It is not like that the legislation is ignorant towards the formulation of trade secret laws, in the year 2008 the National Innovation Act was proposed, but it never became a law.

So the question lies why are trade secret overlooked compared to other intellectual property rights?

The answer is that, the trade secrets do not get light as they always shall be kept in confidence and in addition to which they do not need any government approval or any kind of protection from the government neither they need to be registered. We can say that trade secrets have been a part of business for a long time but the phenomenon of the whole trade secret is a very recent one. There is no codified law in India for trade secrets but the Indian Courts have recognised the existence of trade secrets as a form of intellectual property. The courts have tried to address various areas of trade secret be it the definition of trade secret, the grounds on which the trade secret is protected and the scope of the same.

Currently, India has no specific laws regulating trade secrets and there is no adequate protection except against misappropriation of trade secrets. The information which is shared to the partners or the employee has economic value attached to it because they are kept in confidence. So in case of infringement there is no legislative provision specifically for trade secret misappropriation. If the parties have entered into a contractual agreement, agreement to keep the secret intact then the violating party has said to be in breach of contract.

Intellectual property includes trademark, copyright, patent, industrial design etc. all of the said has a proper codified law and the one which had no codified law such as industrial design or integrated circuits, new Acts were enacted after the implementation of TRIPS, but the Indian Legislation has not formulated an act for the protection of trade secret and still relies on common law remedies.

What is a Trade Secret?

 We need to trace the definition of trade secret from laws of other countries as we have no law to regulate it. According to World Intellectual Property Organisation (WIPO), Trade secrets are any information which provides an enterprise with a competitive edge to a business^[1].

The definition and scope of trade secret differs from jurisdiction to jurisdiction. Trade secret may comprise of formulas, patterns, manufacturing process, method or compilation of customer list, these are certain elements defined by the Uniform Trade Secret Act (UTSA).

Whereas the Economic Espionage Act of 1996 has laid down a test for the information to qualify as a

trade secret:

(a) It must be a secret;

(b) Shall have a commercial value;

(c) Reasonable steps are taken for effective protection.

Trade Secret compared to Copyright

A copyright is that a form of intellectual property where exclusive rights are given to the creator of any art form such as literary work, films, dramatic work, sound recordings and music works etc. Whereas trade secret protect information which has to be kept in confidence.

Copyright also protects the software. The copyright protects the textual work which is original and also visual or artistic work. The distribution or public display of software which is similar to the original is prohibited under copyright.The copyright gives the owner the exclusive right of artistic work and prevents others from copying the work.

The copyright is complementary to trade secret compared to patent protection^[2]. The work of copyright should be original and should be in physical form^[3].Whereas the trade secret need not be in original form. The copyright and trade secret mostly protects the same information but the same protection cannot be awarded because copyright work are distributed and made available to the public for their entertainment so it ends the scope of trade secret protection. The work which is not displayed or published the trade secret protection may be awarded for the copyrightable work.

If we talk about software protection, both copyright and trade secret are available for distribution but with reasonable restriction i.e. the licensee signs a non-disclosure agreement which will prevent him from divulging the same and the software program does not require the disclosure of software code. The copyright in software and trade secret go hand in hand because the undisclosed information is the code and the same is protected by the user due to licence agreement.

The copyright can also be a trade secret as in both there is no requirement of registration and neither has a requirement of compulsory disclosure.

Automatic rights are awarded to the copyright. If the work is original the owner will automatically own a copyright^[4]. But the owner registers the copyright to avail the benefit. The process of registration involves sending a copy of the work to the copyright office. This will expose the secret to the world unless important content is hidden. For example it is possible while submitting a data that important portions are encrypted so the data is maintained as a secret^[5].

The copyright is infringed in case of unauthorised use by a party i.e. copying the work which already has a copyright, whereas to file a suit for infringement of a trade secret there shall be misappropriation which leads to the copying of trade secret.

The years of protection awarded to copyright is between 50 to 100 years and protection in India is lifetime + 60 years, which means that the owner of copyright will enjoy exclusive right for his lifetime plus 60 years after his death. Whereas trade secret protection is unlimited unless the information remains secret.

The trade secret need not be unique and original piece of work, whereas to qualify for copyright the work should be creative and original. Both intellectual property is correlative and complementary to each other.

Trade Secret compared to Trademarks

 Trademarks are the logo, shape or a phrase which distinguishes one thing from the other. Trademark gives exclusive right to the owner for the use of names, symbols or a legally registered word/s. Trademark also protects; the product configuration (customization of a product) and trade dress (particular kind of visual representation that depicts the source of the products e.g. shape of the Coca-Cola bottle) and also service marks (Mark given to a service provider e.g. MSU).

Rights of trademark are not obtained unless it is exposed to the public through a product or service^[6]. A trademark to avail the benefit needs to be disclose to the consumer. If we look at trade secret to avail the benefit the information shall be kept secret. Rights of trademark are obtained only when it is protected from public exposure. There are huge dissimilarities between trade secret and trademarks. Though there are dissimilarities a potential trademark i.e. a company plans to use the name or logo in near future is protected through a non-disclosure agreement. So before the public disclosure the potential trademark is a trade secret. There is no use of non-disclosure agreement at later level in trademark.

There is no need to register a trademark but if registered then there are advantages and higher levels of protection. But if a company is in business for a certain period and there is a company with similar name etc. which creates a confusion in the mind of consumer, even though the company who is in market for a longer period of time has not registered the trademark can file a suit against the new competitor on the basis that they have been in business for a longer period of time and relevant section of people knows about this business. There is no need to register the trade secret. The trademark is protected for 7 years minimum whereas in India under the Trademarks Act, 1999 period of protection is 10 years.

Registration in the United States may be necessary in order to file a suit of infringement of a trademark. The case of infringement is filed on the ground that the trademark was used by another company which creates a confusion in the mind of consumers. A single company may have a trademark and trade secret together, the example is the most leading beverage brand Coca-Cola. The trademark is given to the shape of the glass bottle and the word Coca- Cola in the flowing handwriting^[7]. At the same time the biggest trade secret of all time the Coca-Cola recipe is kept in a vault in Atlanta, USA. So, the company has both intellectual property trade secret as well as trademark.

AUTHOR: ADV. SAKSHI KOTHARI

^[1] WIPO, “What is a trade secret”, WIPO.INT, (last visited Oct. 11, 2020), https://www.wipo.int/tradesecrets/en/

^[2] Daluchi & Madubuko, supra, 5

^[3] Id

^[4] NonDisclosureAgreement.com, “Trade Secrets vs Patents vs Copyrights vs Trademarks”NONDISCLOSUREAGRREMENT.COM,https://nondisclosureagreement.com/trade-secrets-vs-patents-vs-copyrights.html .

^[5] Id

^[6] NonDisclosureAgreement.com, supra note 17

^[7] Aparajita Kaul, ―India: Trademarks And Trade Secrets: Know The Difference With Coca-Cola”, MONDAQ.COM,https://www.mondaq.com/india/Intellectual-Property/731000/Trademarks-And-Trade-Secrets-Know-The-Difference-With-Coca-Cola .