TRADE SECRET
Technical &
Financial
scientific
information
information
Commercial Negative
information
information
A trade secret is a formula, pattern,
physical device, idea, process, or
compilation of information which is not
generally known or reasonably
ascertainable, by which a business can
obtain an economic advantage over
competitors or customers.
A formula for a sports drink
Survey methods used by professional
pollsters, and Recipes (food)
A new invention for which a patent
application has not yet been filed
Marketing strategies Manufacturing
techniques Computer algorithms
Unlimited duration -trade secrets could potentially last
longer than patents (20 years) and copyrights
Your protection is theoretically worldwide No
application required
No registration costs
No public disclosure or registration with
government agency
Effective immediately
Restrict access to the information (lock it away in a
secure place, such as a bank vault)
Limit the number of people who know the information
Have the people who know the trade secret agree in
writing not to disclose the information (sign non-
disclosure agreements)
Have anyone that comes in contact with the trade
secret, directly or indirectly, sign non-disclosure
agreements
Mark any written material pertaining to the trade
secret as proprietary
Formula for Coca-Cola
The Big Mac Special Sauce
KFC Chicken Recipe
WD-40 Formula
Secret Recipes
Kentucky fried chicken
The secret recipe of “11 herbs and spices” lies in a bank
vault. Few people know it, and they are contractually
obligated to secrecy.
The ingredients are mixed by two different companies in
two different locations and then combined elsewhere in a
third, separate location.
To mix the final formula, a computer processing system is
used to blend the mixtures together and ensure that no
one outside KFC has the complete recipe
Initially Later stage
Not patentable patentable
Secret !
Strategic
TS patent
business
TS decision
© ID
TS
Part of the idea
Remedies to Misappropriation
1 Court Order to stop the misuse
2. Monetary damages
Actual damages caused as a result of the misuse (lost
profits)
Amount by which defendant unjustly
benefited from the misappropriation (unjust
enrichment)
3. Seizure order
Can be obtained in civil actions to search the
defendant's premises in order to obtain the evidence
to establish the theft of TS at trial
4. Precautionary impoundment
Of the articles that include misused TS, or the products
1. Independent Creation- similar formula created
with his own knowledge.
2.Unclean hands – The owners behavior is
morally wrong.
3.Laches- unreasonable delay in asserting a
claim, which may result in its dismissal.
4.Absence of secrecy protection measures- failed
in protecting its trade secret, sharing it through
publication.
5.Privileges- sharing the information before
media at court trail.
TS protection may be based on...
1. Contract law
• When there is an agreement to protect
the TS
• NDA/CA
• anti-reverse engineering clause
• Where a confidential relationship exists
• attorney, employee, independent contractors
2. Principle of tort / unfair competition
• Misappropriation by competitors who
have no contractual relationship
• theft, espionage, subversion of employees
TS protection may be based
on...
3. Criminal laws
• e.g. for an employee to steal trade secrets from a
company
• e.g. unauthorized access to computers
• theft, electronic espionage, invasion of privacy, etc.
• circumvention of technical protection systems
4. Specific trade secret laws
• US: Uniform Trade Secrets Act; Economic
Espionage Act
Trade secret litigation comprisesof
two aspects.
1. violation of trade secret law takes
place, when the confidential information
is obtained through misappropriation.
2.violation of nondisclosure agreement
takes place when a party in the contract
breached the agreement.
The law of unfair competition is to safeguard the
interest of the customers from unfair or
misleading trade practices.
Types of Unfair Competition:
Passing off Misappropriation
Right of Publicity False
Advertising
Product Disparagement Dilution
Infringement of Trade Dress
Infringement of Trade Dress:- the unique and
distinctive feature of a product , service, or
business which differentiates it from others is
known as “Trade Dress”.
Trade Dress protection is needed to restrict
others from duplicating a product.
Product Disparagement: when a false statement
is made with an intention to harm a company or
its products or its services,
then it is known as
“product disparagement”.
It is also known as ‘Trade Libel’ or “Commercial
Disparagement”.
Right of Publicity: Allows individuals to protect
their identities from being used for commercial
purpose by other parties. Many companies
misuse the celebrities name in fake to sell their
products
Passing off occurs when one party sells his
goods and services by affixing another
company’s trade mark on them.
Passing off is confined to registered and
unregistered trademarks , symbols , signs and
devices etc.,
Passing off is an offence which is done by
misrepresenting the goods and services for
creating confusion in customers mind which
effects the image or good will of the original
manufacturer.
Misappropriation exists when one party uses
the property of other party without informing
them.
Misappropriation means unauthorized use
of
person's name or likeness for advertising
purpose whic effects the image of
, h other
persons
The plaintiff does not possess any copy right
. it and he cannot claim any damages; ex-
for
stock market rumors , new paper report etc.,
The Clean Room:- The clean room refers to a room in
which a team of engineers, designers,
researchers or scientists work together for a specific
purpose. Each and every activity is documented .
The clean room act as an evidence to prove that
the information which is identical to some other’s
trade secret has derived through team efforts.
It also ensures that the information was not
copied , theft or gained through any other
improper means
Reverse Engineering: Any information which is
obtained through reverse engineering of a
product, will also be unprotectable under TS.
Ex:- A Gel Pen company has a secret formula
for making Gel used in pens. If a person
purchases the pen and analyze the Gel
chemically and come to knew about the secret
formula, then it is called “Reverse
Engineering”
A Growing Problem.
Why Does It Occur?
– The Way we do business today (increased use of
contractors, temporary workers, out-sourcing)
– Declining employee loyalty: more job changes
– Organized crime : discovered the money to be
made in stealing high tech IP
– Storage facilities (DVD, external memories,
keys)
– Expanding use of wireless technology
What is lawful?
Reverse engineering
Common practice among software
companies: studying competitors'
products
to make software that can interoperate with
the software being studied
to make a product that will compete with it
E.g. decompile object code to reveal its structure
and figure out the interface specifications for
interoperability purposes
E.g. look at a program's input and outputs
What is typically considered
wrongful?
1. Duty of trust
implied or imposed by law
e.g., employees, directors, lawyers
2. Confidentiality agreement or NDA
e.g., employees, suppliers, consultants,
financial advisors
3. Industrial espionage, theft, bribery, hacking
A partial list of improper means
includes theft,
misrepresentation, breach,bribery,
or
inducement of a breach of a duty to
maintain secrecy or espionage
through electronic or other means
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CDA= Confidentiality Agreement
NDA= Non Disclosure Agreement
The important elements included in the
written agreement of CDA & NDA
are:
1. Ownership of Inventions
2. Non Disclosure Provisions
3. Non Solicitation Provisions
4. Non Competition Provisions
Complaint is a first document which is brought into
the notice of the court by the plaintiff and asks for
the corrective measures.
The defendant is required to give response to
such complaint after receiving the summons
from the court with in stipulated time period
mentioned by the relevant court .
All the case data will be kept in Civil Cover
Sheet.
The trail note book has to be maintained
by paralegal for future assistance.
The trail note book is a binder used to
index and provide reference to the
necessary information required to handle
the case.
It contains all the relevant and important
and legal information regarding the
lawsuit.
Breach of contract takes place when a party
fails to fulfill the promise made in an
agreement.
For example the employee fails to fulfill the
promise and discloses the trade secret to other
parties, then it is known as breach of contract.
This is also treated as Breach of Fiduciary duty
that employee is failed in maintaining the
secrecy
Contract is nothing but An Agreement
Enforceable by Law.
The Ten Essential Conditions for a Contract:
1. Offer, 2. Acceptance, 3.Concensus-Ad-Idam,
4. Lawful Consideration, 5. Capacity to
Contract, 6. Free consent, 7.Legal object,
8. Possibility of Performance, 9. Intention to
create a legal relation ship 10. Writing and
Registration.
In India , violation of trade secrets will be covered under Sec 27
of the Indian Contract act. It restricts parties in contract from
Disclosing any kind of Information.
The Special Contract Acts like , Agency law clearly
defines the Duties and Responsibilities of the
Employer and Employee.
And it provides the eligible Remedies for the
possible Damages occurred to the
Owner from
the agent .
The Agent is Liable to the Owner for the
loss occurred due to him.
THANK YOU
