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  • Writer's pictureOishika Banerji

Trade Secrets protection in India: an empty vessel?

Trade secret in India has remained a developing topic taking into account the absence of specified legislation governing this area of intellectual property rights. The prerequisites of availing trade secret protection that the World Intellectual Property Organization (WIPO) have laid down are;

  1. Commercially valuable;

  2. Known to a specific or limited group of people;

  3. The rightful holder of the information must take reasonable steps to keep the information a secret.

Considering these three requirements in the Indian scenario where there has been a clear absence of trade secret legislation, the two Indian statutory provisions that can be brought to this picture are Section 27 of the Indian Contract Act, 1872 and the Specific Relief Act, 1963. A toothless tiger in form of the Information Technology Act, 2000 is also accepted to be an ideal source of protecting trade secrets in India. This article provides an overview of trade secret protection in India and the possible scope for improvement.

Legal provisions and trade secrets in India

The Supreme Court of India in the 1967 case of Niranjan Shankar Golikari v. Century Spinning and Manufacturing Co. Ltd. observed that the agreement entered between the manufacturing company and a foreign investor on grounds of maintaining the secrecy would be a valid one even if the necessary contractual elements are absent. The remedy for breach of this agreement would be an injunction or damages. It has therefore been an established rule that confidential information can be protected under Section 27 of the Indian Contract Act, 1872 that offers a specific remedy to the aggrieved party. It was the Bombay High Court who in the 2010 case of Bombay Dyeing and Manufacturing Company Ltd. v. Mehar Karan Singh clarified that for information to be considered as a confidential one apart from the contract, the information must be accompanied by the necessary quality of confidence and must not be public property or of public knowledge.

Section 4 of the Specific Relief Act, 1963 provides that "specific relief can be granted only for the purpose of enforcing individual civil rights and not for the mere purpose of enforcing a penal law". Thus can also be adopted in providing safeguard to infringement of confidential information of an individual. It is interesting to note that the Copyright Act, 1957 is another legislation under which trade secrets can be protected. In the 1995 case of Burlington Home Shopping Pvt Ltd. v. Rajnish Chipper, the Delhi High Court had observed that computer databases can be protected under the said legislation under the head of literary work as both time and money are invested in the compilation of a database.

The Information Technology Act, 2000 has been much in discussion when it comes to the subject matter of trade secrets protection. The only data protection law that India embraces as an expensive ornament, the IT Act of 2000 though has been modified and amended several times, has considerably failed in extending complete safeguard to trade secrets. Section 72 of the Act prescribes a penalty for breach of confidentiality and privacy that includes imprisonment for a term which may extend to two years, or with a fine which may extend to one lakh rupees, or with both. A reliable provision, Section 72 of the Act creates a platform for breach of privacy and confidentiality to be recovered by a legal tool.

It is necessary to note that the burden of proof is much higher on the person accusing or claiming breach of his or her trade secrets in criminal liability when placed in comparison with civil liability.

Efforts adopted by the Indian Government to come up with a trade secret law

It will not be correct to ignore the efforts that have been adopted by the democratic government for coming up with a definite trade secret legislation. But the efforts have majorly flown down the tubes as can be viewed in the current scenario. In 2004, the government formulated the Satwant Reddy Committee in order to look at data exclusivity policy in relation to trade secrets. The Committee took a period of three years to examine various dimensions of data exclusivity from the point of view of remedy. Although the Committee submitted its report in 2007, the same was unfortunately not implemented.

A well-known effort of the government was the Draft National Innovation Bill, 2008 that came into the picture to boost research and innovation in the field of trade secrets. The legislation was introduced by the Department of Science and technology and aims at building a comprehensive framework to encourage innovation. The objectives of the Bill are presented hereunder;

1. To facilitate public, private, or a consortium of public-private initiatives to build an innovation support system;

2. Bring in a National Integrated Science and Technology Plan and Codifying; and

3. Consolidating the law of confidentiality to protect Confidential Information, Trade Secrets, and Innovation.

Being subjected to various debates, discussions, and interpretations, the Bill has not seen the light of the day as of now but carries the hope for a better future of trade secrets protection in India.


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