‘Trade Secret’ Law is Turning Out to be a Well-Kept ‘Secret’

This post was published on August 26, 2014.


A recent discussion with a friend made me contemplate the methods companies use to protect a business process. Most companies have processes that help in their smooth daily functioning yielding them their revenue. Since business methods are not patentable in India, there must be a way that these processes can be protected from competitors. Of course there is – Trade Secrets.

A business process forms part of a company’s Confidential Information and can be protected as a Trade Secret. A Trade Secret is any kind of ‘information’ or ‘know-how’ which is not ‘publicly known‘, has ‘commercial advantage’ and which the owner has taken ‘reasonable measures to keep secret’. Largely, many countries recognize these as the normal components for protection of a Trade Secret. In India, unlike in the USA or other countries, there is no specific legislation to protect Trade Secrets.

In 2008, the Department of Science and Technology posted the draft bill on The National Innovation Act, which pretty much captured these components in the definition of ‘Confidential Information’ but even six years later, this Act is yet to come into force.

A draft version of the National Innovation Act, 2008 was released in October of 2008 and aimed to provide a fillip to public and private innovation and also codify the law related to confidentiality and trade secrets. The draft, through codification and consolidation of law of confidentiality, demonstrates the significance of Trade Secrets and Confidential Information within the realm of innovation. Innovative ideas, products and business practices help enterprises maintain competitive superiority in the market besides furthering economic interests. It is for this reason that there is a need to prevent others from taking advantage of one’s breakthrough ideas and knowledge or in ordinary parlance, the Confidential Information or Trade Secrets.

With an increasing number of “Trade Secrecy” cases coming up before the Indian Courts, this promised to be a welcome development for the IP community, however, the progress on this draft continues to remain a secret. So far, courts have protected trade secrets under the common law “Breach of Confidence” doctrine. With a statutory enactment, there was bound to be more clarity and certainty in the law but we all are waiting for the legislation that changes the face of trade secret protection in India.

The response of the Indian Government in promulgating the draft National Innovation Act, 2008 to boost research and innovation is praiseworthy. Six years after the introduction of this draft, we continue to await a central legislation on Trade Secrets in the current globalized economy, with influx of Multinational Corporations and Foreign Direct Investment demanding high priority.

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