What is Trade Secret?

Trade Secrets are intellectual property right which has a confidential value and information. This information and value hold the potential to be licensed or be sold. To determine if something is a trade secret Trade Related Aspects of Intellectual Property Rights (TRIPS) have laid down the following essential points that have to be considered:-

1. It is commercially valuable
2. It is known to only a limited group of persons
3. Proper steps have been taken by the owner to keep it as a secret.

Also as per the Uniform Trade Secrets Act 1970, which provides the definition of a  trade secret like an “Information, which is a formula, pattern, compilation, program device, method, technique, or process, that:

• derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and
• is the subject of efforts that are reasonable under the circumstances to maintain its secrecy”.

HISTORY OF TRADE SECRET

With the evolution of industries with time, there were many facilities provided to the trader to promote their business. With growing business completion increased and thus duplicates of originals were also introduced in order to compete for and lower down the business of the other.  Many company and industries who were in business which have their own unique features tried to save their uniqueness through trademarks and copyrights while some of the exceptional cases were good enough to keep a secret of their uniqueness by themselves. This was so because copyright was privileged to the owner only till his lifetime and 60 years after his/her death while trademark for 10 years. The element of uncertainty has diverted the interest to Trade secrets.

Trade secrets have gained popularity because there are no formalities, procedures, delays, permission etc. Further with the changing technologies which are surpassing the existing laws day by day, it is better to protect it by own.

PROTECTION OF SECRET

1. NAFTA

North American Free Trade Agreement (NAFTA) was earlier a treaty between Canada, Mexico, and the United States which helped to eliminate tariffs between the counties. Later on July 1, 2020, it was replaced by the United States-Mexico-Canada Agreement (USMCA). Under NAFTA it is a mandatory provision for member countries to protect trade secrets from unauthorized disclosure, acquisition, or use.

Remedies:  In form of injunction relief and damages.

2. GATT

General Agreement on Tariffs and Trade (GATT) is an agreement between many countries, having the intention to promote international trade by cutting down or eliminating trade barriers like tariffs and quotas.

World Trade Organization (WTO) was established by GATT and spread various trade-related agreements including TRIPS.

Under GATT, “any undisclosed information” shall be protected against use by others without the prior consent of the owner.

3. TRIPS

Trade-Related Aspects of Intellectual Property Rights (TRIPS) is an agreement between all the member nations of the World Trade Organization.  Under Article 39 of the Agreement TRIPS it is obligatory on all the member states to ensure Protection of Undisclosed information. The TRIPS Agreement also need the member countries to provide effective remedies for trade secret misappropriation and should include;

(a) injunction relief

(b) damages  

(c) provisional relief in order to prevent infringement and also to preserve evidence.

4. WIPO

The Paris Convention for the Protection of Industrial Property (Paris Convention) which is administered by WIPO deals partly with the protection of trade secrets of Industrial Property, as does the World Trade Organization’s (WTO) Agreement pertaining to Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement).

WHICH LAW PROTECTS TRADE SECRET IN INDIA

Trade Secrets, till date, is been neglected in India and there is no enactment or policy framework that can provide protection of trade secrets. Even though form of trade secret is new to India, but it is an important field of IP.

As discussed, strict Trade Secret Protection laws will help in getting more of Foreign Investment as Foreign investors requires assurance of protection of their trade secrets in India.

Therefore, an appropriate Trade Secret laws is required which will not only provide sense of security to the foreign investors as well as to the local businessmen but will also further boost the Indian economy.

PROTECTION OF TRADE SECRETS IN INDIA

Though India is a signatory of the TRIPS agreement and under Article 39 (2) it allows its members to frame laws that will prevent the unauthorized disclosure of secret information. The concept of Trade secret is yet to be introduced in India and there is no substantive law to determine or protect the trade secret. Even though there is the unavailability of proper laws on trade secret yet if various case the Hon’ble courts of India have tried to solve the issue. Here are the famous Trade Secret cases in India Courts:

1. In American Express Bank Ltd. v. Ms. Priya PuriDelhi High Court, defined trade secrets as “formulae, technical know-how or a peculiar mode or method of business adopted by an employer which is not known to others.”
2. In Michael Heath Nathan Johnson v. Subhash Chandra And Ors[2]and John Richard Brady And Ors v. Chemical Process Equipments P. Ltd. And Anr[3] took note of the contentions of the counsels who referred to English decisions to define trade secrets
   Mr. Anil Gupta and Anr. v. Mr. Kunal Dasgupta and Ors[4] the Delhi High Court held that the concept developed and evolved by the plaintiff is the result of the work done.
3. Under the Breach of Contract In  John Richard Brady & Ors V Chemical Process Equipment Pvt. Ltd. & Anr 1987 the Delhi High Court held that Rules may be  according to the circumstances in any given case ether rest on principles  of equity that is the application by the court of the need of conscientiousness in the course of conduct or by common law action.
4. In Tata Motors Limited & Anr V State of Bengal 2002, High Court of Kolkata relying on the definition of Black Law Dictionary observed trade secret as a formula, process or device that is kept confidential.

TYPES & EXAMPLE OF FAMOUS TRADE SECRETS

Trade secrets come in array of types some of the examples are as follow: 

1. R&D information 
2. Software algorithms
3. Inventions
4. Designs
5. Formulas
6. Ingredients
7. Devices

WHAT IS A TRADE SECRET EXAMPLES IN INDIA

1. THE GOOGLE SEARCH ALGORITHM 

Google developed a search algorithm and continues to modify its secret algorithm.

2. KFC FRIED CHICKEN 

The secret ingredients for KFC’s original recipe are known by only few employees and are blended into two portions by two separate company it was originally kept with Colonel Sanders.

3. COCA-COLA 

Coca-Cola made a choice of keeping its recipe as a trade secret instead of patenting it. 

4. LENA BLACKBURN’S BASEBALL RUBBING MUD 

Blackburn’s Baseball Rubbing Mud was developed to dull the surface of new baseballs, which gradually made it easier to grip. All the mud comes from the same place, but the business assures everyone it is on public land. 

5. LISTERINE 

The inventor of Listerine licensed its secret formula to Lambert Pharmaceuticals. Lambert which is now Pfizer gave royalty payments to the family of the inventor for 70 years. The formula of Listerine has been in a bank vault and is mixed in three different cities around the globe

6. MCDONALD’S BIG MAC SPECIAL SAUCE 

The special sauce recipe was a trade secret until it got lost in the 1980s during reformulation. Luckily McDonald’s was able to get the recipe from the original person that originally produced the sauce.