No specific legislation in India provides for protection of trade secrets and confidential information. Nevertheless, Indian Courts have broadly interpreted and upheld the protection of confidential information in numerous cases.

Each country may have a different approach to protect the owner of trade secrets or other confidential information. To avail the remedies available in different jurisdictions for breach of confidentiality and secrecy obligations, it is necessary to understand how different courts / jurisdictions have interpreted and enforced such agreements. A few such cases are discussed below:

Simonelli, a US based private consulting firm, accused Tata Consulting Services (TCS) of using their trade secrets and confidential information to build its own consulting practice.^[1] In 2014, Simonelli and Tata America International Corp (TAIC) agreed to co-develop a “prototype factory and co-innovation model”. Simonelli claimed that it had invested considerable amount of money and time to develop its own expertise and methodology which is a trade secret as defined by the Defend Trade Secrets Act of 2016 (a US federal law). Simonelli alleged that TCS breached the confidentiality clause in the contract and took Simonelli’s trade secrets under the guise of a contractual agreement, improperly used those secrets outside of the agreement to build their business and failed to compensate Simonelli. Simonelli is now seeking compensation for the loss in revenue on account of non-compliance with confidentiality obligations by TCS.

In John Brady v Chemical Process Equipments Pvt. Ltd (1987)^[2],the Delhi High Court held that irrespective of whether there is a contract in place or not, no one is allowed to benefit and unfairly gain from using the information received in confidence.

In the Fairfest Media Ltd. v. ITE Group case (2015)^[3], the parties entered into a non-disclosure agreement. Confidential information was misused, and the complainant procured an injunction to restrict the other party from misusing the confidential information. While granting the injunction to restrain the defendant, the Calcutta High Court also ordered for return of all confidential and proprietary information and compensation for any losses suffered due to disclosure of trade secrets.

In a UK case, Lansing Linde Ltd v. Kerr (1991)^[4], while determining what constitutes trade secrets and confidential information, the court held that a trade secret is information which, if disclosed to a competitor, would be liable to cause real or significant harm to the owner of the secret. Trade secret was interpreted as a subset of confidential information providing an economic advantage to the company. Thus, trade secrets not only include secret formulae for the manufacture of products but also, in an appropriate case, the names of customers and the goods which they buy.

In a US case, DB Riley Inc v AB Engineering Corp (1997)^[5], the complainant alleged disclosure of trade secret information by the Defendants despite a non-disclosure agreement restricting the same. The Court noted that there was a time-bound confidentiality obligation to maintain trade secrets and the complainant cannot impose perpetual obligation of confidentiality on trade secrets.

Some pointers to keep in mind while dealing with confidential information/ trade secrets:

• Limit the dissemination of your confidential information (even to your employees) as much as possible or at least discourage widespread publication. Merely because there is a contract in place, you should not disclose everything to the other party.
• Where it is necessary to share confidential information, make sure to designate, label and document the confidential information separately and clearly. Even if your NDA states that everything disclosed will be confidential, there is a high probability that a court may read this down, and it will be necessary to establish that the information was valuable or proprietary or was a trade secret or that the other party was aware that the information was confidential.
• It is not enough to label information as confidential information; you must also make an effort to keep it so.
• Set out time frames of obligations and a process for return of confidential information at the end of each transaction.
• Take prompt action to address the misappropriation or misuse of the information. If you fail to respond quickly, the courts may see it as a voluntary waiver of the agreement.
• Non disclosure agreements are easy signed but difficult to enforce. The only way to prevent any misuse/ leak of confidential information is by exercising control over sharing of information and by having internal procedures in place.

[1] Simonelli Innovation, Llc V. Tata America International Corporation And Tata Consultancy Services Limited (Tcs) (August 15, 2018) [Texas Western District Court US] (5:2018cv00840)

[2] AIR 1987 Delhi 372

[3] [2015(2) CHN (CAL) 704]

[4] [1991] 1 WLR 251, [1991] IRLR 80

[5] 977 F. Supp. 84 (1997)