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TRADE SECRETS: PROTECTION OF CONFIDENTIAL INFORMATION IN INDIA

Updated: Mar 7




INTRODUCTION:


Every business, irrespective of how huge it is, has its own trade secrets which is an extremely valuable asset to them. Trade secrets can have a broad meaning to itself. It can be formulas, techniques, recipes, procedures, data, technical information and any other valuable information that is crucial and confidential to the business. Any confidential information that gives the business an upper hand over other business is a Trade Secret subject to the conditions to qualify as a Trade Secret.


It is essential to note that the main essence of a Trade Secret is its secrecy. Unlike trademarks, copyrights, patents which demand public disclosure and statutory registration, Trade Secrets thrive in secrecy. There is no such requirement such as public disclosure or registration of any sort.


Some examples of Trade Secrets are formula of Pepsi, Mcdonald’s recipe, algorithm used by Google search as these are the factors that give the business the cutting edge over others. If these formulas and recipes were publicly disclosed, everyone would try to duplicate them, eroding the unique selling point of these businesses.


WHAT IS A TRADE SECRET?


WIPO has defined Trade Secrets as Intellectual Property rights on confidential information which may be sold or licensed. In general, to qualify as a trade secret, the information must be:

·Commercially valuable because it is secret,

·Be known only to a limited group of persons, and

·Be subject to reasonable steps taken by the rightful holder of the information to keep it secret, including the use of confidentiality agreements for business partners and employees [1].


Unlike trademarks and patents, trade secrets do not require registration for enforcing the person’s right to protect this secret. There is no period or tenure ensuring protection of a trade secret unless it is sold or licensed and made available to the public.


India is a signatory country of Trade-Related aspects of Intellectual Property Rights (TRIPS) and Article 39 of the TRIP’S agreement highlights on the conditions for a trade secret protection. They are as follows:

·Is secret in the sense 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 the circles that normally deal with the kind of information in question;

·Has commercial value because it is secret; and

·Has been subject to reasonable steps under the circumstances, by the person lawfully in control of the information, to keep it secret [2].


PROTECTION OF TRADE SECRETS IN INDIA:


Though here is no statute or law specifically protecting Trade Secrets till date in India. However, Trade Secrets are protected through common law in India such as Indian Contract Act, 1872 and also under the IT Act, 2000 in case of electronic information.


Section 27 of the Indian Contract Act, 1872 states about Agreements in restraint of trade. An exception herein states that reasonable restrictions can be enforced for protection of Trade Secrets of the business. Additionally, to qualify for protection, businesses must take reasonable steps to keep their information confidential. This can include non-disclosure agreements (NDAs) with employees and business partners, restricting access to the information, and implementing cybersecurity measures. However, these agreements must clearly define and mention as to what are the specific Trade Secrets that they intend to protect.


Section 72A of the Information Technology Act, 2000 provides for punishment in cases where there has been disclosure of information in breach of contract. This can be relevant in cases where an employee or a person who has access to trade secrets or confidential information of a company discloses such information without authorization. This provision can provide a legal basis for action against such unauthorized disclosure, especially in the context of electronic records or information.


CONCLUSION:


Trade Secrets are a very valuable form of Intellectual Property Rights, and all business should be aware and take the necessary measures to protect their secrets that provide them a competitive edge over other businesses. The main crux of a Trade Secret lies in the secrecy of the information. The main advantage of a Trade Secret is its flexibility as a Trade Secret can range from a simple recipe to customer lists to strategies used in the business and much more. By understanding the importance of trade secrets and taking proactive steps to protect them, businesses can safeguard their valuable information and maintain their edge in the market.

 

 

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