INDIA Law and Practice Contributed by: Pravin Anand and Rohil Bansal, Anand and Anand
the case of a dispute courts are guided by principles of equity, whereby whoever has received information in confidence may not take unfair advantage of it. 2.4 Industrial Espionage As industrial espionage includes misappropriation of trade secrets, theft, cheating, etc, civil and criminal claims can be made by the claimant. A detailed analysis of civil claims is covered in 7.2 Measures of Damages , 7.3 Permanent Injunction and 7.5 Costs . Criminal claims are set out in 9.1 Pros- ecution Process, Penalties and Defences . 3. Preventing Trade Secret Misappropriation 3.1 Best Practices for Safeguarding Trade Secrets In transactions involving trade secrets, the owner of such information can take the following steps to ensure that their interests are safeguarded: • inform the recipient that the information is confi - dential in nature and that the giver has all propri - etary rights to said information; • expressly inform that confidentiality of the informa - tion should be maintained at all times and that it should not be divulged to any third party without the consent of the giver; and • clearly inform that, if the information is leaked, immense prejudice and harm will be caused to the giver. Further, in cases where confidential information is involved, parties can form a confidentiality club by making a request to the court that confidential docu - ments should only be accessible to members who are part of the club, and such members should undertake not to disclose or misuse such documents or informa - tion. The concept of confidentiality clubs has been discussed and upheld in various cases, such as: • Pfizer v Unimark Remedies , order dated 4 May 2016 in Misc Petition (L) No 56 of 2016; • Sivasamy v M/s Vestergaard A/S [FAO (OS) 206/2009];
• Mvf3 v Sivasamy [CS(OS) 599/2007] in IA No 10268/2009, CS (OS) No 599/2007; • Roche v DCGI [CS (OS) 355/2014]; and • Dolby International v GDN Enterprises [CS (COMM) 1425/2016]. Relying on the above judgments, the Delhi High Court passed an order in Ericsson (Publ) v Xiaomi Tech- nology to the effect that “the reason probably is, in today’s world of globalisation, where competition is at its peak, organisations may not be inclined to disclose trade secrets/confidential agreements or their details they had entered [into] with different parties lest [this] may cause serious prejudice to such parties because of competition involved”. The Delhi High Court (Original Side) Rules, 2018 intro - duced a rule on “confidentiality clubs”, under Chapter VII Rule 17. Further, the Delhi High Court Intellectual Property Rights Division Rules, 2021, Section 19 also deals with confidentiality clubs and redaction of confi - dential information, and states that at any stage in any proceeding the court may constitute a confidentiality club for the preservation and exchange of confidential information and documents filed before the court. 3.2 Exit Interviews The manner of conducting exit interviews will vary across industries and across hierarchies. However, highlights include the following: • the departing employee must not part with the confidential information they may have received during the employment; • they ought not have in their power or possession any company property that may be tangible or intangible; and • they may be required to sign a non-compete agreement, by virtue of which they would agree to not engage in a competing business by themselves or join any other person who engages in such com - peting business. In Krishan Murugai v Superintendence Co , AIR 1979 Delhi 232, the court held that an injunction can oper - ate after termination of employment only if it is con - fined to the divulgence of trade secrets. There can be no restriction on the employee from joining a competi -
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