Skip to content

CS Professional · Intellectual Property Rights - Law and Practice · Protection of Trade Secrets

Anil's employment contract with a Chennai firm contains a clause barring him, for three years after leaving, from working with any competitor anywhere in India. After he leaves, the firm seeks an injunction on this clause. Following the approach in Indian case law such as Niranjan Shankar Golikari, what is the likely position?

The post-termination non-compete is likely void as a restraint of trade under Section 27 of the Contract Act, though the firm can still enforce confidentiality duties and restrain misuse of its trade secrets.

  1. APost-termination restraint is void as a restraint of trade, though confidentiality obligations can still be enforcedCorrect
  2. BThe clause is fully enforceable because Anil signed it
  3. CThe clause is enforceable only if registered with the Registrar of Trade Secrets
  4. DThe clause is enforceable if the firm pays Anil a fee

Explanation

Under Section 27 of the Indian Contract Act, post-employment restraints on trade are void. Courts have held that restraints operating during employment may be valid (Niranjan Shankar Golikari), but post-termination non-compete clauses are not enforceable. Confidentiality can still be protected. The 'signed it' option ignores Section 27.

Did you get it right without looking?

One question tells you little. A timed set on Protection of Trade Secrets shows your real accuracy, how long you take and where you lose marks.

Practise Protection of Trade SecretsFree diagnostic mock

More Protection of Trade Secrets questions