Trade Secrets
A Trade Secret is information used in trade or business that is kept confidential to maintain an advantage over competitors generally known or easily accessible to persons involved in particular trade or business. It could be know-how, formula, recipes, manufacturing methods, pattern, compilation, program, device, method, plan, practice, sketch, technique, process, design, instrument, commercial method or other technical information.
Essentials of a trade secret:
- The information must have originality,
- It must not be generally known to public,
- It must have commercial/economic value and should not be trivial or vague,
- The owner must take reasonable steps to maintain the secrecy of information
Laws Protecting Trade Secrets
WTO mandates the member countries to draft legislations as per the rules incorporated in TRIPS (Trade-Related Aspects of Intellectual Property Rights) agreement which includes provision for protection of trade secrets. So far in India, there is no specific legislation governing Trade Secrets despite being the member country. Nevertheless, few legislations are being relied upon for protection of trade secrets such as IT Act, Copyright Act, Design Act, Patent Act, Contract Act, Competition Act, Specific Relief Act and Code of Civil Procedure. Trade secret law has been developed by Courts with an aim to maintain and promote commercial ethics and fair dealing based on law of unfair competition. Unlike other Intellectual property, trade secrets are protected without registration. The Indian Judiciary has adopted and applied “Spring Board Doctrine” while dealing with cases related to trade secrets.
Spring Board Doctrine:
The Spring Board doctrine has been explained by the Courts as, “A person who has obtained information in confidence is not allowed to use it as a springboard for activities detrimental to the person who made the confidential communication, and springboard it remains even when all the features have been published or can be ascertained by actual inspection by any member of the public.”
The Delhi High Court in John Richard Brady And Ors v. Chemical Process Equipments P. Ltd. and Anr (1987) held that the Springboard Doctrine will be applicable even in absence of Non-Disclosure or any other related agreement. The court opined that the law of trade secrets is not subject to contracts and that the breach of confidential information depends upon the principle of equity that he who receives information in confidence shall not take unfair advantage of it.
The principle behind this common-law doctrine is that When an ex-employee joins a competitor with knowledge of a former employer’s trade secrets, he would inevitably disclose the same to the new employer due to the nature of the new job, and hence, the former employer does not need to wait for an actual or even threatened use of the trade secrets and he could seek legal redress to prevent,
- the ex-employee from taking up the job with the competitor and
- the new employer(competitor) from hiring the employee
The Bombay High Court in Bombay Dyeing and Manufacturing Co. Ltd. v. Mehar Karan Singh (2010), held that “Such common-law doctrine would, therefore, apply even to the information which has been published or can be ascertained by the public. Such information cannot be used to the prejudice of the person who gave it without the consent of that person”.
In a recent Judgement, Inphase Power Technologies vs Abb India Limited (2016) the Karnataka High Court opined that on the basis of Spring Board Doctrine, an ex-employee may be injuncted from using the information in his possession and acting in a manner which can be detrimental to the interest of an employer. A company which invests its time, money and manpower in research and development deserves protection against infringement and passing of.
Conclusion
The Spring board doctrine has been enunciated by foreign courts and subsequently followed by the Indian Judiciary. If a person uses confidential information, directly or indirectly obtained from the employer, without the consent, express or implied of the employer, he will be guilty of an infringement of the employer’s rights. The affected person may claim compensation, injunction and punishment of wrongdoers. The doctrine also provides an additional advantage to employer to protect his rights even before the actual infringement. The Indian Judiciary, even in the absence of an explicit legislation dealing with trade secrets has efficaciously protected the rights of employer.
