TRADE SECRETS 

TANMOY MUKHERJEE INSTITUTE OF JURIDICAL SCIENCE

Dr. Tanmoy Mukherjee

Advocate

TRADE SECRETS –

Tanmoy Mukherjee

Advocate

Meaning-

A trade secret is any confidential business information that provides a company with a competitive advantage and is not known to the public.

It includes-

A trade secret must be-

1. Secret

2. Commercially valuable

3. Protected through reasonable steps by the owner

 Legal Position in India-

India does not have a specific Trade Secrets Act, but protection arises from-

→Contract law (Non-Disclosure Agreements, confidentiality clauses)

→Equity (breach of trust or confidence)

→Common law principle of "breach of confidence"

→Indian courts treat trade secrets as property of the business.

Features of Trade Secrets-

1. No Registration Required-

Protection begins automatically as long as secrecy is maintained.

2. Unlimited Duration-

Protection lasts as long as the information remains secret.

3. Low cost-

Only confidentiality measures needed.

4. Protection against-

-Theft

-Breach of contract

-Industrial espionage

-Misappropriation

-Unauthorized disclosure.

What Cannot Be a Trade Secret?

→Publicly known information

→Reverse-engineered information

→Information easily available or obvious

→Information disclosed without confidentiality protection.

 Remedies for Misappropriation-

When someone steals or leaks a trade secret, the owner may seek-

Civil Remedies-

→Injunction (temporary/permanent)

→Damages

→Return/destruction of confidential material

→Account of profits

Criminal Remedies-

Depending on the act-

→Theft under IPC

→IT Act provisions (for data theft).

Examples of Famous Trade Secrets-

→Coca-Cola formula

→KFC's blend of 11 herbs & spices

→Google’s search algorithm

→Lijjat Papad recipe

→Customer database of any company.

Difference between Trade Secret and Patent-

Trade Secret	Patent
Must be kept secret.	Must be publicly disclosed.
No registration needed.	Registration compulsory.
Protection lasts indefinitely.	Protection for 20 years.
Vulnerable to reverse engineering.	Legal monopoly.
Cheaper and faster.	Expensive and lengthy process.

 

Important Case Laws (India)-

1. Zee Telefilms Ltd. v. Sundial Communications Pvt. Ltd. (2003)-

Court protected confidential film concept shared under trust.

2. American Express Bank Ltd. v. Priya Puri (2006)-

Employee cannot take customer lists or confidential data when changing jobs.

3. Niranjan Shankar Golikari v. Century Spg. & Mfg. Co. (1967)

Upheld confidentiality clauses during employment.

How to Protect Trade Secrets in Business-

→Use NDAs with employees & vendors.

→Limit access to confidential data.

→Use password protection & encryption.

→Mark documents as “confidential”.

→Create internal confidentiality policies.

→Employee exit interviews + non-solicitation clauses.