Business Law & its conflicts with Trade Secrets

Introduction

In order to gain an advantage over and retain the uniqueness of their product/service, companies typically accumulate and use creative as well as revolutionary concepts that are unfamiliar to their rivals. Information that is not commonly available to rivals and covered by confidentiality agreements, is known as trade secret' as quasi-intellectual property and is liable for immunity from disclosure or unauthorized use of the trade secret under tort or contract law. The size of a corporation is no requirement for a company to apply for the same business confidentiality and security.

The size of a corporation is no requirement for a company to apply for the same business confidentiality and security. For the survival of organizations, enforcing the security of trade secrets is very important and crucial for their survival. It is of great importance for companies in this era of globalization to ensure that the security of their trade secrets from their rivals is adequate in cases where fear of disclosure exists, especially when recruiting new employees for strategic growth or when introducing new products and services.

Trade Secret Security System in India

It is becoming increasingly difficult to protect business plans and secrets in this age of globalization, where businesses offshore to different countries for growth as well as cheaper labor. Instead of patentable knowledge, businesses see technology as a secret. This is large because rivalry in markets has reached a stage that once knowledge is available, rivals innovate. While this gives rise to healthy competition, once such data is available to business majors, it becomes increasingly difficult for new companies to keep up or thrive.

The only protection that trade secrets have earned in India is through conventional judicial decisions and through fair law, contract law, and tort clauses and elements. The lack of a trade secret law has always made decisions complicated, but judicial pronouncements have always sought to establish and safeguard trade secrets and to resolve confidentiality breaches.

Landmark Cases in India

1. Konrad Wiedemann GmbH v. Standard Castings Pvt, the leading Indian case. In the Saltman case, Ltd relied heavily on the observations of what all Lord Green stated. On the other hand, it is perfectly possible to have a confidential document, whether it is a formula, a plan, a sketch, or something of that kind, which is the result of the manufacturer's work on materials that can be accessible to anyone to use; but what makes it confidential is the fact that the manufacturer of the document has used his brain and therefore produced a result that can only be produced by someone else.

2. In Suhner v. Transradio Ltd. Plowman, J. Confirmed that the confidential existence of a document does not depend on whether the information it contains is available anywhere, but if it contains valuable information gathered for a particular purpose by the claimant and if so, has been sent for a specific purpose to the defendant. The record shall be confidential if these conditions are met, and the defendant shall not be able to use it for any other purpose.

Under the Law of Contracts

Under the concepts of equity and contractual responsibility, the Indian Courts have upheld trade secret rights. Section 27 of the Indian Contract Act makes this clear because of the trade restraint clause. This section, which is general in its terms, declares as null all agreements which restrict trade. The section was originally strict in its invalidation of restraints, but it was enforced when trade was still undeveloped and security of restraint of trade was the object of the section. Later, the implication/recommendation of the Law Commission of India in 1958 to allow fair restraint came into the picture.

Remedies for breach of Trade Secrets

In the event of a violation, the recourse can be an injunction or compensation. As under the law of injunction in India, the law of the Special Reliefs Act, 1877 extends in favor of the injured. However, it is important to create a prima facie scenario, a balance of convenience along with irreparable loss. In several cases, owing to the inadequacy of the prima facie argument, the grant of an injunction was denied. The courts also found that in order to seek injunctions, the applicant should genuinely hide the material truth in order to obtain equitable relief. In compliance with Section 41(e) of the Relevant Relief Act, an injunction that cannot be clearly enforced should not be issued by the court.

Threat from Employees

People working in corporations may be a challenge to the security of a company's intellectual property. While intellectual property security remedies and defensive measures can be placed in place, employee loyalty can not be undermined and remains the greatest obstacle that companies have to face in order to protect their IPs. To secure the recipe as a trade secret, Coco-cola goes to the point of letting only two people in the organization know about the proportions of ingredients in their drink. Because of the ever-changing environment and the reality that trade secrets are independently discoverable by others, companies are commonly encouraged to continue to transform their trade secrets and innovate so that competition stays in place and can avoid their trade secrets from being identified.

The threat that comes with recruiting is inevitable for businesses that operate and hire workers in India. It is a challenge to find ideas for constantly evolving and innovating trade secrets. Some businesses often make attempts to snatch workers from their rivals unscrupulously in order to access their creative abilities and their knowledge of their competitors' secrets of performance.

Conclusion

In the area of intellectual property rights, while the law of trade secrets falls into the current context of tort law, contract law, and competition law, there are some issues with regard to its inception. A separate law on trade secrets, though, would also remove the difference. Being a developing country, India must have a strong law to protect trade secrets. In order to meet its responsibilities under the TRIPS Agreement, the TRIPS Agreement required that its Member States change their laws and put in the new legislation. It is now time to put into force in India a statutory law that not only protects trade secrets and confidentiality but also makes necessary changes to the current Competition Act structure against misappropriation and regulation of such confidential information.

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Ankita Rathi