Protection of trade secrets in India

Bizar Male

The realm of Intellectual Property Law (hereinafter referred to as “IPR”) encompasses a variety of rights such as copyrights, trademarks, patents, designs, geographical indications, traditional knowledge as well as trade secrets. These rights can further be forked into IPRs governed by legislations and IPR governed under common law that is, law derived from customs and precedents.

Each one of us must have encountered examples of trade secrets in our lives. If you think otherwise, here’s an example that might help you understand better; In the cartoon, SpongeBob SquarePants, the character – Mr. Crab’s Crabby Patty’s recipe is the best fictional example of a trade secret. Other such real-life examples include the formula of making Coca-Cola and Google’s search engine’s algorithm.

What is a Trade Secret

Let us first understand the meaning of the term “trade secret”. According to the World Intellectual Property Organization, “Trade secrets are intellectual property rights on confidential information which may be sold or licensed1. The term in this definition are “confidential  information” and “which may be sold or licensed”, these words highlight the fact that trade secrets are confidential data which is known to only a limited group of persons and that it holds commercial value taking into consideration the fact that it can be sold or licensed. Another important essential of a trade secret is that the owner of the trade secret must take reasonable efforts to keep its secrecy. Thus, the unauthorised disclosure of such information to an outsider    will be regarded as a violation of the trade secret right.

How are trade secrets protected in India?

In India, there is no particular legislation governing trade secrets. However, the Indian Judiciary has taken an active role in granting protection, based on principles of equity laid down by common law and as per contractual obligations, to uphold trade secret protection. The non-viability of specific legislation governing trade secrets has not hindered the Indian Courts from granting protection to trade secret owners on a case to case basis. The various types of protection available under Indian law are explained in detail below.

Protection under Contract law – The Indian judiciary has upheld the protection of trade secrets  under the contractual obligations made under the Indian Contract Act. For example, if a person is contractually bound to not disclose certain information known to him/her in confidence and  he/she breaches that obligation then he/she will be held liable for the same. Section 27 of the Indian Contract Act, restricts a person from disclosing any confidential information which he acquires during the time of his employment.

Breach of Confidence – Breach of confidence is a common-law tort that protects confidential information that is made available to a person in confidence. In order to constitute a breach of confidence, it must first be established that the infringer of the information obtained an unfair advantage from such breach. In case of a breach of confidence, the owner of the confidential information can file a suit before a competent Court of Law.

Copyright Law – In today’s digital world, most confidential information is stored in databases. Computer databases are included in the definition of a “literary work” and thus, protected under the Indian Copyright law. Any breach of such data will give rise to an action taken under the copyright law.


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