Open Access Research Article
TRADE SECTORS AND NON- DISCLOSURE AGREEMENT AS A TOOL OF PROTECTION PROPRIETARY INFORMATION IN INDIA
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Article Details
TRADE SECTORS AND NON-
DISCLOSURE AGREEMENT AS A TOOL OF PROTECTION PROPRIETARY INFORMATION IN INDIA
AUTHORED BY - SANIYA1 &
DR. JUHI SAXENA2
ABSTRACT
A crucial component
of modern business
activity is the interaction between trade sectors and non- disclosure agreements (NDAs), which are
used in India as a measure for protecting intellectual information. This abstract explores the importance of this
subject by emphasizing the changing trade
sectors in India and the critical function that non-disclosure agreements
(NDAs) play in protecting confidential information.
This paper examines the legal environment surrounding non-disclosure
agreements (NDAs) in India, the
difficulties experienced by various trade sectors in protecting confidential
information, and the efficacy of NDAs
as a safeguard through a thorough review and analysis of the literature. This
abstract also highlights the necessity for more study and the creation of policies to solve new issues and maximize the application of NDAs in
India's changing trade environment.
Keywords: Intellectual Property, Trade
Secrets, Confidential information, TRIPS, Non-disclosure agreements.
INTRODUCTION
Intellectual Property (IP) is considered as an intangible
asset to a business. when there is IP protection
laws, partners and institutions in the business gets confidence to further
develop their businesses by investing and collaborating with other entities
to expand and thus to increase profits.
If the property is worldly explored, more profit can be earned by the
owner. IP is divided into industrial property and copyright.
India has a large collection of traditional, oral, customary,
Ayurvedic knowledge etc. The lack of protection
mechanism to people is an actual setback to a developing country like India.
When someone first thinks about IPR
laws, patent, trademark, and copyright laws comes to the mind right away. Trade secrets are also added
but it is not well known comparing with others. Trade secrets are not known to the at large, they are protected by the
owners by instituting special procedures
which includes technological and some legal measures. Sometimes the owner keeps the trade secrets
with themselves or allow limited
number of people to have access for the effective
running
of the business. Economic interest of the owner has to be given a prior
importance; Therefore, protection of trade secrets is necessary. The main function
of the trade secret is to protect
the information that gives a competitive advantage to those people
who possess such information, provided
such information is not readily available with or discernible by the competitors.3
The IPR laws are normally national, not international.
there are laws to protect trade secrets at international
level. First protection is offered by United Nations Organization (UNO). UNO
have a specialized agency known
World Intellectual Property
Organization (WIPO), which gives recommendations for the member
countries to have an effective
law to safeguard the trade
secrets. WIPO directives are not binding
upon its member
countries including India.
The instruction of the World Trade Organization is binding on
the member countries. For the protection of IP, it has set out a minimum standard criterion
under TRIPS agreement
for the member countries and these each
member countries are expected to frame or reframe its IPR laws by complying
with those minimum
standards.
As trade secrets comes under TRIPS, its obligatory from the
part of India to protect it. TRIPS Article
39.1 clarifies that effective protection from unfair competition includes
protection of undisclosed information. In India, TRIPS
Article 39.1 clarifies
that effective protection from unfair competition includes protection of undisclosed information. Section 27 of the contract
act provides an indirect, latent,
and covert mention
of trade secrets.4 Moreover, Indian courts
also take approach
on common law and grant some relief
on dealing with trade secrets.
So, it must that if any country
wants a definite and effective IPR law, it must have trade secrets law.
Definite and effective trade secret law is one of the pre-requisites
to excel the national economy.
There is no specific definition for trade secret under the
Indian law. Ideas which have to be protected
under trade law, if not protected, it will become detrimental for the traders.
And also, if there is no law, there is less chances
of conviction for the trade secrets
misappropriation, as for an inventor there is no protection is under
the trade secret, another option is patent protection which may not help in the appropriate
long time run. So as there is no particular IPR protection for trade
secrets in India, it has become pertinent to see other laws. It is also
necessary to find a model law of trade secrets as IPR, which
will protect all owners
without deviating from WTO-TRIPS.
IPR AND TRADE SECRETS
When an individual creates a property, he enjoys the
said property for personal use or uses it for
gaining some economic profit. Along
with sufficient labour, skill, capital etc. Mind is also applied for such property formation. From these
properties, where the intellect is more used, the owner safeguards the property by IPRs.5
The quintessence of trade in the present time is ideas and
knowledge. Having a need to give paramount
importance to the ideas behind the various property.6 Due
to this, many corporations which is having multi-national operations need to block others
from using their inventions, or from other creations, and use that right to
get amount in return, for others using them. These are mentioned as “Intellectual Property Rights” in contemporary-day parlance.
Intellectual property is all
about the creativity of humans. These rights are observed as a reward for
creative and skilful work in executing ideas.
The IPR impact
has spread to every aspect
of life. In modern times,
there is a need to protect
these intellectual properties. GATT negotiations which resulted in the formation of World Trade Organization including
TRIPS have universally recognized the IPR.7
Before understanding the nature and meaning of Intellectual Property
one must have to know the concept
of the property. The term property includes
every kind of property whether it is corporeal or
incorporate, tangible or intangible, visible, or invisible, real, or
personal etc. According to the Encyclopaedia Americana:
“Anything whether tangible
or intangible, which can be reduced to
possession or made the subject of ownership comes
within the legal definition of property. Human rights
are considered as positive rights,
but in case of IPRs it doesn’t
allow one to use every
right but allows
owner to stop others from using the Intellectual property.8 In such a case IP is
considered as a negative right. Intellectual properties are considered as individual rights, except
geographical
indications and farmers rights which can be termed as group rights. The IPR is granted
only for a temporary period,
after that it falls into the public
domain, and anybody
can use it. In India there is a balance
between both capitalist and socialist approach
is preserved. Individual rights or private rights are encouraged by the capitalist society whereas socialist society encourages collective or societal rights. India
being a member of WTO and one of the TRIPS signatories, it must protect the IPR through legislation.
The property which resulted out of mental labour is known as intellectual property.9
Famous English jurists John Lock propounded ‘Labor theory’
states: “Human labour deserves reward
in the form of proprietary rights”. Also, in Utilitarian theory, which is
postulated by Bentham states, maximum
benefit to the maximum members of the society should be provided. IPR serves benefit to the society by
enhancing companies or business value and providing an increasing market share. Reward for the IP owners can be
justified as they hold the right only for temporary period and after that it falls
on the public domain for the benefit of the public.9
Burlington home shipping pvt ltd v. Rajnish Chibber
KINDS OF INTELLECTUAL PROPERTY RIGHTS
Intellectual property involves
mental labour. As they have intellectual efforts which have commercial value should be given protection. There are many fields such as literature, technology, science, agriculture, manufacturing which gives rise to definite intellectual property rights. Depends upon the nature of work and filed taken for application, IPRs have organized
into different kinds:
1. Copyrights
2. Trademarks
3. Patents
4. Geographical indications
5. Industrial designs
6. Semiconductor chips and integrated circuits
7. Protection of plant varieties
and farmers rights
8. Trade secrets
PROTECTION OF TRADE SECRETS UNDER COMMON LAW AND WORLDWIDE
Under the system of free private enterprise and
competition, the trader should obtain as much
information concerning his rival's business
and let him know a little of it. This information may be a trade secret
like the method of production or a business, financial secret, or arrangements. Some of this information would be extremely confidential, as being potentially changing. If a competitor obtained it, some would be less so, and much would be worthless to a rival organization. Countries
protect trade secrets in the form of confidential information. Where
there are no specific laws for the
protection of trade secrets, common law provides protection.10 Common laws are uncodified. This means there is no inclusive
compilation of legal rules and statutes which comprise common law. Common law is mainly based on
judicial precedents. These are maintained year by year through the court records and journals, and reports. The
applications of precedent in each case decision
are determined by presiding judges of the case. Trade secrets protection is
mainly based on common law
principles. Trade secrets are being protected under the contract,
quasi-contract, and the property
rights.11 The trade secrets
protection under contract theories include in which were existed an express contract or a confidential information
etc. The quasi-contract protection includes
avoidance of unjust enrichment from misappropriation of trade secrets. Trade
secrets are seen as a property
right under property
theory, which includes
subjective as well as objective
11 Ciba
Inc. v. Sequent scientific ltd..,
notice of motion
no:3472 of 2009 in suit No.2501 of 2009 Bom HC 13
Coco
v. A.N Clark (engineers) Ltd (1969) R.P.C.41
at 47.
approaches
subjects to protective rights in its uses and disclosures. Under common law, liability for trade secrets misappropriation needs
acquisition by another by improper conduct or unfair means and the use or disclosure by such person
to the detriment of the trade owner.
The jurisdiction for restraining the breach of confidence
has its origin in the law of contract and equity due to the remedy of injunction. The subject matter
also occupies the same moral
terrain as a breach of trust.13 In this modern era, the breaking of
confidence started in 1948 by appealing an English court decision in Saltman engineering co ltd v. Campbell engineering
co ltd12 In this case, breach of confidence is considered as a different
cause of action,
and liability exists
detached from any other legal action. Trade secrets and confidential
information are considered as an equitable right more than a property right in commonwealth common law jurisdictions.
In the case of Coco V.A.N. Clark(engineers) Ltd, the test for detecting a cause of action for breach of confidence in the common
law world is set out. the court,
while granting the injunction, pointed
out, provided the test for a
cause of action for breach of confidence as:
The information must contain the necessary quality of confidence concerning it.
Information has been imparted in the circumstances imparting
an obligation of confidence. There must be an unauthorized use of that information, which in turn, detrimental to the party communicating
it.13
If the elements of the tort of breach of confidence are
satisfied, action can be started for the trade
secrets disclosure under the tort of breach of faith. Courts provide
various cases for breach of confidence.
A trade secret is an aspect that must be kept in confidence with other people.
It is impossible to run a business or
trade without sharing the secret with associated people, and such sharing is done in confidence. A trade
secret has monopoly value as well as use-value. Still, the former will be usually affected by the
misuse of the unknown.14 A
right of action for confidence breach,
strengthens and, in many of the cases, it predates a more crystallized
intellectual property right. The nature of this kind of action can be considered in the leading
Spy catcher case (Attorney general v guardian newspapers) where Lord
Keith held that based on an equitable principle of confidence, the obligation may exist independently of any
contract. Such an action seems to stem from
the belief that information can be seen as
a property right.15
But this assertion has been the focus of rigorous debate. The
main problem, however, occurs because
the secret is once revealed, the ideas of legal and equitable title cannot be
applied. In certain circumstances, courts have looked at trade secrets protection in a new light where
traditional characteristics are not necessary. Moreover, it was held
that trade secrets disclosure in the form of breach of confidence is not allowed. It deemed that there exists an implied contract in
14 Desiccant rotors
international v. Bappad
Sarkar & another
IA No.5455/2008, I.A No.5454/2008 &I.
A. No5453/2008 in CS(OS)No.337/2008, Delhi HC ,14 July ,2009.
the case of employment. Breach of confidence in such a kind of case may amount to the disclosure of confidential information or trade secrets
and will be considered as a tort of breach
of confidence. The law
of breach of confidence is focused mainly on use or
disclosure, not on acquiring information. In Saltman Engg Co v.
Campbell Engg, Ltd Lord Green, shown that primary test for imposing an obligation for confidence breach.
Suppose it proved that the defendant used confidential
information directly or indirectly obtained from the plaintiff without the
plaintiff's consent, express or
implied. In that case, he will be considered to have done infringement of the plaintiff's rights.16
CONFIDENTIAL INFORMATION
The business may have a different type of information. But
all information is not equal. Some information
is relatively important than others. some of the reports are so important that
it determines the fate of the
businesses, and these are considered confidential and kept as secrets. The most asset of a company is
confidential information. Law may not automatically prevent others from using the most valuable
information. Confidential information can be ascertained by testing the basics of the information such
as objective and subjective tests. In Thomas Marshall (EXPORTS) Ltd v Guinle17 ,
here Ms. guile was the managing director in the company of the plaintiff and then later he started a
competitive company. plaintiff after knowing this had filed a petition and sought for an injunction
against the starting of the competitive business. The plaintiff said that the defendant was a previous
employee, and he knew some confidential information. The court observed
that once information is considered confidential, it's not available in the
public domain and the owner of this
information has a reasonable belief that its release would be detrimental to the business. Here the idea
of the owner has given the primary importance.18 These decisions were reviewed by the
House of Lords in the famous Spy catcher case, (attorney general
v.
guardian
newspapers and observed that if the holder of information himself has made the information in the public domain, no action
of breach of confidence will exists.
CONCLUSION & RECOMMENDATIONS
Currently, the Indian trades
secrets law is a judiciary
made law based
on common law and principle of equity, and Indian jurisprudence regarding trade secrets is
unclear on number of important aspects
like scope of damages, theft of trade secrets by competitors, procedural
safeguards during court proceedings etc.
The recent formation of national IP rights policy has given
plans for the introduction of trade secrets
law. currently there is no particular time frame has given to achieve the
objective, it is undeniable that
there will be a trade secret law in near future Legislation in other countries
and possible influence of such
legislation in India. There is a strong need for legislation with respect to the trade secrets.19 Indian
law can be made conveniently based on English law or English court principles or federal trade secrets law of USA under 1990 uniform trade secrets act, the Restatement (Third) Unfair and
the judicial pronouncements of the same.
In India, the codified law must first define the word trade secrets and the subject
matter. protection also should be extended. information in combination to other information also should be protected. to make sure that the knowledge is not
in the public domain, factors such as industrial level of general
knowledge and information ability can be taken.20 it is necessary for a codified
law to take tort of
misappropriation into consideration which is committed through improper means.
a body specializing in deciding cases
related to trade secrets as in other cases related to IPR have to be kept in conduct proceedings. disclosure of
the trade secrets should be taken care of and in lieu of proceedings should be also taken care of. Starting from the
Paris convention to the TRIPS agreement,
there were many international agreements that were adopted for the protection
of the intellectual property rights.
the TRIPS agreement actually unified the IPR law in all the member states.
this agreement can be considered as the magna carta of the IPR. trade secrets
are confidential, at the same
time they have commercial value. so, in order to maintain its practical value, one has to share it with few people
like the employees or the business partners. So, a little disclosure about the information
is a must.
REFERENCE
•
Ambience India Pvt Ltd v. shri Naveen Jain (2005) 122 DLT 421
•
American Express
bank ltd v. Ms. Priya puri (2006)
III LLJ540 Del
•
Attorney general v. guardian newspapers
(Spy catcher case) (1998)3 AII ER545
•
Barr Mullin
Inc. v. browning (1993) 424 S.E.2d 226
•
Bio-tech systems &services ltd v. Suprabhat ray &Ors AIR 2015 Cal 261
•
Brahmaputra tea company v. E Scarth
(1885) ILR 11 Cal 545
•
Burlington home shipping pvt ltd v. Rajnish Chibber
•
Cadbury Schweppes Inc. v. FBI floods
ltd (1999) 1 S.C.R.142
•
Charles worth v. MacDonald (1898) ILR 23 Bom
•
Ciba Inc. v. Sequent scientific ltd.., notice of motion no:3472 of 2009 in suit No.2501 of 2009 Bom HC
•
Coco v. A.N Clark (engineers) Ltd
(1969) R.P.C.41 at 47.
•
Coke v. Gujarat bottling company AIR 1995 SC 2372; (1995) 5
SCC 545
•
Desiccant rotors
international v. Bappad Sarkar & another IA No.5455/2008, I.A No.5454/2008 &I. A.
No5453/2008 in CS(OS)No.337/2008, Delhi HC ,14 July ,2009.
•
Diljeet Titus v. Mr. Alfred A Adebare &ors (2006)32PTC 609 Del • Dionne stoutest foam converting &packaging 397 S.E.2d 110
(Va.1990)
•
DVD copy control assn. Inc. v. bunner (2003)31
Cal 4th 864.
•
E.I. DuPont
de Nemours and Co v. Christopher 431 F.2d 1012 (5th Cir. 1970
•
Esso petroleum Co Ltd
v harpers garage ltd [1968] AC
269
•
Flitch v. Dewes (1921)
2 AC 158
•
General billposting company v. Atkinson
(1909) A11 ER AC 118
•
Gopal paper mills v. Ganesh das Malhotra AIR 1962 Cal
Article Information
TRADE SECTORS AND NON- DISCLOSURE AGREEMENT AS A TOOL OF PROTECTION PROPRIETARY INFORMATION IN INDIA
Authors: SANIYA, DR. JUHI SAXENA
- Journal IJLRA
- ISSN 2582-6433
- Published 2024/04/26
- Issue 7
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International Journal for Legal Research and Analysis
- Abbreviation IJLRA
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