INDIA Law and Practice Contributed by: Pravin Anand and Rohil Bansal, Anand and Anand
It is extremely important to ensure that the relevant information, which falls within the domain of “trade secret” as per the employer/licensor, is specified to be such in the agreement with the employee/licensee, so that there is no ambiguity later. In Navigators Logistics v Kashif Qureshi , CS(COMM) 735/2016, the Delhi High Court rejected the claim - ant’s claim and complaint as it did not clearly identify the trade secret in issue, the secrecy regarding such data and what steps (apart from the secrecy clauses under the appointment letters with the defendants) the plaintiff took to maintain secrecy/confidentiality. Additionally, trade secrets can be protected by an action against misappropriation under common law. Misappropriation of trade secrets may occur by way of breach of an obligation of confidence (whether arising impliedly or expressly) as well as by theft. The parameters for determining whether the rights- owner of a trade secret has taken reasonable meas - ures for protection of their trade secret vary from case to case. While there is no “straight jacket” formula, the following are a few illustrative measures that a rights- holder can adopt. It is reasonable for owners of trade secrets to insert clauses into a technology transfer or other licence agreement, stating that the technology transferred is of a confidential nature and that the licensee is obli - gated to maintain confidentiality, during the pendency as well as after its termination. Moreover, the owner may mandate the licensee to enter into appropriate secrecy agreements with their employees, subcontractors and visitors to their fac - tory, to maintain secrecy about such trade secrets. Owners of trade secrets may even insert a cautionary notice into all technical manuals clearly stating that the information contained therein is of a proprietary and confidential nature. However, an ex-employee cannot be prohibited from divulging or using their skill set for a competitor of the owner of a trade secret. In Ambience India , the High Court of Delhi held that day-to-day affairs of employ -
ment in the knowledge of many and commonly known to others cannot be called trade secrets. 1.6 Disclosure to Employees Disclosure of a trade secret to employees does not mean that the information has lost confidentiality. The presence of a non-disclosure agreement with the employees is not a mandatory requirement for protecting the owner’s rights in a trade secret. This is judged from the facts and circumstances of each case. Trade secrets are protected, irrespective of contract, against misuse by the employees or ex-employees, contractors or subcontractors, licensees or ex-licen - sees. The case of Konrad Wiedemann states that trade secrets are protected against misuse by any party who may have a relation with the claimant, irre - spective of contract, based on the broad principles of equity. In Hi-Tech Systems v Suprabhat Ray (supra), the High Court of Calcutta held that a principal – in order to protect the utilisation of trade secrets and to prevent damage, if it cannot be compensated in money – can seek restrictions on its agents. In such a situation, equity would step in and prevent any damage from being caused to the business of the principal. Nonetheless, the owner of such trade secret or a licensee is expected to take all reasonable measures to maintain secrecy, and to ensure that such confi - dential information is imparted to their employees in circumstances importing an obligation of confidence on them as well. However, it is important to state here that an employee cannot be restrained from using the business acumen that they have acquired during their employment. In Star India Pvt. Ltd v Laxmiraj Seethar- aman Nayak , 2003 SCC OnLine Bom 27, the Bombay High Court opined that anyone in any employment for a certain period would know certain facts and would acquire some information without any special effort, and cannot be said to know trade secrets or confiden - tial information. All information or general knowledge of facts cannot be labelled as trade secrets or confi - dential information.
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