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Trade Secret

Trade secret is a formula, process, device or other business information that is kept confidential, to maintain an advantage over the competitors. It consists of formula, pattern, compilation, programme, device, method, technique, or process that derives independent economic value from not being generally known or readily ascertainable.

Below are the ingredients of trade secrets :

  • It is such information not generally known to the public which in turn confers economic or commercial benefit through the maintenance of confidentiality and exclusivity,
  • It is subjected to reasonable efforts of secrecy since disclosure would result in undue enrichment of others. For Eg., Coca-Cola’s formula for its aerated drinks and KFC’s recipe for its delicious fried chicken are considered to be trade secrets which have been preserved for many decades

Intellectual Property with Trade Secrets:
Art.1(2) of the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS Agreement), states that intellectual property shall include protection of undisclosed information. Art. 39 of the TRIPS Agreement states that in the course of ensuring effective protection against unfair competition as provided in Art. 10 of the Paris Convention, with respect to information which is

  • A secret not generally known or readily accessible,
  • Has commercial value by virtue of secrecy,
  • Has been subjected to reasonable steps for ensuring its secrecy, Member nations should ensure that natural and legal persons have the possibility of preventing such information, within their control, from being disclosed to, acquired by, or used by anybody without their consent, which is in a manner contrary to honest commercial practice. Possibility of being referred to hereinbefore implies that trade secrets should be accorded protection within the legal system and not necessarily in the IP legislative framework of the said Member nation.

Indian Policy Approach
The 1989 GATT (General Agreement on Tariffs and Trade) discussion paper of India sets out that as per India, trade secrets cannot be considered to be Intellectual Property Rights, because the fundamental basis of Intellectual Property Right rests in its disclosure, publication and registration, trade secrets are premised upon secrecy & confidentiality. Point to be taken into consideration is that disclosure and publication are necessary before according the protection of exclusivity when viewed from the IPR context since the prosecution stage involves challenge & objection which test the grant of said exclusivity. The paper further goes on to state that the observance and enforcement of secrecy and confidentiality should be governed by contractual obligations and the provisions of appropriate Civil Law but not by intellectual property law.

On May 12, 2016 India approved the National IPR Policy with the 7 objectives and elaborative steps to be undertaken by the identified ministries/departments. One of its objectives was to ensure an effective legal and legislative framework for the protection of IP. The steps outlined to be taken towards attaining this objective include, among other things, identification of important areas of study and research for future policy development, and one such area identified was the protection of trade secrets. So, India has taken a step towards considering the protection of trade secrets under the ambit of IPR protection.

Subsequently, the U.S. – India Trade Policy Forum held on October 20, 2016 in New Delhi included a meeting of the High-Level IP Working Group, and a side-event on trade secrets, and several notable consensus outcomes related to promoting Intellectual Property. India announced that it has taken important initiatives and steps, which is designed to enhance trade secrets protection in India, showing India’s strong commitment towards the importance of trade secrets protection.

These initiatives and steps include the following:

  • A workshop was convened with government officials, academics, legal experts and representatives,
  • U.S. and Indian industry, facilitated the exchange of information and best practices on trade secrets protection in both countries; India noted that it protects trade secrets through a common law approach,
  • A toolkit is to be prepared for industry, especially SMEs, to highlight applicable laws and policies that may enable them to protect their trade secrets in India,
  • A training module for judicial academies on trade secrets might also be considered,
  • A further study on various legal approaches to protection of trade secrets will also be undertaken by India.