Why trade secrets in India needs legislative protection

Trade secrets are the best form of intellectual property (IP) protection if kept secret and enforced properly. The biggest testimony for the statement is the trade secrets for the coke formulation. But for MSMEs and other industry sectors like pharma, biotech, IT and software and many electronics, trade secrets enforcement is really becoming challenging with no relief on misappropriation and thefts by employees, vendors and third parties. Trade secrets are that form of IP which protects information which is commercially valuable and available to a select few in the organisations and reasonable steps are being taken to protect it as trade secrets.

With the dynamics of work and work culture undergoing paradigm shift and convergence in similar line of technologies and expertise in today’s world, there are more chances of information spillage and likelihood of trade secrets violations and thefts. But at times, trade secrets offer a long-lasting fool proof protection for lifetime for brands like Coca Cola, KFC , Starbucks etc, unlike patent for a limited term of 20 years.

To further add, due to the lack of any statute or legislation, courts are not drawing a distinction between knowledge possessed in common domain regarding the business of an organisation, or the general skill and expertise of employees acquired through their employment in an organisation, and trade secrets that are protectable. Therefore, it is getting all the more critical for proprietors to specify the information that may constitute a trade secret.

Countries like US, China EU have enacted effective trade secrets protection acts with civil remedies and criminal sanctions which India can explore and put up a white paper for a robust Trade Secret Act for India. For MSMEs to prove a trade secrets violation in the court of law is a major hurdle as they need to prove how did the information came to their possession and their ownership on the same. It is very important to have proper documentation, demarcation and digital tools to keep information secret with tight covenants.

To conclude, causes of action that are commonly asserted against misappropriation and unauthorised disclosure of trade secrets are: breach of confidence; breach of contract; tort of misappropriation; and criminal offences, such as theft and criminal breach of trust. In certain cases, depending on the subject matter involved, copyright infringement may also be relevant, hence it is very pertinent to have a separate act for trade secrets with proper definitions and sections for making it easier and faster for redressal for all stakeholders.

Till there is an Act in place, a few best practices that can prevent trade secrets misappropriation to certain extent are: organisations should identify information that they believe constitutes a trade secret – not all information relating to the business of a company will be considered a trade secret by the courts, and such information should be reviewed periodically by the company; classified , limited access control , contractual and confidentiality agreements and a robust trade secret policy. If trade secrets are the major component of one’s business, then these are the ways to go about to mitigate risk and damages.

(The author is Head of Legal &IPR Department at Resolute Group of Companies)