Professional Documents
Culture Documents
Manoj Pillai,
Partner , LEX ORBIS IP PRACTICE
Acknowledgement:This presentation contains textual and graphical matter from a WIPO Presentation on Trade Secrets.
This is intended to be a fair academic use of the contents from the earlier presentation .
General principles:
Information that has commercial value
and that has been diligently kept
confidential will be considered a trade
secret (TS).
Owner will be entitled to legal
remedies against those who use it
without authorization, steals it, or
divulges it.
Question 1
WHAT KIND OF INFORMATION
QUALIFIES AS A TRADE
SECRET ?
TRADE
Provides
competitive
advantage
Potential to
make money
SECRET
Kept
confidential
Technical &
scientific
information
Financial
information
TRADE
SECRET
Commercial
information
Negative
information
Typical examples of TS
Hardware design
Software
Technical data about product performance
Pending patent applications
Business plans & strategies
New product names
Financial projections
Marketing plans, unpublished promotional material
Cost & pricing information
Sales data
Customer lists
Info re: new business opportunities
Personnel performance
Question 2
WHAT MAKES SOMETHING A
TRADE SECRET ?
1. Secret
not generally known among or easily accessible to
persons within the circles that normally deal with this
kind of information
What is generally known in the industry?
matters of common knowledge
information you find at library, online database, trade journals,
patent information, etc
price list on website
Hardware design, software application
1. Secret
Not required that be known only by one person
e.g. based on supplier relationship, joint development agreement,
due diligence investigation, etc.
2. Commercial value
Must confer some economic benefit on the holder
This benefit must derive specifically from the fact that
it is not generally known (not just from the value of
the information itself)
How to demonstrate:
3. Reasonable
steps
Under most TS regimes, you cannot have a TS unless
you have taken reasonable precautions to keep the
information confidential
Reasonable case by case
reasonable security procedures
Non-disclosure agreements (NDA)
such that the information could be obtained
by others only through improper means
To avoid disputes:
WRITTEN AGREEMENT
+
ASSIGN
in advance all trade secrets developed
during employment or commission
Question 3
When can you seek Legal
Remedy?
Enforcing TS in India
No legislation governing Trade Secrets
Laws relied on
Indian Cases
John Richard Brady And Ors v. Chemical Process Equipments P. Ltd. and Anr
[AIR 1987 Delhi 372]
Issues Considered
(a) Whether the defendants Fodder Production Unit is based on the plaintiffs
drawings and the related know-how passed to them under the express condition
of confidentiality?
(b) Whether the technical drawings of the defendants are artistic works that
qualify for protection under the Copyright laws?
The Court took the position that, even in the absence of an express confidentiality
clause in the contract, confidentiality is implied and that the defendant is liable for
breach of the confidentiality obligations.
English Precedents
Most cases dealing with trade secrecy in India refer to British
case law.
In Mr. Anil Gupta and Anr. Vs. Mr. Kunal Dasgupta and Ors., the
Plaintiff relied on the springboard doctrine,
cited
Franchi v. Franchi 1967 RPC 149,
Saltman Engg. V. Campbell Engg. (1948) 65 RPC 203,
Terrapin v. Builders Supply Co. 1967 RPC 375 and
Seager v, Copydex Ltd. (1967) RPC 349
and relied on the spring board doctrine.
At least 1 case each attracted the Information Technology Act, the Indian
Penal Code, the Arbitration & Conciliation Act and the Designs Act
At least in 1 case, the Delhi High Court invoked a wider equitable jurisdiction
and awarded injunction even in the absence of a contract John Richard
Brady
English Precedents
Most cases dealing with trade secrecy in India refer to British
case law.
In Mr. Anil Gupta and Anr. Vs. Mr. Kunal Dasgupta and Ors., the
Plaintiff relied on the springboard doctrine,
cited
Franchi v. Franchi 1967 RPC 149,
Saltman Engg. V. Campbell Engg. (1948) 65 RPC 203,
Terrapin v. Builders Supply Co. 1967 RPC 375 and
Seager v, Copydex Ltd. (1967) RPC 349
and relied on the spring board doctrine.
At least 1 case each attracted the Information Technology Act, the Indian
Penal Code, the Arbitration & Conciliation Act and the Designs Act
At least in 1 case, the Delhi High Court invoked a wider equitable jurisdiction
and awarded injunction even in the absence of a contract John Richard
Brady
Question 4
HOW ARE TRADE SECRETS
LOST OR STOLEN ?
A Growing Problem.
Why Does It Occur?
Way we do business today (increased use of
contractors, temporary workers, outsourcing)
Declining employee loyalty: more job changes
Organized crime : discovered the money to
be made in stealing high tech IP
Storage facilities (DVD, external memories,
keys)
Expanding use of wireless technology
Examples
Reverse engineering, independent discovery
Improper licensing
Burglaries by professional criminals targeting
specific technology
Network attacks (hacking)
Laptop computer theft
Inducing employees to reveal TS
Question 5
HOW TO PROTECT
YOUR TRADE
SECRETS?
3. Restrict access
to only those persons having a
need to know
the information
computer system should limit each
employees access to data actually
utilized or needed for a transaction
4. Mark documents
Help employees recognize TS
prevents inadvertent disclosure
Uniform system of marking
documents
paper based
electronic (e.g. confidential button
on standard email screen)
Shredding
Oversight; audit trail
Overheard conversations
Documents left in plain view
Unattended waste baskets
2. Current employees
Prevent inadvertent disclosure (ignorance)
Train and educate
NDA for particular task
3. Departing employees
further limit access to data
exit interview
letter to new employer
treat fairly & compensate reasonably
for patent work
Question 6
MAY TRADE SECRETS BE
SOLD OR LICENSED?
SALE
Most TS sales occur as part of the sale of the business
LICENSE
e.g. in combination with patent license
e.g. software license for highly specialized program
Advantage: additional revenues
Disadvantage: risk of disclosure (potential loss)
In some countries, restrictions
TS Licensing
Definition of the secret subject matter
what is to be kept confidential?
marked as such or broad clause?
Permitted use
disclosure to employees, professional advisors?
modification of technology?
Precautions to be taken
Exclusions
TS Licensing
Duration of secrecy obligations
Royalties
Sanctions
Should not be subject to alternative dispute
resolution
Question 7
HOW IS TRADE SECRET
PROTECTION
ENFORCED?
What can you do if
someone steals or
improperly discloses
your TS?
3. Criminal laws
e.g. for an employee to steal trade secrets from a
company
e.g. unauthorized access to computers
theft, electronic espionage, invasion of privacy, etc.
circumvention of technical protection systems
Remedies
1. Injunction Temporary or Perpetual
2.
Damages
3.
4.
Precautionary impoundment
Question 8
PROTECTING INVENTIONS:
TRADE SECRETS OR PATENTS?
T r a d e S e c r e ts
P a te n t s
n o r e g is tr a tio n
r e g is tr a tio n
- le s s c o s ts (b u t: c o s ts to k e e p s e c re t)
- im m e d ia te ly a v a ila b l e
c a n la s t lo n g e r
- b u t: lim i t e d to e c o n o m ic life
- u n c e rta in life s p a n : le a k o u t is irre m e d ia b l e
- g e n e ra lly : m a x 2 0 y
- b u t: c a n b e in v a l i d e d
n o p u b lic d is c lo s u r e
p u b lic d is c lo s u r e
- b u t: p ra c tic a l n e e d to d is c lo s e
- if le a k o u t: T S lo s t
T r a d e S e c r e ts
P a te n ts
L a r g e s u b je c t m a t t e r
S u b je c t m a t t e r li m it e d :
P r o t e c t io n o f v ir t u a lly a n y t h in g
m a in t a in e d in s e c r e t b y a b u s in e s s
t h a t g iv e s c o m p e t it iv e a d v a n t a g e
- R e q u ir e m e n t s : n e w , n o n o b v io u s , u s e f u l
- S c o p e : p a te n t c la im
O n l y p r o t e c t io n a g a i n s t
im p r o p e r a c q u i r e m e n t /u s e
E x c l u s iv e r ig h t s
M o r e d if f i c u l t t o e n f o r c e
" P o w e r to o l"
- s o m e c o u n t r ie s : n o la w s
- a b ilit y t o s a f e g u a r d T S d u r in g lit ig a t io n
m o n o p o ly t o e x p lo it
t h e in v e n t io n
INNOVATIVE IDEA
Initially
Later stage
Not patentable
patentable
Secret !
Strategic
business
decision
TS
patent
TS
Part f the idea
TS
Question 9
WHAT TO BEAR IN MIND IF
YOU SIGN A CONFIDENTIALITY
AGREEMENT FOR A CLIENT ?
reasonable in scope
- defines precisely what information you
must keep confidential
- limited in time (max. 5 years)
- exceptions
Thank you