Summary
This post examines the essential requirement of reasonable measures for the protection of trade secrets in India. It discusses how courts evaluate the adequacy of steps such as confidentiality agreements, explicit confidentiality notices, physical security, and information security protocols. The analysis also clarifies that while stringent measures are not mandatory, some form of notice and mandate of secrecy is critical for legal recognition of trade secrets. The post further notes that in certain cases, industry norms alone may suffice, though relying solely on them is risky. The discussion is objective, adhering to legal standards and factual accuracy.
This post was first published on July 4, 2011.
One of the basic and most important requirements for protection of trade secrets is reasonable measures. Despite its value, information would not be considered to be a trade secret unless reasonable measures are taken to protect its secrecy. A measure is considered to be reasonable if it gives notice of the existence of a secret and mandates or imposes its non-disclosure. While the stringency of a measure would provide a strong basis to prove existence of a trade secret, measures need not be very stringent or unbreakable.
Some measures that have been considered by courts include:
Some measures that have been considered by courts include:
a. Agreements
Agreements having confidentiality or non-disclosure clauses have been deemed by courts as reasonable measures. Existence of such an agreement to safe-guard secrecy of information has been accepted by courts as proof of existence of trade secrets. Signing of non-disclosure agreements before information disclosure is a standard business practice and is considered to be a reasonable measure.
Agreements having confidentiality or non-disclosure clauses have been deemed by courts as reasonable measures. Existence of such an agreement to safe-guard secrecy of information has been accepted by courts as proof of existence of trade secrets. Signing of non-disclosure agreements before information disclosure is a standard business practice and is considered to be a reasonable measure.
b. Confidentiality Notices
Express notices of confidentiality in combination with other measures and some times independently has been accepted as a reasonable measure. Incorporation of a notice stating that the information being accessed is confidential and imposing conditions for its use is a legally valid measure to show existence of trade secrets. Such notices complemented by business norms and practices would go a long way in protecting trade secrets. An example of a confidentiality notice is provided hereunder for reference.
Express notices of confidentiality in combination with other measures and some times independently has been accepted as a reasonable measure. Incorporation of a notice stating that the information being accessed is confidential and imposing conditions for its use is a legally valid measure to show existence of trade secrets. Such notices complemented by business norms and practices would go a long way in protecting trade secrets. An example of a confidentiality notice is provided hereunder for reference.
“The information in this document is highly confidential and shall not be accessed or used without appropriate permission.”
In one instance, a short confidentiality notice in an email has been held by the court to be a reasonable measure to safeguard the content of the email.
In one instance, a short confidentiality notice in an email has been held by the court to be a reasonable measure to safeguard the content of the email.
c. Physical Security
Physical security measures such as access controls, scanners, security cameras, guards to check flow of information and so on are considered as valid measures to show existence of a trade secret. Many companies employ policies such as clean desk policy, restricted photocopying, printing on authorization and so on to prevent loss of information. If a physical measure is implemented in a company, it would more often than not be sufficient to show notice and mandate of secrecy. While simple measures are generally sufficient under the law, companies sometimes adopt very stringent measures based on the value of information.
Physical security measures such as access controls, scanners, security cameras, guards to check flow of information and so on are considered as valid measures to show existence of a trade secret. Many companies employ policies such as clean desk policy, restricted photocopying, printing on authorization and so on to prevent loss of information. If a physical measure is implemented in a company, it would more often than not be sufficient to show notice and mandate of secrecy. While simple measures are generally sufficient under the law, companies sometimes adopt very stringent measures based on the value of information.
d. Information security
Today, information security is a very important facet of trade secret protection. Incorporating controls to access information by user name and password, fire walls, encryption and so on have been recognized by courts as valid reasonable measures. Providing electronic notices, warning messages and so on would also be considered as reasonable measures.
Today, information security is a very important facet of trade secret protection. Incorporating controls to access information by user name and password, fire walls, encryption and so on have been recognized by courts as valid reasonable measures. Providing electronic notices, warning messages and so on would also be considered as reasonable measures.
Despite any conscious measures, courts have some times provided relief to trade secret holders based on industry practices and norms. In other words, even if no measure is taken , trade secret protection can be obtained if it can be shown that information would be considered confidential in the context of a specific industry or business and industrial norms. Having said that, reliance on practices is a very tricky preposition and cannot be pulled off in all circumstances.
Authored By: Dr. Kalyan C. Kankanala
