The Pomegranate Series, Episode 5: What’s all the Hush? (Trade Secrets)

In the last two episodes we saw how a creative expression of your ideas is protected by the State through copyright law. But we were left with a puzzling question: What do we do when you have a great idea, but you are unable to or you do not have the desire to express it? Remember, the whole concept of protection of intellectual property is that the State is going to protect your IP in return for full disclosure; may it be subject matter of a copyright, patent or industrial design. The State can only protect when it knows what it is protecting, and when it knows that eventually it is going to fall in public domain, after which everyone can make use of the said IP. Coincidentally there is no statute which protects undisclosed information or ideas in India.

But what happens when, for example, you come up with a great plot for a movie or a new invention or even a business method (of accounting or managing client lists etc.), but have not written it down because you think you may not be able to do justice to your idea; or because even if you can, you do not have the resources to commercialize your idea and make it successful; or because even when you have the resources, you simply do not wish for any other person to profit from your idea? After all you were the one to come up with the idea, it is only fair and reasonable that only you get to choose who can and who cannot profit from it.

Now is when the law makes an exception to the doctrine of full disclosure.

There is a simple answer: keep it secret. The law allows you to keep your ideas secret, and even extends protection to you for any misuse of that secret, even if there is no statute to that effect. The only conditions are that you must believe that your idea or information is valuable and that you have taken all possible efforts to keep this information secret and that this information is not already available in the public domain. Of course as you may know, a secret not always something that you keep only to yourself; you do tell it to people who you trust can keep it further to themselves.

These people can be bound by contract. Before you reveal your information to any person, you can enter into a contract with him / her to enter into a confidentiality clause or a non-disclosure agreement (NDA). If after entering into such an agreement, such a person discloses your secret to third party, you can sue him / her for breach of confidentiality.

NDAs are very commonly entered into between an employer and their employees in order to protect all proprietary and sensitive information of the employer.. The subject matter need not always be limited to non-disclosure; it may also extend to an agreement restraining the promise from making any use (for benefit or otherwise) of the trade secret (so disclosed) in any manner that the promisor does not allow.

Even though contractual protection is available and enforceable, trade secrets often go unprotected. This may happen because there was no express agreement that the subject matter of disclosure was not meant to be further disclosed. In India, trade secrets and confidential information have been strongly protected in common law by our Courts at various instances even in the absence of an express agreement; especially in disputes between employers and their employees (who quit their jobs and seek employment elsewhere) when the nature of the information is commercially valuable and essentially absent in the public domain.

This form of protection of your ideas is particularly very effective when even the expression of such ideas is not protected under statutory IP law. For example, while an algorithm or mathematical formula (say for selling ball pens more effectively) cannot be subject matter of patent protection in India, it can be protected as a trade secret since it is commercially valuable. Like any other IP, this information (or trade secret) can be licensed, shared as well as sold or assigned to any person by the owner of such information. At other times, even if such expression of an idea is patentable (like the chemical formula for Coca Cola®), one may simply choose to not get a patent over it requires full disclosure of  the subject matter of the idea; especially when one is certain that the subject matter is difficult, if not impossible, to be discovered by reverse-engineering.

After reading this long post on contractual and common law protection of Trade Secrets and Confidential Information, you may now be able to answer the question I posed at the end of the previous episode. And now that I have told you about those expressions (of ideas) which cannot receive patent protection, it might be a good time to tell you which of them can.

Watch the next episode of The Pomegranate Series to meet the most commercially successful and the highest grossing IP blockbuster of all time.

Ritvik M. Kulkarni


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