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Understanding Trade Secret And Its Position In India With Reference To Brand Protection

Posted By Admin on 28 Nov 2015

Trade secrets is a form of intellectual property rights which is any information that can be used in business operation or other enterprise that is sufficiently valuable and secret which provides an economic advantage over others. Trade secrets are also referred to as ‘confidential information’ or ‘undisclosed information’.
Trade secret has been defined differently in different jurisdictions but what is common to all these definitions are the following:
• It is not generally known to public
• Confers some sort of economic benefit on the holder (where the economic benefit is derived particularly from the secret not being known to others)
• Reasonable efforts have been made to maintain its secrecy

So, basically trade secrets can be anything like a recipe, a formula, a method of conducting business, a customer list, a price list, marketing plans, etc. which is kept secret in order to derive economic advantage over other organizations or enterprises. It acts as brand recognition and thus is protected by the companies because it has a direct connection to the brand name. For example: restaurants keeping their recipe secret so that the customers can’t get it anywhere else and they are economically benefited but if someone purchases the dish and from that dish he traces back the recipe then it can’t be protected under trade secrets as this is considered a proper mean to acquire trade secrets. This tracing back is called “reverse engineering”. Reverse engineering thus creates problems for the companies to identify fake products and also information on fake products which has used the trade secret of the companies. The basic problem with trade secrets is that it has no federal law unlike copyrights, trademarks and patents for which there are proper statutory laws.
The major intellectual property is regulated by TRIPs (Trade Related Aspects of Intellectual Property Rights) agreement to which India is a party and under TRIPs, section 7 talks about the “protection of undisclosed information” and further Article 39 has elaborated on it.
Trade Secret Protection in India:
What is necessary for us to know is the legal status of trade secrets in India, as there are no statutory laws regarding it. India, though not having any specific legislation relating to trade secret protection but has a draft prepared by the department of science and technology named as “THE NATIONAL INNOVATION ACT, 2008”, where section 2(3) defines “CONFIDENTIAL INFORMATION” which has all the matching attributes of trade secret but, it’s important to know that this is just a draft which has been prepared by a government department and has not been accorded any status of an Act, it is just present there on the website of the department of science and technology.

Current Legal Status of Trade Secret Protection in India:

India lacks in the development of area of protection of trade secrets and needs to work on it but currently trade secret is protected under common law and has no legislative protection for the same but being a party to the TRIPs Agreement, India is bound to protect it. The cases of trade secret protection are generally dealt under the contract law of India which is the Contact Act, 1872 under section 27 which talks about agreements relating to restraint of trade, business or profession, after the termination of the contract, is invalid. Further, one can seek an injunction against the unauthorized or illegal user under Code of Civil Procedure, 1908 and has to prove that it was a secret and misappropriation has occurred which means the burden of proof lies on the plaintiff (who files the complaint against other party) in order to get an injunction. It is also dealt under section 403 of Indian Penal Code, 1860 which says about criminal misappropriation and trade secrets misappropriation can be brought under this section.

Globalization has taken over the world and intellectual property plays a very important role in it and thus a country should strengthen its intellectual property laws where India lacks which is creating difficulties for organizations which want to work with India as they don’t feel safe enough in regards to brand protection and trade secrets being directly associated to brand and losses brand has to suffer due to loss of trade secrets and thus it should be dealt much more seriously by coming up with a specific legislation on it or may be appropriately placing the word “trade secret” or “confidential information” in different Acts as mentioned above so that trade secret gets appropriate importance as required. Till these changes are not made the companies and enterprises have to rely on common law method itself and for any other brand protection services in India they can take help of online platforms like Brands and Fakes is one such popular platform.

Written by- Ruchi Sinha

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