-disclosure agreement (NDA), also known as a confidentiality agreement, confidential disclosure agreement (CDA), proprietary
information agreement (PIA), or secrecy agreement, is a legal contract between at least two parties that outlines confidential materials or knowledge the parties wish to
share with one another for certain purposes, but wish to restrict access to. It is a contract through which the parties agree not to disclose information covered by the
agreement. An NDA creates a confidential relationship between the parties to protect any type of confidential and proprietary information or a trade secret. As such, an
5 It is ascertained by supreme court in the case Ruckeshaus v. Monsanto Co., 467 U.S. 986, 1002 (1984)
6 E.I. dupont deNemours & Co. V. Christopher, 431 F.2d 1012, 1015 (5th Cir, 1970)
7 Refer to http://en.wikipedia.org/wiki/Non-disclosure_agreement

NDA protects non-public business information. NDAs are commonly signed when two companies or individuals are considering doing business and need to understand the
processes used in each others business for the purpose of evaluating the potential business relationship. NDAs can be "mutual", meaning both parties are restricted in their
use of the materials provided, or they can restrict the use of material by a single party.
It is also possible for an employee to sign an NDA or NDA-like agreement with an employer. In fact, some employment agreements will include a clause restricting
employees use and dissemination of company-owned "confidential information." NDAs are used in the IT field, and are often given directly prior to taking a certification
exam. In rare cases, the contract may state that the existence of the NDA itself cannot be disclosed.
Marking information as Confidential: by marking the information as confidential or proprietary, those who gain access to the information are aware of its status and must
realize that they have to keep the information secret. Such a marking is not the same thing as a copyright notice 8. A copyright notice only indicates who the copyright holder
is. It does not say anything about the confidentiality of the material.
Restricting distribution: As the saying goes, a secret known to three people is only secret if two of them are dead. However, assassinating those who know "too much" is
only an option in spy movies. The best thing for companies is to make sure that trade secret information is only disseminated to those people who have a real need to know
the information. For information on paper colored paper can be used to make copying more difficult, indicating to the owner of the paper that the document is not supposed
to be copied. With electronic documents, it is sometimes possible to indicate that the document may not be copied, printed or forwarded. Although such indicators can be
removed, this is difficult to do by accident. Intentionally removing such indicators proves intent to damage the trade secret status of the information.
(III) Utility requirement (Economic value): The information must have value to the business and to the competitors to become trade secret. The trade secret economic
value factor is very interconnected with the secrecy element. It does not encompass any assessable independent book value or a particular investment figure with respect to
8 Refer to http://www.iusmentis.com/copyright/notice/

the secret information. Instead, the economic value of the information increases from the competitive business advantage presupposed by the information secrecy. It is the
usefulness of the information for the ongoing concern that lens commercial value to the information. If information which needs protection under the trade secret protection
system has no use or no economic value in the related industry, then there is need to protect them.
The last but not the least method to determine whether information is a trade secret is to consider the efforts made by the owner to generate the trade secret and investment
made in acquiring or developing the information. Another criterion is the degree of the difficulty a competitor would face in duplicating the information.
Case study: The coca-cola company has most successfully protected is formula for the soft drinks. In a case of Coca-Cola formula in Coca-Cola Co., 107 F.R.D. 288 (D.
Del. 1985), the court held that company take several measures to protect its formula. The written version of formula is kept secret in security vault in Atlanta bank and
the vault is allowed to open only by the resolution by the Board of Directors. Only two employees of the company know the formula at a time and only those persons
oversee preparation of formula. The identity of the both employees is kept secret who have access to the formula. Both employees are not allowed to fly on same plane at
same time. The last element is also present in the formula kept secret by the company that it is not known to the persons of general public as well as to the person
experienced in the relevant field. From the above case study it is clear that a plain assertion of the secrecy is not enough to claim the protection under trade secret. The
claimant owner must take affirmative steps that show his or her desire to veil the information from others.
PATENT AND TRADE SECRET: Trade secret rights are different to the right granted by patent system in most jurisdictions however
both are meant for the protection of the innovation but trade secret protect the inventions and processes which are not patentable. The some differences are listed here:
Trade Secret Patents
The definition of the trade secret is broad Patent system provides mainly three criteria: novelty, non obviousness,
Definition and often vague and is very difficult to industrial applicability which have to be checked in proposed invention
apply. to become patentable
Limit No such limit or boundaries (like claims) Patent also provide for claims that attempt to strictly define the limits of
are provided in the law to define the rights the patent rights

of a trade secret. It is very difficult to draw
a line between protect able and non protect
able information, when think about trade
secret
The trade secret may provide protection to
any innovation for the unlimited period9 of
time. Likewise they may instantly
terminated by inadvertent or intentional
public disclosure such as patents, article,
Every patent regime grant protection for a limited time period10, after
Term of protection journals, or presentations. The protection
which any one can use the patented invention at own will.
provided under trade secret last as long as
the information met the requirement of
protection. Once it is disclosed to public it
loses its protection. Trade secret protection
could be perpetual.
The trade secret rights are volatile in A patent right can be destroyed only through expensive and time
Volatile Nature nature in contrast to the stable nature of consuming challenges against the validity of the patent but a trade secret
patent rights right can be destroyed easily by the inappropriate public disclosure.
9 The trade secret of the coca-cola company is a well known example of a trade secret which acquires protection at its best. It has been protected through such regime
for more than a century.
10 Term of protection granted to a patent is 20 years from the effective filing of the application.

Reverse engineering or independent development Trade secret may be discovered and Patent rights are not subject to independent development and reverse
exploited by the independent development engineering. For the patented product the subsequent independent
and reverse engineering. The trade secret development will cause the patent infringement charge. The subsequent
user is not liable for the trade secret reverse engineering of the patented product or invention on the market
infringement if he/she obtained it by place will not excuse patent infringement.
lawful means.
An acquisition of the patent is a long and costly process that could
Economic analysis support trade secret undermine profitability. In spite of this, the trade secret protection
Economic aspect
protection economic implications are limited to the cost of keeping the information
secret
WHY PROTECTION OF TRADE SECRET IS NECESSARY? Trademarks and patent are the well known
form of intellectual property rights, and are highly effective in protecting the creation of intellect of human mind. But the corporate houses are trying to convince their
respective government to provide protection of trade secret; they think trade secret to be back bone of their operations. The protection of the trade secret seems to be very
essential for the small sized industries, as they can not afford for the patent protection which is very expensive process. The trade secret also had an added advantage; they
would be sole possession of the holder as long as he is able to keep it secret and even if the competitor acquired through lawful mean the original holder can file patent
application to protect their innovation.
Generally, the trade secret have to be protected from the exploitation by those who either obtained access to someone trade secret by improper means or those who obtain
the information from one who knows or should have known the information by improper means; or those who breach the confidence/promise to keep the information
confidential. After the theft of the trade secret, if owner can prove that reasonable efforts have been made to keep the information confidential, the information remains a
trade secret and generally remains legally protected. Such reasonable efforts taken by the owner will prove highly beneficial during the suit in infringement against the trade
secret. Conversely, trade secret owners if cannot evidence reasonable efforts at protecting confidential information, risk losing the trade secret, even if the information is
obtained by the competitors illegally.

The policy objectives behind the protection of trade secrets are the maintenance of ethical commercial standards and the encouragement of research and innovation. In the
technology industry, trade secrets are particularly useful to protect a patentable invention during the application process, information not covered by the patent and
information this is not patentable. The other rationale behind the protection of trade secret is that creative efforts made by the owner are valuable because they are product
of creative work. To encourage those efforts, the society needs to ascribe the benefits of such creative labor to the owner. That is why trade secret deserved protection in
order to make them valuable assets.
“PROS AND CONS OF RELYING ON TRADE SECRET PROTECTION”
When deciding whether to patent a technical trade secret or to keep it as a secret, the owner of the confidential information must be aware of the several pros and cons of
protection under the trade secret system.
PROS OF THE TRADE SECRET PROTECTION:
 The trade secret protection may continue indefinitely as long as the secret is not revealed to the public11.
 Trade secrets involve no registration cost.
 Trade secret protection arises immediately at the time they are discovered.
 Trade secrets are very easy to obtain, although they require some diligence to maintain12.
11 The case of the coca-cola company.
12 Rockwell case
11

 Formulas are ideal to protect by trade secrets. Formulas may be more difficult to obtain patent protection. As formulas and algorithm are not patentable subject matter to
the extent that they merely abstract ideas. The formula or mathematical algorithm must be reduced to a practical application.
 In case of software, it is very difficult to detect the infringement if the competitor has embedded the formula in the software. But if the processing or working of the
software is kept secret, it will be very easy to protect the interest of the owner.
CONS OF TRADE SECRET PROTECTION:
Along with the advantages there are some disadvantages of the trade secret protection. The owner can benefit from the trade secret protection by keeping these in mind.
 Reverse engineering: if the trade secret is embodied in an innovative product, the competitors may be able to reverse engineer the product, discover the secret and be
thereafter entitled to use it.
 Once the trade secret is made public, anyone may have access to the information and anyone can use it at own will.
 Trade secret may be patented by someone else who develops the relevant information by legitimate means.
THEFT OF TRADE SECRET: MISAPPROPRIATION: Trade secret does not provide the owner with the exclusive
right to use the confidential information. Therefore a person is not legally precluded to use a trade secret, as long as the trade secret was acquired by the improper means.
The acquisition of the trade secret a person using improper means is known as misappropriation. Misappropriation is an amorphous tort that is a part of state unfair In the
terms of law, the misappropriation is the intentional, illegal use of the property or funds of another person for one’s own use or other unauthorized purpose, particularly by a
public official, a trustee of a trust, an executor or administrator or a dead person’s estate or by any person with a responsibility of care for and protect another’s assets. As
the trade secrets also constitute a property so the intentional or illegal use of the trade secret is also a misappropriation.
WHAT IS MISAPPROPRIATION?

Misappropriation covers illegal acts, such as wiretapping or theft. But also improper acts that might strictly speaking legal can qualify as misappropriation. For example, in
a famous US lawsuit on trade secret theft, a chemical company was building a plant in which a secret process was to be used. At some point during the construction it was
possible to look through the roof to see details of the process. A competitor hired a small plane to fly over the plant and took photos. Although flying over someone's
property is not trespassing, this act was still held to qualify as misappropriation because it was performed explicitly for the purpose of circumventing the precautions taken
by the chemical company to protect its secret process. In general terms, misappropriation is the wrongful acquisition, disclosure or use of a trade secret, which is defined by
the various trade secret acts as:
acquiring the secret through improper means or from another person knowing that they acquired the trade secret by improper means;
disclosing or using the trade secret without the consent when the circumstances create a duty not to disclose or use it.
In a case of International News Service v. Associated Press13 , seminal 1918 Supreme Court case creating the doctrine of misappropriation as part of unfair competition law.
In that case, AP sued INS for taking its news stories on the east coast and providing them to customers on the west coast. INS accomplished this by taking advantage of the
difference in time zones and using the intervening time to rewrite the news stories and wire them to publishers on the west coast. Since the essential facts were first
extracted and articles rewritten, there was no copyright infringement. Nevertheless, the Supreme Court granted relief since the defendants had “misappropriated” the “hot
news” generated by AP. The Court reasoned that the plaintiff had acquired an intangible quasi-property right in the news (at least temporarily while it was “hot”).
BREACH OF CONFIDENTIAL RELATIONSHIP:
13 Refer to http://www.law.uconn.edu/homes/swilf/ip/cases/ins.htm
13

Misappropriation of the trade secret is thought to be occur when the trade secret has been acquired improperly or under an obligation not to disclose or use it; or from
someone else who had an obligation not to disclose it; or by accident or mistake, if before using or disclosing the trade secret the person acquiring it learns that it is a trade
secret14.
Misappropriation can also occur when a confidential relationship is breached. If someone receives information under NDA and then reveals this information to others, he
violates the NDA and so is guilty of misappropriation of the trade secret information. But breach of confidentiality can also occur even if no NDA was signed. The
circumstances might make it clear that a confidential relationship exists. For example, a contractor who is asked to submit a quotation to build a certain product should
normally consider the information regarding the product to be confidential. At the same time, the person soliciting the quotations should know that these quotations should
be kept confidential. Knowing the quotations of his competitors enables a contractor to lower his price to have a bigger chance of getting the contract.
LIABILITY FOR MISAPPROPRIATES OF TRADE SECRETS:
Someone who misappropriated a trade secret is liable for damages. Also, the owner of the information can apply for an injunction to stop him from using the information.
The misappropriation may have resulted in loss of the trade secret status. Then an injunction is often limited in time to the "lead time" obtained by the misappropriator. That
is, the court tries to determine how long it would have taken to independently come up with the same information, and forbids the misappropriator to use trade secret
information for that period. If in the meantime a lot of different people have legitimately acquired the protected knowledge, the court is less likely to award an injunction.
The only remedy then is a compensation for the damages suffered by the loss of trade secret status. These damages can be computed as the profit made by the
misappropriator.
14 These are the some reasons why companies even after high security and various protective measure lose their trade secrets.

In a case of Garth v. Staktek Corp15., the question presented on appeal was whether a temporary injunction should be upheld against a corporation and an individual who
would otherwise continue to make use of certain trade secrets obtained through a prior confidential relationship. Garth, Burns and Campbell formed a joint venture in
January, 1990 to produce a certain three-dimensional memory package for computer applications. In turn, Garth joined RTB Technology, Inc. (RTB) to proceed with a
competing product. Thereafter, Staktek brought suit against RTB. The trial court issued a temporary injunction and RTB appealed. On appeal, RTB argued that the public
disclosure of a patent abstract in Brussels on February 20, 1992 vitiated any trade secret rights. RTB also argued that its activities in the design of a competing product did
not constitute "commercial use" for purposes of finding a misappropriation of trade secrets. The Texas Court of Appeals rejected both arguments. Any misappropriation of
trade secrets, followed by an exercise of control and dominion, is considered a commercial use. The trial court found that RTB had used Burns' trade secrets to develop its
competing product before the Brussels publication. RTB's "use" of trade secrets before such information was allegedly disclosed to the public is a wrongful act that makes
imminent financial harm from unfair competition clearly foreseeable. An irreparable injury exists when unfair competition deprives the initial producer of a fair
opportunity to market its product. Lost opportunity to gain control of a new market may result in unquantifiable losses for which there is no adequate remedy of law. By
appropriating Staktek's confidential information before its publication, RTB was able to prepare to enter the market at the same time as Staktek, and thus could deprive
Staktek of the competitive advantage offered by the normal developmental period. Additionally, a single industrial standard generally dominates the market for computer
components. The trial court found that only one product is likely to survive, and that RTB's licensing a competing product with major manufacturers would probably
destroy Staktek's opportunity to develop the standard and market its product. To provide any real protection in situations in which the competing company uses the creator's
trade secrets to concurrently develop a similar product, injunctive relief beyond the date the company creating the technology publicizes its product is an appropriate
remedy.
15 Refers to http://www.asksam.com/cgi-bin/as_web5.exe?Command=Doc&File=halligan&DocID=144363&Request=misappropriation
15

“Industrial espionage16” is one of the most common methods to misappropriate a trade secret. The UTSA provides civil rather than criminal liability for the
misappropriation of trade secrets and also provide a private cause of action for the victim. Along with these another remedies for the misappropriation of trade secret in
another countries are injunction and damages which will be explained later.
NO MISAPPROPRIATION
Trade secret protection does not extend to someone who obtained the same information from another source. A customer list may qualify as a trade secret, but a competitor
may have compiled the same list independently (for example, if the number of potential customers is limited). Also, the information could have been obtained from a public
source, which means that no trade secret misappropriation occurred. This applies also if the information can be derived from a product sold by the information owner,
unless the product was sold under NDA.
PROTECTION OF THE TRADE SECRETS: There is no global law of the trade secret protection or even not a worldwide
common definition of what constitute a trade secret.
A. LEGAL PROTECTION OF TRADE SECRETS: Trade secret rights are protected under the state as well as under federal law by different statute as explained here:
STATE LAW: Trade secrets are mainly protected under the state law rather than federal law in many countries. A model law which is adopted by almost 40 states mainly
U.S. is “Uniform Trade Secret Ac17t”. UTSA was drafted by the National Conference of Commissioners on Uniform State Laws in 1970 and after that amended in 1985.
Approximately 45 states have adopted the modified version of the UTSA.
16 Refer to http://en.wikipedia.org/wiki/Industrial_espionage
17 Refer to http://en.wikipedia.org/wiki/Uniform_Trade_Secrets_Act

UTSA is the relevant law for the unauthorized commercial use of a trade secret by a third party, first of all enacted in U.S. The U.S. has such legal instrument to protect
trade secrets. The nature and methodology used is this act is quite different from the others.
FEDERAL LAW: The misappropriation or theft of the trade secret is a federal crime18 by the Economic Espionage Act19 of 1996. This law contains two provisions for
criminalizing two sort of the activity. The act criminalizes the theft or misappropriation of the trade secrets for the commercial or economic purposes 20 or for the benefit of
the foreign powers21. The statutory penalties are different for the two offenses.
18 A crime that is either made illegal by federal legislation of that country or a crime that occur federal property of that country.
19 18 U.S.C. section 1831 to 1839
20 18 U.S.C. section 1831 (a)
21 18 U.S.C. section 1832
17

The first, 18 USC section 1831 (a) criminalizes the misappropriation of trade secrets (including conspiracy to misappropriate trade secret and subsequent acquisition of
such misappropriated trade secrets) with the knowledge or intent that the left will benefit a foreign power. Penalties for the violation are fines up to US $500,000 per
offense and imprisonment of up to 15 years for individuals, and fines of up to US $ 10 million for organizations. The second, 18 USC section 1832, criminalize the
misappropriation of trade secrets related to or included in a product that is produced for or placed in interstate (including international) commerce, with the knowledge or
intent that the misappropriation will injure the owner of the trade secret. Penalties for violation of section 1832 are imprisonment for up to 10 years for individuals (no
fines) and fines of up to US $5 million for the organization. In adition to theses penalties, section 1834 of the EEA also requires criminal forfeiture of any proceeds of the
crime and property derived from proceeds of the crime; and any property used, or intended to be use, in commission of the crime.
Trade secrets are also protected under the Commonwealth common law jurisdictions, in this confidentiality and trade secrets are regarded as an equitable right rather than
a property right22.
B. PROTECTION OF TRADE SECRET BY SUI GENERIS SYSTEM
The large repository of the knowledge and practices are locked up with our vaidyas, hakims, artisans and artists, which remain as a trade secret and have current or potential
commercial value. Their protection is vital for the survival of these systems and practices. To protect the vast repository of undisclosed information and knowledge which is
kept trade secret by their practitioners, India should consider their protection under a pro-active legislation under a “sui generic” system. This sui generis trade secret
protection23 is provided under Article 10 bis of the Paris Convention and Article 39 (2) and 39 (3) of TRIPS 24. Most of the information is already goes with the traditional
22 There is an exception in Hong Kong where a judgment of the High Court indicates that confidential information may be a property right
23 Refer to http://www.tradesecretsblog.info/2008/11/trade_secrets_protection_in_in.html

people, which could prove beneficial for the mankind if known to us, by keeping it trade secret. Hence their protection is very essential. These types of practices and
products, possessed by our large number of our vaidyas, hakims, artisans and artists, can be protected under “Sui Generis” legislation.
C. INTERNATIONAL TREATIES FOR THE PROTECTION OF TRADE SECRET:
There is an increasing recognition of the importance of trade secrets and trade secret protection in the United States and abroad. It has been estimated that the majority of
working technologies worldwide is protected as a trade secret rather than by patent. Also the globalization of the commerce requires even small companies to protect their
trade secret on international basis. If the companies fail to protect their trade secret internationally, then during business in abroad or foreign countries they have to sacrifice
competitive advantage. Various treaty and the agreements are enacted to protect the intellectual property on global basis that also protect the trade secret. Both the North
American Free Trade Agreement (NAFTA) and the Agreement on Trade Related Aspects of Intellectual Property (TRIPs) ratified during the Uruguay Round of the General
Agreement on Tariffs and Trade (GATT) include specific provisions directed toward increasing the protection of trade secrets. There are no comprehensive international
treaties pertaining to the trade secret. NAFTA and TRIPS provide only brief attention to the topic. Furthermore, in the past ten to fifteen years, there has been a trend toward
the adoption of domestic statutes specifically directed at the increased protection of trade secrets, particularly among Asian nations. There is a little difference in the
protection provided by the various international treaty and agreements:
24 Refer to http://www.wto.org/english/docs_e/legal_e/27-trips_04d_e.htm
19

(I). PARIS CONVENTION: The Paris convention25 for the protection of industrial property (1883) was enacted, in part, to discourage the unfair competition. Article 10
bis of the Paris Convention26 (covering unfair competition) provided a potential source of support for the international standards of trade secret protection, but the language
of this provisions is only poorly suited for this purpose. The Paris convention prohibits unfair trade practices among its members, means “Any act of competition which is
in conflict with the fair customs of the industry and trade is not acceptable”. The examples of the unfair competition provided by the Paris convention do not include trade
secret infringement. Thus, it is not clear from the convention statement if economic espionage or other unfair means to appropriate a trade secret comprises unfair
competition. But the article 1 (2) of the Paris convention stipulates that the industrial property should be understood in its broadest sense. Therefore, legal consequences of
interpreting the Paris convention in the field of trade secret is deemed to be unclear because the lack of enforcement provisions in the Paris Convention left the international
community without a legal apparatus to achieve the protection level desired.
(II) TRIPS AGREEMENT: The main aim of the TRIPS agreement27 (1994) is to provide internationally accepted standards of protection of intellectual property rights
and it is implemented by the WTO. All the major industrialized countries are members of this agreement. GATE created the WTO which is responsible for the development
25 Refer to http://www.wipo.int/treaties/en/ip/paris/trtdocs_wo020.html
26 Refer to http://www.uspto.gov/web/offices/pac/mpep/documents/appxp_10_bis.htm
27 Refer to http://www.wto.org/english/tratop_e/trips_e/t_agm0_e.htm

and administration of agreements and programs for the improvement of world commerce. WTO established an administrative procedure for resolving the trade secret
disputes.
It is a point to think whether trade secrets are form of intellectual property rights? The general opinion at the GATT negotiations was that unauthorized use of “confidential
information”, belonging to others, is an unfair practice. The developed countries wanted to further protect their economic interests and one such way was to provide
adequate protection to the capitalists, which could be achieved by protecting their creations. Various provisions of the TRIPS
Article 39 of the TRIPS, is a first multilateral acknowledgement of the essential role of the trade secret in the market place and this article stipulates that undisclosed
information, often synonymous to trade secrets, can be protected as provided for in Article 10 bis of the Paris Convention.
Article 39, clause 2 states that all members will protect undisclosed information from commercial exploitations.
Article 39, clause 3 states that data or information submitted to Government for regulatory or other approvals have to be protected from leakage to or theft by third parties.
Section 7, of the TRIPS agreement is the most relevant provisions for the protection of undisclosed information.
Article 39 of the TRIPS is certainly an international acknowledgement of the importance of the trade secret too worldwide trade. And is also a victory for the industrialized
western nations in their search for a better legal framework to protect industrial property like trade secret. TRIPS include provisions for the protection of trade secrets,
under the general term “undisclosed information”, but are silent on the modalities of achieving this and have left it to the member country as how much protection they
provide. Member’s countries must follow standard requirement for what constitute trade secret, infringements and available remedies.
(III) NAFTA (NORTH AMERICAN FREE TRADE AGREEMENT)28: The U.S., Mexico and Canada are the signatories to the North American Free Trade Agreement 29
(NAFTA) in late 1992. NAFTA carries a provision directed to provide uniform minimum standards for protecting trade secret. NAFTA largely follows the tenets of trade
28 Refers to http://www.international.gc.ca/trade-agreements-accords-commerciaux/agr-acc/nafta-alena/texte/index.aspx
21

secrets law in the United States. A trade secret under NAFTA is defined as commercially
valuable information, which is not publicly known and the owner of which takes
reasonable steps to maintain the information’s secrecy.
The article 1711 (1) of this agreement states the protection of the trade secret. It states
that each party shall provide the legal means for any person to prevent trade secret from
being disclosed to, acquire by, or used by others without the consent of the person
lawfully in control of the information in a manner contrary to honest commercial
practices, in so far as: The information is secret, has actual or potential value and the
person lawfully in control of the information has taken reasonable steps under the
circumstances to keep it secret. The NAFTA members are responsible for protecting trade
secrets and to prevent the unauthorized acquisition and use of materials that classify as
trade secrets. Among the available remedies in each of these countries, injunctions as
well as monetary remedies are required.
It seems clear from the above that NAFTA protection of trade secret is almost the same as
that provided by the TRIPS to undisclosed information. However the protection provided
by NAFTA is broader, to the extent that confidential information could have present or
potential value. While the TRIPS does not recognize such a dichotomy, it needs the
protection must have potential value. Other contrast are that NAFTA allow its members
to require some sort of the tangible evidences for the trade secret protection30, also
NAFTA prohibits the parties from limiting the duration of the protection. NAFTA
discourages or impedes the trade secret licensing process31. TRIPS is completely silent as
to the above elements.
29 Refers to http://www.fas.usda.gov/itp/Policy/nafta/nafta.asp
30 Article 1711 (2) of the NAFTA agreement
31 Article 1711 (3) of the NAFTA agreement

(IV) EUROPEAN UNION: the European Union32 does not have any specific legal
provisions to protect the trade secrets or undisclosed information. One of the problem
facing this common market and economic union is that “the exercise of the industrial or
commercial property rights must inevitably restrict the competition; indeed their very
purpose is to give their owner some protection against competition by giving him
monopoly rights for a certain period of time as a reward for his creative endeavor or
acquired goodwill in his product”. From this follows that the possible perpetual trade
secret protection is somewhat in doubt within the EU. It could be interpreted as an
industrial property right abusive exercise infringing free flow of goods. The actual
situation of the trade secret protection in the EU is not yet clear.
D. BRIEF OVERVIEW OF TRADE SECERET PROTECTION IN DIFFERENT
NATIONS:
Depending on the legal system, the protection of the trade secret is base upon the case
law on the protection of confidential information or on specific provisions enacted in the
different countries. The protection of the trade secret is slightly different under various
nations but the aim and nature of protection is same. There is no law on the trade secret
protection which provides them protection in all countries at once. So for the trade secret
protection, the individual countries are doing well and there was a noticeable movement
towards increased protection of trade secret in many countries of the world. There is
found a surprising uniformity in the treatment of trade secret.
(I) UNITED STATES: many aspects of the doctrinal development of the law of trade
secret in the United States came from England to protect commercial or industrial secret
information. At first the trade secret law in US has been an area traditionally regulated by
the individual states common law. The first attempt to codify the judge made law of the
trade secret was the Restatement (First) of torts of 1939. After that a more modern
approach was incorporated by the Restatement (Third) of Unfair competition (1993).
Trade secret laws are state granted rights. Nearly all states have adopted the UTSA (as
explained earlier). The UTSA allows the recovery of the plaintiff’s actual losses and the
32 Refer to http://en.wikipedia.org/wiki/European_Union

amount by which the defendant has unjustly benefited from the misappropriation.
Damages may include lost profits and the costs associated with repairing one’s business.
Exemplary damages can be recovered in exceptional cases. Injunctions are also available.
The other act which makes the theft of the trade secret is a federal crime is Economic
Espionage Act.
(II) JAPAN: Japan enacted it own national trade secret protection law which is effective
from June, 1991. Trade secret in Japan includes any “technical or business” information
that has commercial value, is not in public domain, and which has been “administered” as
a trade secret. The infringement of the trade secret occurs when a person procures a trade
secret by theft, fraud or extortion. A person whose business interests are infringed by
misappropriation of the trade secret is entitles to seek an injunction, a disposal of object
created by the act of the misappropriation, and damages against the person who is
infringing such business interest. The statute in the Japan has similarities with UTSA.
There are no criminal sanctions under the statute operating the Japan related to trade
secret and UTSA. There is a provision in both the statute that the owner of the
information can claim for the infringement in 3 years after the discovery of trade secret
violation33. After considering the case of Asahi Engineering K.K. v. Dai-ichi Seiko K.K34.
the Ministry of Economy, Trade and Industry (METI) released the proposed report of
future revisions of the unfair competition act in December 2002.
33 The unfair competition prevention act, article 2, 3 and 4
34 Judgement of the Fukuoka District Court, December 24, 2002.

(III) CHINA35: the Law of the people’s republic of china (PRC) against unfair
competition was promulgated by the state council in September 1993 and became
effective on December 1, 1993. Trade secrets are defined Trade under Chinese law as:
 Technical and management information that is unknown to the public;
 Can bring economic benefits and is of practical value, and
 Which the rightful party has adopted measures to maintain its confidentiality.
Probably the most famous trade secret in the world is the exact formula for the
manufacture of Coca-Cola. China, there is protection against disclosure of a trade secret.
Article 10 of the Anti-Unfair Competition Law, prohibits business operations from
engaging in any of the following acts: Obtaining the trade secrets of any rightful party by
theft, inducement, duress, or other illegal means; Disclosing, using or allowing others to
use the trade secrets of any rightful party obtained by illegal means; Disclosing, using or
allowing others to use trade secrets in breach of an agreement or the confidentiality
requirements imposed by any rightful party. There is also third-party liability.
(IV) UNITED KINGDOM: The UK has probably the most developed trade secret law,
mainly due to the industrial revolution and its common law legal system. Under the UK
statute search and orders may be issued to protect the trade secrets and preserve the
evidences. The UK provides broad and effective protection for the trade secret. There
exists the full panoply of the remedies for “a breach of confidence” including the
injunctive relief, damages and the third party liability.
(V) FRANCE: France also provides protection for the industrial and commercial secrets.
France law recognizes three types of the trade secrets: Manufacturing secret 36, Know
35 Refers to http://beijing.usembassy-
china.org.cn/uploads/images/6koRQt1GbIOZujaZbTTFVg/Trade_Secrets_Protection_in_
the_Workplace_in_China.pdf
36 French translation: Secrets de fabrique

How37 and confidential business information, taken together are equivalent to Anglo-
American trade secret concept. In general the manufacturing secrets have their roots in
the French penal code and are not subject to a particular law. These are secrets
information regarding some sort of the industrial application capable of providing the
commercial or market value. Regarding the commercial secrets there is no specific
mention in the French legislation. French law provides for the penal sanctions against
the theft or misappropriation of the manufacturing trade secret38s. Companies that are
victims of manufacturing trade secret theft may also file complaint before the civil courts.
The same applies when the wrongful acts have not been committed by an employee but
the third party using fraudulent devices. In this case, complain is to be filed on the basis
of unfair competition act39. Injunctive relief, damages and third party liability are the
available remedies to the plaintiff.
(VI) BRAZIL: Brazil revamped its intellectual property laws in 1996. Trade secrets are
protected under the statute of “unfair competition” in Brazil. To determine whether a
information qualify as a trade secret or common knowledge, knowledge in the public or a
knowledge that is apparent to the person expert in the field; the variant of section 75740 of
the UTSA is used. The owner of the information which fulfills the requirement to be a
trade secret must take positive steps to safeguard the safety of the information. The
37 French translation: Savoir-faire
38 Article L621-1 code de la propriete intellectuelle and article L 152-7 of the code du
Travail
39 Pursuant to article 1382 et seq of the French civil code
40 6-factors

industrial and the business secrets are protected in Brazil under the trade secret
protection. The remedies to the trade secret infringement available in Brazil are:
compensatory damages, punitive damages and injunctions, these remedies are available
through Brazilian Civil Code and Code of Civil procedure. There are also criminal
sanctions available against anyone who release, exploits or use without authorization a
trade secret to which the person had access by virtue of contractual or employment
relationship. It is clear that Brazil approaches the unfair competition act to deal with
protection of trade secrets.
(VII) ITALY: italy also provides strong protection for the trade secrets. The trade secret
theft is a crime in italy41. The full panoply of the trade secret misappropriation are
available42. The new Italian code of intellectual property43 provides legal protection for
the corporate secret information. The code provide that anyone who acquire or receive
the corporate secret information shall be bound not to use or reveal the company
information and the commercial or techno-industrial experience to third parties44.
41 Under article 513 and 623 Codice Penale
42 Under article 2598 (3) and 2600 Codice Civile
43 Codilla della proprieta industriale came in to force on March, 2005.
44 Article 98 and 99.

(VIII) POLAND: the provision of the unfair competition Law of April 16, 199345 as
amended cover disclosure, unfair acquisition, unfair use of trade secrets. The law
provides injunction and other available remedies for the infringement of trade secret,
along with this damages and monetary relief46. The law also provides the penal remedies
in the form of a fine, restriction or imprisonment for up to two years47.
TRADE SECRET PROTECTION IN INDIA:

Indian parliament proposed National innovation Act 2008 in to law for the protection of
trade secret. Before this the trade secret protection in India follows the tradition of
common law and also in some protected the trade secret though the contracts. The Indian
courts always looked for the contractual obligations48 to enforce the trade secrets, as they
are strong proof for the making the information trade secret. The National innovation act
2008 is named by the Department of Science & technology of Government of India and
not by the Department of Industry Policy and Promotion under the ministry of
commerce49. The complete scheme of the act, except the provisions concerning the trade
secret, is more like a policy frame work on innovation encouragement rather than a
substantive legal provision and the related enforcement mechanism. It seems as the bill is
45 http://www.polishlaw.com.pl/pct/fileakty_prawne47_0.pdf
46 Article 18 of the act
47 Article 23 of the act
48 Except the case of John Richard Brady and Ors. V. Chemical Process Equipments P.
Ltd. And Anr [AIR 1987 Delhi 372] where the court relied on the principle of equity to
enforce the trade secret.

drafted on the policy base study and it continues to look like a policy paper. The bill
contains some vary forward thinking provisions such as creation of a market place for
trading in innovation- something that companies like Ocean Tomo is advocating. The first
online auction for the patents is conducted in Bangalore a few months ago while it is a
good move to provide legal backing to such forward thinking ideas, the law must be
outcomes of a deeper analysis of the underlying implications. The proposed act is not a
stand-alone legislation for the protection of trade secret, but also includes provisions for
creating the national environment that support the innovation. This act is thought to be
enacted in Indian to meet the TRIPS obligations and also to address the emerging issues
of the intellectual property issues. It is the first time in the history of India, that
government of India proposes a law which combines the intellectual property with the
other legislative objectives (which are not so closely related).
The Bill contain the of protection of the trade secret relating the nature of protection, for
whatb type of the contents are protected under the act and also third party liability to the
infringement.
THE NATURE OF PROTECTION:
The chapter VI of the proposed act deals with trade secret protection which include the
substantive character of the trade secret compared to policy style prescriptions in other
chapters. While the drafters have made an earnest effort to propose a different “look and
feel” for the proposed provisions. The draft Section 8 (1) allows parties to “contractually
set out the terms and conditions governing rights and obligations in respect of
confidential information, including with a view to maintain confidentiality and prevent
misappropriation.” On the face of it, this does not alter the position of law – parties were
always, it would seem, able to do this. Typically, claims concerning protection of trade
secrets are brought to enforce confidentiality agreements, or on the grounds of the tort of
breach of confidence. Equitable obligations often tend to arise in this regard – for
instance, directors of a company are under a fiduciary duty to the company; and one of
49 This government body is generally involved in dealing with policy and law making in
the area of intellectual property rights.

the duties of directors as fiduciaries is to prevent misuse of corporate information and to
refrain from using corporate information for their personal benefit.
CONTENT TO BE PROTECTED
Obviously the “confidential information” is protected under the Bill. It might be useful in
this connection to look at the US position. In the US, laws protecting trade secrets are
enacted by the states, but most such laws are based on the model UTSA. it continues to
resemble the provisions of UTSA. The most common similarity between the National
Innovation Act 2008 and the UTSA is the definition of the trade secret. The national
innovation act 2008 follows the pattern of the definition contained in the section 4 of the
UTSA. Both the definitions have basic ingredients that the information must be secret, it
must have commercial value, and the reasonable steps must have been taken by the
person in control of it to keep it secret. This might very well be compared with the rather
similar Section 2 (3) of the Indian Innovation Bill which defines “confidential
information”.
“Confidential Information means information, including a formula, pattern, compilation,
program device, method, technique or process, that: (a) is secret, in that it is not, as a
body or in the precise configuration and assembly of its components, generally known
among or readily accessible to persons within circles that normally deal with the kind of
information in question; (b) has commercial value because it is secret and (c) has been
subject to responsible steps under the circumstances by the person lawfully in control of
the information, to keep is secret.
IMPACT ON THIRD PARTIES:
Moving on to another aspect, Section 9 of the Bill says that when confidential
information been received by a third party without the consent of the complainant,
“obligations of confidentiality and equitable considerations” may also create rights and
obligations in respect of the confidential information. The tort of misappropriation was
originally developed in American Courts to impose liability on third parties for the use of
trade secrets.
The interesting and perhaps most substantive (at least in terms of enforceability) part of
this Bill are the provisions on trade secrecy or "breach of confidence". To appreciate this
branch of intellectual property, think the secret Coke formula, the KFC formula and in the

Indian context, the Ayurvedic "massage" formula by the famous Kottakal family. Under
the "trade secrecy" provisions of the NIA, Kottakal can take steps to prevent the wrongful
disclosure of its massage techniques by ex -employees etc to third parties. With an
increasing number of "trade secrecy" cases coming up before Indian courts, this promises
to be welcome development for the IP community. So far, courts have protected trade
secrets under the common law "breach of confidence" doctrine. With a statutory
enactment, there is bound to be more clarity and certainty in the law. However the trade
secret protection under the national innovation act is similar to the American statutory
model of trade secrecy (where trade secrecy norms are codified into a statute), so it is to
be kept in mind that whether India need the protection system from the American system
or want to retain the flexible case law (judicial) approach that is currently endemic to the
UK and India. Both approaches come with their respective pros and cons.
The act has another provisions50 for the annual integrated science and technology plan
Specific Measures for Supporting Innovation, Specific Measures for Supporting
Innovation, and also define the innovation along with economic significance.
REMEDIES FOR THE TRADE SECRET

INFRINGEMENT: Law encourages the flexibility in determining
damages for the trade secret misappropriation; there are many potential remedies
available to the trade secret owner for the misappropriation of the trade secret. The
available remedies are:
(I) INJUNCTIVE RELIEF: The disclosure or use of trade secret information may be
enjoined. Injunctive relief is the most common form of relief sought in trade secret
litigation. The standard for issuing a preliminary injunction under a state’s trade secret act
is usually the same as that for other preliminary injunctions. Most court conducts a
balancing test among the four factors when determining whether a preliminary injunction
is warranted:
 The likelihood of the success on the merits;
50 Refers to http://spicyipindia.blogspot.com

 The irreparable harm that could result if injunction is not issued;
 The impact on the public interest of granting or denying the injunctions;
 The possibility of the substantial harm to others, if the injunction is issued.
The majority of the jurisdictions that view trade secrets as a property right tend to hold
the right is only valuable as long as it remains secret and protect it for the period it
remains secret or for the period of time it would have defendant to develop the same
secret independently. The rationale for this is that trade secret law protect only against
unfair competition, it is not intended to stifle legitimate competition. Therefore, the
injunction should only remove the head start advantage the misappropriator might
otherwise enjoy because it was not shaded with the same development time and expense
as trade secret owner. Some jurisdictions focus on the idea that trade secrets are generally
misappropriated by the some breach of confidence or confidential relationship.
In a case Total Car Franchising Corp. v. L & S Paint Works, Inc., court did not conduct
the complete assessment of all the four factors as described above, instead found that
plantiff would likely to succeed on its claim of breach of post termination non
competition and confidentiality agreement. Court also found that other three factors
favored the franchisors.
Typically, the defendant learn of the trade secret either through former employees of the
plaintiff or because plaintiff disclose the trade secret to defendant in a confidence.
Because breach of confidence can not be remedied in any period of time, an injunction
against future use or the disclosure of the trade secret may be perpetual.
In one more case a company in Singapore got a court injunction against three of its
former employees from starting a business for 18 months, in an area where trade secret
acquired during their employment will be used. The court ruled that the Non-disclosure
Agreements signed by them were valid, binding and enforceable. However, if a
competitor (who had no access to the secret) decoded by reverse engineering to obtain the
secret by lawful means then there is no violation of trade secrets.
(II) CIVIL TRADE SECRET REMEDIES: A variety of civil remedies are available
for protecting against the theft of trade secrets. Most jurisdictions provide for some form
of preliminary and final injunctions to prevent further disclosure and use of the trade
secret information. Most jurisdictions also provide for recovery of actual damages

incurred by trade secret owner as a result of the misappropriation. These damages could
include the loss of profits to the trade secret owner, the gain enjoyed by the trade secret
thief, or a reasonable royalty. U.S. and other jurisdictions will permit the award of
punitive damages for malicious and willful trade secret misappropriation. In some
jurisdictions, the trade secret owner can also be protected by a judgment for attorney fees
and for prejudgment interest to recover for the cost of the lost value of money during any
ensuring litigation.
These civil remedies for trade secrets are augmented by the contract laws from the
various jurisdictions. If the trade secret is a subject of a license, the misuse or
inappropriate disclosure would constitute a breach of that agreement, subjecting the
license to contract damages and other remedies. If the rights of the parties to injunctive
relief and damages are to be curtailed in any way, the license agreement should
specifically and clearly provide for the limitations of the remedies available to either
party.
(III) CRIMINAL SANCTIONS: The trade secret theft or infringement is considered as
a criminal act in some jurisdictions. The United States and most other industrial countries
also provide for criminal sanctions against trade secret theft. Virtually all states in the
United States have criminal laws protecting trade secrets. Furthermore, the federal 1996
U.S. Economic Espionage Act provides for the federal protection against the theft trade
secrets. The sanctions under the Economic Espionage Act can be substantial. A violation
of the statute can bring fines up to $ 10 million and prison terms up to 15 years for trade
secret theft. This criminal statute must be kept in mind when trade secret rights are
defined and controlled in any agreement.
(IV) MONETARY DAMAGES: The damages are provided in some cases for the
infringement of the trade secret. The monetary damages are generally awarded in case
where there has been wrongful use of owner’s trade secret in a manner that generate
measurable damages. These are calculated by case on case basis. These may be measured
by:
 Profits lost due to trade secret infringement.
 Royalties for the use of trade secret information.
 Profits the infringer made from the trade secret infringement.

In a case of Asahi Engineering K.K. v. Dai-ichi Seiko K.K., the Fukuoka District Court
rendered a significant judgment in 2002 on trade secret misappropriation case of the
greatest scale ever in Japan. This case was a big fight between the semiconductor
precision machine and mold manufacturers. All of the managers of “Dai-ichi Seiko K.K.”
resigned and then established a new company “Asahi Engineering K.K.”. The trade secret
was obtained by the infringers during their employment in “Dai-ichi Seiko K.K.”. In this
case, the court found the misappropriation of the trade secrets which include about ninety
thousand drawings and affirmed an injunction, a disposal of drawings, auto molding
systems and mold designed or manufactured by misappropriation and also awarded the
damages for the lost profits and also attorney’s fees. The total monetary damages paid by
the Asahi exceeded JPY 400 million yen, the highest award ever in trade secret
misappropriation cases in Japan.
Monetary damages can be awarded in conjunction with or in addition to injunctive relief.
Damages under the contract law will typically apply if the basis for a claim of
confidential information infringement or unlawful use of trade secrets is a contractual
provision in the agreement.
CONCLUSION: Trade secret protection is now longer a national legal

issue. It is now become an international issue with a great demand for the protection of
trade secret. The transnational trade and investment scenario has created for the new legal
development of the protection of industrial and business secret information. It is
important to recognize that national systems for the trade secret protection are not
harmonized till today various countries are having different laws. The international
agreement like TRIPS and NAFTA are also minimal legal standard for trade secret
protection, leaving behind the rooms for the national legislation of the member countries.
EU has not address the protection of trade secret directly. The theoretical approach from
where the trade secret protection arises, create various difference in the national law.
Therefore there is still need to think over the harmonization of the trade secret protection.
The Indian trade secret protection under the national innovation is quite helpful to the

national but important step still missing in innovation promotion is the growing gap
between innovators and investors. Investors are getting more comfortable funding
projects using business track record of the promoters as the basis and not the inherent
strengths of the technological innovation. We must find ways to identify and promote
innovations irrespective of from where the innovation is emerging. If innovations need
business acumen to succeed, then it must be the first task of innovation promoters to
make available business managers. After all most businesses are run by hired managers.
If the idea is good, then we should be able to encourage enterprising business managers
to join the innovation team and convert the idea in to a commercial success.
LIST OF CASES:
 Ruckeshaus v. Monsanto Co., 467 U.S. 986, 1002 (1984) available at
http://supreme.justia.com/us/467/986/
 E.I. dupont deNemours & Co. V. Christopher, 431 F.2d 1012, 1015 (5th Cir,
1970) available at http://www.precydent.com/citation/431/F.2d/1012
 Coca-Cola Co., 107 F.R.D. 288 (D. Del. 1985), available at
http://www.questia.com/googleScholar.qst;jsessionid=J1gHmvKTzk0GVQjKtHzJ
QVGyy5Tsx7pT1YRT7LthMc6T1gJGPyHz!832988903?docId=96432961
 International News Service v. Associated Press available at
http://www.law.uconn.edu/ homes/swilf/ip/cases/ins.htm
 United States Sporting Products, Inc., Et Al., V.Johnny Stewart Game Calls,
Inc., Court of Appeals of Texas, 10th District, Waco 865 S.W.2d 214 available at
http://cyber.law.harvard.edu/metaschool/fisher/linking/doctrine/ussp.html
 The Board Of Trade Of The City Of Chicago, V. Dow Jones & Company, INC.
Supreme Court of Illinois, 98 Ill. 2d 109; 456 N.E.2d 84 available at
http://cyber.law.harvard.edu/metaschool/fisher/linking/doctrine/dow.html
 National Basketball Assoc. V. Motorola, Inc., 105 F.3d 841 (2nd Cir. 1997)
available at http://www.law.cornell.edu/copyright/cases/105_F3d_841.htm
 Mercury Records v. Economic Consultants, available at
http://caselaw.lp.findlaw.com/scripts/getcase.pl?
court=wi&vol=wisctapp2%5C4q99%5C98-0700&invol=1

 Erie Railroad v. Tompkins available at http://www.encyclopedia.com/doc/1O184-
ErieRailroadCovTompkins.html
 Garth v. Staktek Corp., 876 S.W.2d 545 (Tex. App.--Austin 1994)
http://www.asksam.com/cgi-bin/as_web5.exe?
Command=Doc&File=halligan&DocID=144363&Request=misappropriation
 Other cases are studied from Trade Secrets Case Law Database by R. Mark
Halligan, Esq available at http://www.asksam.com/halligan/
REFERENCES:
Statute:
 Trade secret protection Act
 Uniform Trade secret Law
 Paris convention
 TRIPS agreement
 NAFTA agreement
JOURNALS AND ARTICLES

 Gillian Dempsey, “Industrial Espionage: Criminal or Civil remedies” trends and
issues in crime and criminal Justice, March 1999
 WIPO magazine “Trade secrets are gold nuggets: protect them”, April 2002
 Eleanor R. Godfrey, “Inevitable disclosure of Trade secrets”
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Offers another Weapon to Companies Seeking Protection” The Connecticut Law
Tribune, Vol. 34, No. 43

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1

Trade Secret: Protection & Remedies

2 Author can be reached at satija.neelam@gmail.com

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3 Philippines provide no protection to trade secret.

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 Trade secrets involve no registration cost.

11 The case of the coca-cola company.

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19 18 U.S.C. section 1831 to 1839

20 18 U.S.C. section 1831 (a)

21 18 U.S.C. section 1832

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30 Article 1711 (2) of the NAFTA agreement

31 Article 1711 (3) of the NAFTA agreement

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33 The unfair competition prevention act, article 2, 3 and 4

34 Judgement of the Fukuoka District Court, December 24, 2002.

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 Can bring economic benefits and is of practical value, and

36 French translation: Secrets de fabrique

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39 Pursuant to article 1382 et seq of the French civil code

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41 Under article 513 and 623 Codice Penale

42 Under article 2598 (3) and 2600 Codice Civile

43 Codilla della proprieta industriale came in to force on March, 2005.

44 Article 98 and 99.

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TRADE SECRET PROTECTION IN INDIA:

46 Article 18 of the act

47 Article 23 of the act

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REMEDIES FOR THE TRADE SECRET

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 The impact on the public interest of granting or denying the injunctions;

 The possibility of the substantial harm to others, if the injunction is issued.

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 Royalties for the use of trade secret information.

 Profits the infringer made from the trade secret infringement.

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CONCLUSION: Trade secret protection is now longer a national legal

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