• IPTT Team

Trade Secret: An Overview Through A Case Law

Updated: May 6


Trade secrets are the secret device or formula which is used by the multinational company to develop their own goods without coming in knowledge of others.


It’s a secret formula or design of information of a company which remains disclosed from the public and any other person except the main members of the company. The main members include only the top officials who play a major part for the formation and working of company.

It can also be called as a process or a commercial method of producing a product for the company.


Its common in this business world and the world of capitals, competition is growing higher day by day. The number of companies and industries are increasing day by day which possess a greater threat for each other’s business. In order to specialize their product they use certain formulas or methods of manufacturing their products; if these things get exposed then they might suffer a huge loss in their business or might ruin their business.

One of such secret formulas we can see as an example is the manufacture of coca cola drink .It is said that the manufacturing formula of coca cola drinks is the best kept trade secrets in the world. It is not only a trade secret but also kept within the high security which prohibits everyone from entering into that premises.


This famous Saltman Engineering case of United Kingdom took place in 1948. It came under the jurisdiction of England and Wales and was reported under (1948)65 RPC.2003. This case is completely based on the protection of the trade secrets.


According to sources the agent who took the manufacturing contact of the tools misplaced the art or plan with one another, so saltman engineering claimed that breach of confidence is a distinct cause of action.


The fact was some kind of issues related to technical secrets which belongs to Saltman Engineering Company and was given to Campbell Engineering Company.


The plaintiff had given some ideas for the leather punches and asked another company to draw up plans for the punches. The second company instructed a third company which was Campbell Engineering Company.


The second company gave him to work with the plans which was originally given by the plantiff i.e. Saltman Engineering Company. But the defendant used this formula to manufacture the tools for themselves.


The judgment was delivered considering , first of all the question which was raised here was whether Campbell Engineering Company is liable for the breach of confidence or not. In this case Lord Greene MR was the judge, who gave the judgment on behalf of the plaintiff and plaintiff won the case.


Here Lord Greene MR said that:

“The defendants knew that loose drawings had been placed in their possession for a limited purpose, namely, the purpose only of making certain tools in accordance with them, the tools being required for the purpose of manufacturing leather punches. I need not go into the law, which I think is correctly stated in a formula, which Mr. Heald himself accepted. I will read it: ‘if a defendant is proved to have used confidential information ,directly or indirectly obtained from a plaintiff ,without consent, express or implied, of the plaintiff, without the consent ,express or implied of the plaintiff , he will be guilty of the infringement of the plaintiff’s rights.”

And

“I think that I shall not be stating the principle wrongly if I say this with regard to use the confidential information. The information, to be confidential, must, I apprehend, apart from contract, have the necessary quality of confidence about it, namely, it must be something public property and public knowledge. On the other hand it is perfectly possible to have a confidential document be it a formula, a plan, a sketch or something of that kind, which is the result of the work done by the maker upon materials which may be available for the use of anybody; but what makes it confidential is the fact that the maker of the document had used his brain and thus produced a result which can only be produced by somebody who goes through the same process.


What the defendants did in this case was to dispense in certain materials respect with the necessity of going through the process which had been gone through in compiling these drawings, and thereby to save themselves from great deed of labour and calculation and careful draftsmanship. No doubt, if they had taken the finished article, namely the leather punch which they might have brought in a shop, and given to an expert draftsman and the draftsman could have produced these drawings for the manufacture of machine tools required for making the particular finished article. In any rate a very material they respect they saved themselves that trouble by obtaining the necessary information either for the original drawing or for the tools made in accordance with them. That, in my opinion was a breach of confidence.”


References:

[i] Saltman Engineering Co. V. Campbell Engineering Co(1948) [1964]3AII E.R. 413(Note) ( 01 January 1948) [ Full Judgement ]



Prepared by:
Nitish Pattanaik (B.B.A.,LL.B SEM 2, ALSK)

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