CS Professional · Intellectual Property Rights - Law and Practice

Protection of Trade Secrets: formula sheet

Full chapter guide

Key formulas

Test of a trade secret: Trade secret = Secrecy + Commercial value from secrecy + Reasonable steps to keep it secret; Based on Article 39(2) of TRIPS. Lose any one element and protection fails.
Duration of protection: Protection lasts as long as the information stays secret; No fixed term and no registration, unlike patents.
Source of protection in India: Contract + Equity (breach of confidence) + Tort/Criminal law; There is no specific trade secret statute in India.
Patent vs trade secret: Patent: disclosure for a limited monopoly. Trade secret: secrecy with no monopoly; A trade secret holder cannot stop independent discovery or lawful reverse engineering.
Source of obligation: TRIPS Article 39 = protection of undisclosed information as part of protection against unfair competition (Paris Convention, Article 10bis); Article 39(1) links the duty to Article 10bis. Say this link in every answer.
Three conditions for protection (Article 39(2)): Secret + Commercial value because secret + Reasonable steps to keep secret; All three must be met together. Failing any one removes protection under Article 39(2).
Wrongful conduct test: Disclosure, acquisition or use without consent + contrary to honest commercial practices; Footnote examples: breach of contract, breach of confidence, inducement to breach, and acquisition by third parties who knew or were grossly negligent.
Test data rule (Article 39(3)): New chemical entity + considerable effort + data required for approval of pharmaceutical or agricultural chemical products = protect against unfair commercial use and disclosure; Disclosure is allowed where necessary to protect the public, or where steps ensure protection against unfair commercial use.
Who is protected: Natural and legal persons lawfully in control of the information; The person must have lawful control. A thief cannot claim protection.
Elements of breach of confidence: Confidential quality of information + obligation of confidence + unauthorised use or disclosure (usually with detriment to the holder); The three-part test from English common law that Indian courts follow. Apply it to every fact pattern.
Section 27, Indian Contract Act, 1872: Agreement in restraint of lawful profession, trade or business = void (to that extent); Post-termination non-compete clauses are generally void. Confidentiality clauses are treated differently and are enforceable.
Trade secret features (TRIPS Art. 39 idea): Secret + commercial value because secret + reasonable steps to keep it secret; Use this as the test for whether information qualifies for protection.
Contract vs equity: Contract: duty from agreement. Breach of confidence: duty from circumstances of confidence; Equity can protect even when there is no contract or the contract is silent.
Remedies: Injunction + damages or account of profits + delivery up or destruction; Add Anton Piller-type search and seizure or John Doe orders only where the facts justify them.
Elements of a trade secret: Secret + Commercial value because secret + Reasonable steps to keep secret; This is the TRIPS Article 39 test. Use it to frame any answer on what is protected.
Post-employment non-compete: Section 27, Indian Contract Act, 1872: agreement in restraint of trade is void; Generally unenforceable after the employment ends. Do not say it is always valid.
During-employment restraint: Negative covenant during the term of service is generally enforceable; Based on the employee's duty of fidelity. Courts do not usually treat it as a Section 27 restraint.
Core NDA clauses: Definition + Purpose + Exclusions + Duration + Return/destruction + Remedies + Governing law and forum; Use as a drafting checklist.
Usual NDA exclusions: Public domain, already known, independently developed, lawfully received from a third party, disclosure required by law; Standard carve-outs that keep the NDA reasonable.
Remedies: Injunction + Damages or account of profits + Delivery up of material; Civil remedies in a suit for breach of confidence or contract.
Elements of a breach of confidence claim: Confidential information + obligation of confidence + unauthorised use or disclosure (usually with detriment); Structure every liability answer around these three elements.
Civil remedies: Interim injunction → permanent injunction → damages OR account of profits → delivery up / destruction; Damages and account of profits are alternatives; the claimant cannot have both for the same wrong.
Interim injunction test: Prima facie case + balance of convenience + irreparable injury; The usual test for temporary injunctions in Indian civil courts.
Source of protection in India: Contract + equity (breach of confidence) + other statutes where facts fit; No specific trade secret statute exists.
Restraint after employment: Post-termination non-compete = generally void (Contract Act, section 27); confidentiality duty = enforceable; Courts restrain use of secrets, not an employee's right to earn a living.
Elements of breach of confidence: Confidential quality of information + obligation of confidence + unauthorised use or disclosure (often with detriment to the owner); Three-element test from Coco v A.N. Clark (Engineers) Ltd (1969), which built on Saltman Engineering v Campbell. Indian courts follow it. Use it as the test in any fact-based question.
Saltman principle: Information given in confidence must be used only for the purpose for which it was given; it must not be public property or public knowledge; Basic principle of breach of confidence. The duty can arise without a written contract, from the relationship itself.
Burlington principle: Compiled customer list built with skill, labour and capital = protected mainly as a copyright compilation, with confidentiality as a supporting ground; copying it by a departing employee can be restrained; Delhi High Court, 1995, Burlington Home Shopping v Rajnish Chibber.
American Express principle: General knowledge, skill and experience of an employee ≠ trade secret; injunction needs proof that specific confidential information was taken or misused; Delhi High Court, 2006. Separately, Section 27 of the Indian Contract Act, 1872 voids agreements in restraint of trade, which affects post-employment restraints.

Quick revision

A trade secret is information that is secret, has commercial value because of that secrecy, and is protected by reasonable steps.
No registration is needed, and protection can last as long as secrecy lasts.
Once the secret becomes public, protection ends.
TRIPS protects undisclosed information under its provision against unfair competition.
India has no dedicated trade secrets statute.
Indian protection rests on contract, equity (breach of confidence) and related laws.
An NDA should define confidential information, state exclusions, fix purpose and duration, and provide remedies.
Employment contracts can bind an employee to confidentiality during and after service.
Reverse engineering and independent discovery are generally not misappropriation.
Typical remedies are injunction, damages or account of profits, and delivery up of material.
Answer fact-based questions in order: principle, facts, conclusion.
Compare trade secrets with patents on registration, term, disclosure and cost.

Common mistakes

Saying trade secrets must be registered Fix: Write that no registration exists or is needed. Protection depends on secrecy.
Claiming India has a trade secrets Act Fix: State that protection comes from contract, equity and general law. A national law has been discussed, but do not say it exists.
Saying TRIPS grants an exclusive property right in trade secrets. Fix: Write that Article 39 protects against unfair competition and gives owners the possibility of preventing misuse. It does not give a registered right.
Listing only two conditions, usually secrecy and commercial value. Fix: Memorise S-V-R. Secrecy, value because of secrecy, reasonable steps.
Writing that India has a Trade Secrets Act or that the National Innovation Bill is law. Fix: Say clearly that there is no dedicated statute and the 2008 Bill was only a draft that lapsed.
Saying every restrictive clause is void under Section 27. Fix: Distinguish a post-employment non-compete (generally void) from a confidentiality clause and an in-term restriction (generally enforceable).
Saying post-employment non-competes are valid in India if they are reasonable. Fix: State that Section 27 voids restraints of trade, and that Indian courts generally refuse to enforce post-termination non-competes.
Treating the whole NDA as void when the non-compete fails. Fix: Treat them separately. Confidentiality can be enforced even where the non-compete cannot.
Saying trade secrets are protected under a specific Indian Act. Fix: State that India has no dedicated Act and protection comes from contract, equity and related statutes.
Claiming both damages and an account of profits. Fix: Present them as alternatives. Damages compensate the claimant's loss; account of profits strips the defendant's gain.

Exam tips

Always write the three-part test in definition questions. Examiners look for secrecy, value and reasonable steps.
In comparison questions, use a table-style list of points: registration, disclosure, duration, exclusivity. Avoid vague statements.
In case-based questions, apply each element to the facts before concluding.
Mention that India has no specific statute and name the sources of protection. Do not cite section numbers you are unsure of.
Write the three conditions in a numbered list. Examiners look for all three, with the words "because it is secret" and "reasonable steps".
In case questions, quote the facts for each condition before concluding. A bare conclusion earns little.
Mention Article 10bis of the Paris Convention and the footnote on honest commercial practices to show depth.
Keep Article 39(3) as a separate short paragraph. Do not mix it with Article 39(2).