Introduction:
In a free market economy, where
competition is fierce, every businessman looks forward to outwit his rival.
This he may do by capturing more market or eliminating his rivals from the
market, if necessary.
Therefore, businessmen are very
careful and impart their business or trade related confidential information to
only some responsible employees for the purpose of business. In other words,
the access to such information is restricted.
The concept of confidence arises
from trust in a relationship* between two or more persons. The person who
receives the confidential information is under an obligation to protect the
information and not to use it for purposes other than those for which such
information was first imparted. A confidence is thus regarded as a legal
obligation enforceable by law.
*Relationships of trust wherein
an obligation of confidence to others arise are: Employees to their employers,
consultants to their clients, and doctors to their patients, advocates to their
clients.
Jurisdictional Bases of the Law of Confidence
The jurisdictional bases of the
action of breach of confidence can be classified into the following categories:
[ Prince Albert v. Strange (1849]
Contract
The obligation to protect
confidential information may be incorporated in a contract either in express or
implied terms. The express contractual obligation with respect to the
confidential information makes the recipient of the information liable, if he
breaches his obligations. The implied term may be considered to exist if a
plain reading of the contract & its circumstances lead one to conclude that
but for the contract, such information would never have been revealed.
(However, courts may disregard unreasonable conditions imposed by the confider
on the recipient of the information)
Property
In law, confidential information
is not treated as property. If at all the word property has been used in some
judicial decisions it is merely aimed to reflect the confider’s rights in contract
& equity.
Tort
Since confidential information is
an intangible property, jurisdiction under tort may be invoked. Relying upon tort,
the confider can take action against third-party who wrongfully acquires his
information in prejudice to his benefits. The jurisdiction under the law of
tort may also be invoked when it appears that the third party has induced the
receiver of the information to breach his contractual obligations with respect
to the confidence.
Equity
(In law, the term
"equity" refers to a particular set of remedies and associated
procedures involved with civil law. These equitable doctrines and procedures
are distinguished from "legal" ones. A court will typically award
equitable remedies when a legal remedy is insufficient or inadequate.)
The jurisdiction on the basis of
contractual obligation cannot be invoked against a third party because
according to the principle of Privity of Contract, the confider cannot take
action against a stranger to the contract who obtains the confidential information
from a contracting party. To deal with such situations, equity comes in to
provide justice to the parties who deserve it.
Equity may be used independently
of any legal right. A party may avail those remedies to which he is not
entitled under other jurisdictional sources at least in three situations:
1.
When no contractual relationship exists, the
user of confidential information may be held liable by equity for the misuse or
unauthorised disclosure of the information.
2.
Equity plays a distinct and concurrent basis for
remedies despite the fact that there exists a contractual obligation.
3.
When the recipient of information conveys the
information to a third party who is not cognizant of the breach of confidence
at the time of the reception but later becomes aware that what he has received
is confidential information.
The law of confidence is based on
the broad principle of equity that he who receives information in confidence
should not take unfair advantage of it by using it to the prejudice of the
person who imparts it. [Saltman
Engineering Co. Ltd. v. Campbell Engineering Co. Ltd. (1948)]
TRADE SECRET
Some famous Trade Secrets
Thomas’ English Muffins
They’re enticingly showcased in extreme close-up in TV ads: a landscape of craters on a bread surface dubbed “nooks and crannies,” suited for catching tiny pools of melted butter and bits of jam. That’s useful—so how does one replicate such nooks and crannies? It’s a secret and one that’s well protected, with around $500 million in yearly sales at stake.
In 2010, a former employee of parent company Bimbo Bakeries USA, one of seven people worldwide who knew the secret of the nooks and crannies, came under suspicion before a planned move to competing baked goods company Hostess, according to The New York Times. Bimbo filed a trade secret lawsuit to prevent the employee from making the job switch.
The Times noted that Bimbo’s recipe manuals are called “code books” and, as with other trade secrets, the information on recipes and manufacturing methods is compartmentalized to help keep it secure. After taking the case to an appeals court, the employee was barred from starting the job at Hostess.
Coca-Cola
The formula for Coca-Cola is one of the go-to examples of a trade secret. According to a company representative, the original formula is written on a piece of paper stored in a bank vault. Only “a small handful” of people know the formula at any time.
In 2011, the radio program “This American Life” devoted an episode to unravelling the secret, focusing on (among other leads) a pharmacist’s formula for a cola beverage, although Coca-Cola denied that the secret was revealed.
The original formula isn’t the only secret that may be of value on the black beverage market. In 2007, employees were caught trying to sell samples of a new Coca-Cola beverage to its biggest competitor, Pepsi.
WD - 40
The world’s best-known household lubricant got its secret agentesque name in 1953 from its inventor Norm Larsen, and it stands for “Water Displacer—40th attempt.”
An article in The Wall Street Journal reported that the formula is in a bank vault and has only been taken out twice—when changing banks and on the product’s 50th birthday when CEO Garry Ridge rode on a horse into Times Square while wearing a suit of armour and carrying the formula. He said the company mixes a concentrate in three locations, then distributes it to aerosol manufacturing partners worldwide.
The company reveals what’s not in the secret formula on its FAQ page: WD-40 Multi-Use Product does not contain silicone, kerosene, water, graphite, or chlorofluorocarbons (CFCs). As for what might be in that secret formula, in 2009, Wired.com sent a can to a lab and published this report: http://archive.wired.com/science/discoveries/magazine/17-05/st_whatsinside
KFC
KFC’s “Secret Recipe of 11 Herbs and Spices” for its original fried chicken recipe is nearly as famous as the former Kentucky Fried Chicken ad slogan “finger-lickin' good.” A section of the company’s website is now devoted to spreading the lore about the spice blend. It states that Colonel Harland Sanders kept his recipe in his mind and used to carry the mixture in his car, but today it’s kept under lock and key in a Louisville, Ky., safe. One company blends part of the spice recipe, and another company mixes the rest so that neither party has the entire recipe.
The Colonel commented how low-security operation he and his wife, Claudia, operated when he was starting out. "After I hit the road selling franchises for my chicken, that left Claudia behind to fill the orders for the seasoned flour mix. She'd fill the day's orders in little paper sacks with cellophane linings and package them for shipment. Then she had to put them on a midnight train."
Many reverse-engineered recipes for KFC-style fried chicken include speculation that the flavour-enhancing additive MSG is part of the secret mix. Others claim the distinctive KFC chicken experience owes a lot to the pressure-frying technique, which is patented.
The search engine Google dominates Internet searches and, by extension, the Internet. Google is the pacing horse, and the key is that search algorithm. Google’s algorithm is its version of a secret recipe: how it mixes the information of a website’s relevance, the number of visits, inbound links, anchor tags, user’s location, and other factors to provide the search results best tailored for each user.
The New York Times's Best-Seller List
It's every writer's dream to get his or her novel on The New York Times Best-Seller list, the most influential such list in America, which dates back to 1942. So how do you do it? No one really knows. The New York Times won't reveal what constitutes a best-seller, saying its methodology is a trade secret. We know the newspaper asks chain bookstores, independent bookstores and wholesalers about their sales figures, but that's about it. The reason for the secrecy is supposedly that if the system was known, publishers could play around with sales data to their advantage.
It should be a relatively easy formula: A book that sells 'x' number of copies in a week or month or year is a best-seller. But one book that sells 32,000 copies can be named a best-seller, while another that sells even more is not. Times employees skirt around the issue, saying there are "official" best-sellers and "unofficial" best-sellers
This trade secret has gotten the company into legal battles at times. In 1983, William Peter Blatty, author of "Exorcist, "unsuccessfully sued the newspaper for $9 million, saying that amount equalled his lost revenue when the paper didn't add his novel "Legion" to its best-seller list.
According to World Intellectual
Property Organization (WIPO):
A trade secret is information of any type that is actually or
potentially valuable to its owner and not generally known or readily ascertainable
by the public, and which the owner has made a reasonable effort to keep secret.
A trade secret generally has come cost associated with its development, and it
is not common knowledge in the industry. Even negative information, such as
research options that have been explored and found worthless can be a trade
secret. Practically any type of technical and business information can be
protected as a trade secret provided that it meets these requirements.
·
Trade secret is confidential information of a
business or enterprise.
·
A trade secret is any information that can be
used in the operation of a business or other enterprise and that is
sufficiently valuable to afford an actual or potential economic advantage over
others.
·
Trade secret must not be something which is
public property or public knowledge.
It is perfectly possible to have confidential document, be it a
formula, a plan, a sketch or something of that kind, which is the result of
work done by the maker upon materials which may be available for the use of
anybody…. What makes it confidential is the fact that the maker of the document
has used his brain and thus produced a result which can only be produced by
somebody who goes through the same process.
·
The owner of trade secret should take every
precaution to keep it secret.
·
The information which is in public domain,
voluntarily revealed, insufficiently guarded, or reverse engineered may not be
protectable.
Kinds of Trade Secrets
1.
Technical
Secrets: which are related to manufacture or improvements of quality of
goods or conduct of services and which include secret process for manufacturing
specific products, the secret formulae or the design of the product, know-how
etc.;
2.
Business
Secrets: which are administrative and strategic in nature and developed
internally, such as cost and pricing data, sales statistics, lists of customers
and suppliers, market predictions, expansion plans etc.
Examples:
Designs, drawings, architectural
plans, blueprints and maps; data compilations such as list of customers;
algorithms and processes that are implemented in computer programs and the
programs themselves; instructional methods; manufacturing or repair processes,
techniques and know-how; document tracking processes; formulae for producing
products; business strategies, business plans, methods of doing business,
marketing plans; financial information; personnel records; schedules; manuals;
information about research and development activities; etc.
Know How:
Know-how is required or developed
by a person in the course of research and development activities or through the
application of industrial and business techniques in the operations of the
enterprise. It is, therefore, data or knowledge resulting from experience and
skills and can be identified in terms of relevant documentation. E.g. Diagrams
of the layout of the plant, drawings or blueprints of machines, manuals or
instructions prepared by the operation of machines or the assembly of
components, specifications of raw material, labour and machine time
calculations, packaging and storing instructions etc.
Factors to consider the nature of trade secret
The following six factors may be
considered to determine whether information owned by an enterprise is a trade
secret. These are:
1.
The extent to which the information is known
outside the enterprise;
2.
The extent to which the information is known by
employees and others involved in the enterprise;
3.
The extent of measures taken by the enterprise
to guard the secrecy of the information;
4.
The value of the information to the enterprise
and to competitors;
5.
The expenditures incurred by the enterprise in
terms of time, money and efforts in developing the information; and
6.
Ease or difficulty with which the information
could be properly acquired or duplicated by others.
Conditions for an Action for Breach of Confidence:
In an action for breach of
confidence following conditions must be established; [Coco v. A. N. Clark (Engineers) Ltd. (1969)]
1.
Information
in dispute must be confidential and not a public knowledge.
·
The test to protect the confidentiality is inaccessibility.
If it is found that information is not a deliberately kept within limited
circle, it may lose confidentiality.
·
Publication of information may result in loss of
confidentiality if information has been distributed widely. On the other hand,
if by publication of information it is made available to limited recipients, it
may still be considered confidential.
·
Confidential information may be imparted in
different ways. It may be imparted in tangible form e.g. drawings, graphs,
diagrams, photographs, equipments, printed lists of agents or suppliers or
customers etc. or communicated orally*. *[Seager
v. Copydex (No. 1) (1967)]
The information, therefore, can
be held confidential regardless of its form.
2.
Recipient
of information under obligation to respect confidentiality.
There must be an express or
implied obligation on the recipient of information to respect the
confidentiality of information. In other words, information should have been
imparted to its receiver in circumstances imposing an obligation of confidence
on him. In this context, obligation of employee is worth discussing:
·
Obligation
of Employee
·
Employer-employee relationship plays an important
role to protect confidential information from disclosure. An employee is under
an obligation to respect confidentiality of information. He must observe his ‘duty
of fidelity’ while he remains in employment. This duty of fidelity embraces the
protection of confidential information which is given to him and which he
generates in the course of his work. Therefore, an employee is under an
obligation not to engage in competitive work, either with another person or on
his own.
·
The problem arises when an employee accepts a
new job leaving the former one. He carries confidential information of his
former employer. The former employer, therefore, seeks to restrain his
ex-employee from disclosing or using his confidential information for the
benefits of others. [Burlington Home
Shopping(P) Ltd. v. Rajnish Chibber
(1995), Diljeet Titus Advocate & Others v. Alfred A. Adebare & Others
(2006), American Express Bank Ltd., v. Priya Puri (2006) & Tractors &
Farm Equipment Ltd. v. Green Field Farm Equipments Pvt. Ltd. & Others
(2006)]
3.
Unauthorised
use of confidential information:
To bring an action for breach of
confidence it is essential to establish that the recipient of the information
is made or is about to make an unauthorised use or disclosure of that information.
In other words the recipient of information breaches the obligation to using it
in a manner other than for which it was imported.
Confidential information and copyright:
Copyright subsists in expression
of idea and not in ideas per se. Howsoever
valuable the idea may be, if it is not expressed in a material form, it is not
protectable under the copyright law. However, the law of confidence extends the
protection of those subject matters which are not predictable and copyright law
provided the information was given in
confidence and the recipient was put under an obligation to protect it. These subject matters include ideas, schemes, plots,
etc. [Zee Telefilms Ltd. v. Sundial
Communications Pvt. Ltd. (2003) & Urmi Juvekar Chiang v. Global Broadcast
News Ltd. (2008)]
Confidential Information and Patent:
·
Patent means a statutory grant of the exclusive
right to a person to exploit is invention for 20 years from the date of
application. The patentee, however, is put under an obligation to describe his
invention in the specification with such clarity and completeness of all the
technical details that any one having ordinary skill in the art should be able
to carry out the invention.
·
In an unpatented invention, the whole process of
invention is kept secret. An inventor may, therefore, prefer not to get his
invention patented in order to avoid disclosure of his invention. But at the
same time, he is running the risk of his invention relating secrets being
leaked. Therefore, inventors often secure patents for their central inventions,
while much that is learned in the process of bringing it into commercial
production, popularly known as ‘know-how’ is kept secret, which is predictable
under the law of confidence.
Remedies:
1.
Injunction
Being an equitable remedy
injunction is discretionary and the decision to grant an injunction is
influenced by several factors.
The list of factors militating against
an injunction may include:
·
The fact that the defendant was copying only
subconsciously for some reason innocently:
·
The gratuitous manner of the plaintiff’s
communication;
·
The fact that he was not himself utilizing the
idea but was rather pursuing an alternative in collaboration with another
producer;
·
The extent of the defendant's own contribution
to the design of a successful product;
·
Whether the information was economic or personal;
·
The relatively mundane or subsidiary character
of what was taken;
·
The fact that the information had become public;
·
Possibly even the patentable nature of the idea -
thus requiring the plaintiff who wants a full right of property to apply for a
patent.
2.
Damages
Where the information has been
disclosed or used in some way in breach of confidence and such breach of
confidence is also breach of contract or a general tort, court will award
damages in accordance with normal principles applying to these common law wrongs.
The courts while laying down the formulae for determination of damages stated
that the value of confidential information depends on its nature. The formulae are:
a.
The damages would be equivalent to the fee of
consultant if there was nothing really special about the information and it
could have been obtained by employing a competent consultant; and
b.
That the damages would be equivalent to the price,
which a willing buyer would pay for the information if the information was
something special and involves an inventive step.
c.
In some cases the courts decided that payment of
damages in the form of royalties would be an adequate remedy.
3.
Account
of profits
The remedy of a account of
profits is available to the plaintiffs where the information has been exploited
commercially by the defendant in breach of confidence. The remedy of account of
profits is not available in addition to damages. It is an alternate remedy and is
discretionary. [Peter Pan Manufacturing
Cop. v. Corsets Silhouette Ltd. (1963)]
4.
Delivery
up or destruction
The court may order the defendant
to deliver the articles or destroy them in which the defendant had used the
confidential information of the plaintiff in breach of confidence. This is also
an equitable remedy and therefore discretionary.
Cases:
1.
Prince Albert v Strange was a court
decision made by the High Court of Chancery in 1849, and began the development
of confidence law in England. The court awarded Prince Albert an injunction,
restraining Strange from publishing a catalogue describing Prince Albert’s
etchings. Lord Cottenham LC (Charles Pepys, 1st Earl of Cottenham) noted that
"this case by no means depends solely upon the question of property, for a
breach of trust, confidence, or contract, would [sic] of itself entitle the
plaintiff to an injunction".
Summary:
Both Queen Victoria and Prince Albert sketched
as a hobby. Sometimes they showed them to friends or gave them away. Strange
obtained some of these sketches from a person named Brown and scheduled a
public viewing of these. He also published a catalog listing these sketches.
Prince Albert filed a suit for the return of the sketches and a surrender of
the catalog for destruction. His plea was granted.
2.
Saltman Engineering Co. Ltd. v. Campbell
Engineering Co. Ltd (1948)
Lord Greene observed that the
defendants "dispensed in certain material respects with the necessity of
going through the process which had been gone through in compiling [drawings of
a product] … thereby saving themselves a great deal of labour and calculation
and careful draftsman ship".
That is, the defendants in that case relied
upon the work carried out by the plaintiff (including the time, effort and
expense involved in carrying out that work) to more quickly develop and
manufacture their own product. Such reliance, in effect, allowed the defendants
to "springboard" to a better position than they would have been if
they independently developed that product themselves without reference to the
plaintiff's drawings.
Summary:
The plaintiffs gave designs to the defendants
in order that they could make leather-working tools for the plaintiffs. The
defendants used the drawings to make tools, which they sold on their own
behalf. This was a breach of confidence, as they knew that the drawings had
been given to them solely for the purpose of making the tools for the
plaintiff.
3.
Coco v. A. N. Clark (Engineers) Ltd. (1969)
Justice Megarry held, “In my
judgment, three elements are normally required if, apart from contract, a case
of breach of confidence is to succeed. First, the information must itself …
have the necessary quality of confidence about it. Secondly, that information
must have been imparted in circumstances importing an obligation of confidence.
Thirdly, there must be an unauthorised use of that information to the detriment
of the party communicating it.”
Summary:
Coco was developing a
motor-assisted cycle or moped. He entered into negotiations with AN Clark to
develop the moped and provided information to A.N. Clark about his moped. After
some time, A.N. Clark elected to not further develop the Coco moped and instead
began to develop its own moped. Coco became suspicious that A.N. Clark was
using some of his designs for the new moped. He therefore applied for an
injunction to stop A.N. Clark making or sell any moped using his confidential information.
A.N. Clark had just released its moped on the market while Coco had stopped
developing his moped.
Had Coco established a strong
prima facie case that the information was confidential or that there had been a
breach of confidence? Should an injunction be awarded to prevent the making and
selling of the moped?
It was ruled that Coco had failed
to establish that the similarities between the two mopeds were achieved by the
use of information provided by him to A.N. Clark. Also an injunction was not appropriate
as the evidence for the case had not been properly tested and Coco had not
developed his own moped and therefore it did not need protection from the sale
of the rival moped.
4.
Seager v. Copydex (No. 1) (1967)
“Confidential information does not have to be
in a particular form and may be communicated orally and a breach may still be
actionable.”
Summary:
Mr. Seager had invented a
patented carpet grip which he manufactured and marketed under the trademark
Klent. There were protracted negotiations between Mr. Seager and Copydex over a
proposal for Copydex to market the Klent. One of the issues in the negotiations
was the price at which Mr. Seager was to supply the product. During a meeting
with two representatives of Copydex Mr. Seager disclosed to them an alternative
design of grip which could be produced more cheaply. Although there was a
dispute as to precisely what had been disclosed at the meeting, there was no
dispute that the disclosure was in confidence The defendants had manufactured a
carpet grip, honestly and unconsciously making use of that confidential
information. The alternative design was not covered by Mr. Seager’s patent.
5.
Burlington Home Shopping (P) Ltd. v.
Rajnish Chibber (1995)
This is a landmark case, which
laid to rest the confusion whether a database consisting of a compilation of
addresses developed by any one by devoting time, money, labour and skill,
though the sources may be commonly situated, amounts to a `literary work'
wherein the author has a copyright.
Summary:
Burlington Home Shopping
(plaintiff) was a mail order service company engaged in the business of
publishing various mail order catalogues of several consumer items. These were
posted to the select list of plaintiff's clients. The plaintiff maintained a
compilation of a list of his customers in a self-created database. It was
developed over a period of 3 years whereby the plaintiff invested substantial
amount of money and time for its creation.
Mr. Rajnish Chibber (defendant)
was an employee previously working for the plaintiff. However, his duties had
nothing to do with the compilation of the database. It so happened that after
leaving the plaintiff's establishment, he became the latter's competitor by
entering into a mail order shopping business. While at the time of his
association with the plaintiff previously he managed to get a copy of the
latter's database. Now after the commencement of his own business he started
making use of the said database for establishing relationship with the
plaintiff's customers.
The plaintiff contended that the
database was an original literary work wherein he enjoyed the copyright over
the same and that the defendant had infringed his copyright by his act. Accordingly a suit was filed by the plaintiff
in the Delhi High Court seeking an injunction thereby restraining the defendant
from make use of the said database for carrying out his business. The defendant
contended that the said database was not developed by the plaintiff and as a
result of which the latter enjoyed no copyrights over the same. Further he
stated that he had developed his own database and the act of using it for his
business would never amount to any kind of infringement of the plaintiff's
copyright.
In order to gather the relevant
evidence the court appointed a Commissioner. He made a comparison of both the
databases and found that a substantial number of entries on the defendant's
database were comparable word by word, line by line and even space by space to
that of the plaintiff’s. In some of the entries the locations of commas and
full stop were also comparable. In a good number of entries spelling mistakes
occurring in the plaintiff's data were found in the data compilation of the
defendant as well. Hence, the court was satisfied that the defendant had
infringed the plaintiff’s copyright.
6.
Diljeet Titus Advocate & Others v.
Alfred A. Adebare & Others (2006)
“As an advocate or a law firm
develops its work and relationship with other law firms or clients, the details
about the particular persons in such law firms handling certain nature of work
or as to which officer in a client company is material for getting the work
becomes of great importance. Such a list is of great importance to an advocate
or a law firm. The mere fact that defendants would have done work for such
clients while being associated with the plaintiff would not give them the right
to reproduce the list and take it away,” wrote Justice Kaul in his judgment.
Summary:
Titus and Co. was set up in Delhi
in 1997 when its founder Diljeet Titus left Singhania and Co. along with two
other Singhania lawyers, Seema Ahluwalia Jhingan and Alfred A. Adebare.
Seven years later, when Jhingan,
Adebare and two other Titus lawyers, Alishan Naqvee and Dimpy Mohanty, left
Titus to set up LexCounsel, Titus filed a criminal complaint against them under
the Information Technology Act, 2000, for alleged data theft.
Titus alleged that the four were
criminally liable for stealing “various proprietary drafts of precedents,
agreements, forms, presentation, petitions, confidential documents, legal
opinions, legal action plans, computerized database containing client information,
proprietary client list, proprietary potential client list and other related
information” from a computer in his law firm’s office.
According to the judgment in the
case: “Just a couple of days before leaving [Titus], [Adebare] is stated to
have visited the office of [Titus] after office hours and requested the
security guard to allow him to enter the office on the pretext of downloading
some information from the computer for a project handled by him. The guard had
no reason not to permit [Adebare] to enter [Titus’] office, who brought a
CD-Writer with him and connected the same to the computer in [Titus’] office,
which was inter connected with [Titus’] Local Area Network (LAN) with Windows
Server having 7.2 GB of data. Thus, all the confidential information was copied
using the CD-Writer.”
The four LexCounsel founders in
turn filed a counter claim against Titus in the Delhi high court, challenging
his copyright to the allegedly stolen data, based on the ground that, as
partners and not employees of Titus and Co., they had as much propriety over
the data as Titus. They also filed an anticipatory bail petition and were
granted bail by the Delhi high court on a personal bond of Rs.1,00,000 and a
surety of Rs.1,00,000 each.
Delhi high court judge Sanjay
Kishan Kaul, on 8 May 2006, restrained Jhingan, Adebare, Naqvee and Mohanty
from using Titus’ data for their own benefit or disseminating or exploiting it
in any other way.
Kaul ruled that they were not
partners in Titus and Co. but were employees of the firm, getting their
salaries as a fixed percentage of clients’ fees, having had no written
partnership arrangement with Titus, maintaining time sheets in the name of the
firm and not in their own name, and going through no legal separation of assets
at the time of exiting from the firm.
7.
American Express Bank Ltd., v. Priya Puri
(2006)
The court held that “trade
secrets are acquired over a period of time and are the formulae, technical
know-how or a peculiar mode or method of business adopted by an employer which
is unknown to others….” In the above case, the defendant had acquired all the
information and data during her course of employment. Trade secrets do not
cover the knowledge which is attained through daily operations of the business.
The court further stated that the defendant couldn’t be prohibited from
changing her job as it helps in overall development.
Summary:
The defendant was given the
responsibility of supervising the Wealth Management Division of the plaintiff
(the employers) and was required to act in accordance with the code of conduct
for all employees. The defendant was not allowed to engage in activities, which
conflicted with the plaintiff’s interest. Additionally, during the defendant’s
course of employment, all confidential information, like customer records and
information, was to be protected from the society and the competitors. The
defendant gave her resignation letter to the Director of the Wealth Management
Department. It was soon discovered that the defendant was in the process of
joining a competitor firm. It was also found that the defendant had taken
advantage of her position and had acquired a comprehensive list of all customer
information and investment related data. The plaintiff, being a reputed bank,
filed a suit for injunction against the defendant restricting her not to
release any confidential information and trade secrets related to the
transactions as they have a duty of confidentiality to their customers. It was
contended by the plaintiff’s that even though the confidential information is
not in any document, it existed in the mind of the defendant. Hence, this
existent, intangible threat was sufficient enough to prevent her from
disclosing it.
On the other hand, the defendant
asserted that customer details like their phone numbers and addresses cannot
come under the ambit of confidential information or trade secrets. The reason
being that the same were common knowledge and could be easily accessed as they
were in the public domain.
8.
Tractors & Farm Equipment Ltd. v.
Green Field Farm Equipments Pvt. Ltd. & Others (2006)
The picture that emerges from the
above case law is that the court shall entertain injunction only if the same
is protected either through Copyright or Designs along with a non-disclosure
agreement.
Summary
The applicant/plaintiff, M/s
Tractors and Farm Equipment Ltd (TAFE)
manufactured tractors. The
second respondent/defendant had been an employee of the plaintiff TAFE
when it had developed the idea of a tractor called ‘Hunter’, who as per the plaintiff
had direct access and information
regarding the said program. The second respondent/defendant had tendered
his resignation from, plaintiff TAFE and joined Green Field Farm Equipments
Private Limited, promoted by his wife. Till
he resigned from the plaintiff company, there had not been much activity in the
defendant’s company. Thereafter the
defendant started manufacturing tractors by name Maharaja 3300. The applicant/plaintiff
company claimed that they conceived a
project called ‘Hunter Project’ for producing tractors and entered into a tie
up with some UK companies to design the tractor. These companies developed the
design and assigned the rights therein to the plaintiff, TAFE. The second
respondent/defendant while in service of the plaintiff company was deputed to
UK in his capacity as senior member of the R&D team of Hunter Project for
the purpose of developing the design for the tractor. All communication emanating from the UK design partners had
been accessible to the defendant. The plaintiff, TAFE alleged that the first
respondent/defendant company registered a design, which according to the
plaintiff company was the design of tractor developed under the Hunter project.
On comparing the designs, the court found that the registered design was a copy
and plain imitation of the design developed by the British companies for
TAFE. Since the second respondent/defendant
had access to the Hunter tractor designs as a result of his association with
this program during his employment in TAFE and since
such tractors were
not manufactured by TAFE, the
court held that
the defendant ex-employee alone could have copied and registered the
design in the
name of the
first respondent, Green Field Farm Equipments. Additionally, no
material was produced
before the court by
the defendants to
show that they
developed the design on
their own and
that the applicant/ plaintiff did not have any claim
over it. While employing the second respondent/defendant, the plaintiff TAFE,
had entered into a confidential agreement which stipulated that if he had
acquired any knowledge of confidential or restricted nature either developed by
itself or through
technical collaboration or
licenses, he should not
make available or accessible such knowledge to third parties either
directly or indirectly for a period of three years.
Based on its
finding that the
Hunter tractor design and
the design of
the tractor registered
by the defendants under
the Designs Act
were one and
the same, the court concluded that the second respondent who was
in the service
of the plaintiff,
unlawfully copied the original designs assigned to
applicant/plaintiff by the
British companies. It was held that the second respondent/defendant had
committed a breach of trust and
confidentiality agreements for which he should be restrained by an order
of injunction. The court also found a subsisting copyright in favour of the
plaintiffs in the Hunter tractor design and restrained the defendants from
infringing the copyright.
But the court made it clear that the
injunction will not be applicable if the
defendants are manufacturing tractors on their own not connected with
the digital images and photographs of Hunter tractor design since there cannot
be any blanket injunction against anybody preventing the production of a
tractor of his own design and configuration, not offending the rights of
others.
9.
Zee Telefilms Ltd. v. Sundial
Communications Pvt. Ltd. (2003)
‘There can be no copyright of
ideas or information and it is not infringement of copyright to adopt or
appropriate ideas of another or to publish information received from another,
provided there is no substantial copying of the form in which those ideas have,
or that information has, been previously embodied. But if a person under such
circumstances has acquired the ideas or information that it would be a breach
of good faith to publish them and he has no just case or excuses for doing so,
the court may grant injunction against him. …. Copyright is good against the
world generally while confidence operates against those who receive information
or ideas in confidence. Copyright has a fixed statutory time limit which does
not apply to confidential information, though in practice application of
confidence usually ceases when the information or ideas becomes public
knowledge..”
Summary:
The employees of the plaintiffs –
a company engaged in the business of producing television serials - had
developed the concept for a program, which they had registered with the Film
Writers Association. Subsequently, they made a confidential pitch of the
concept to the representatives of the defendants, a well-known TV channel.
Although initially the defendants appeared reluctant to take the concept
forward, they proceeded later on, without the authorization of the plaintiffs,
to produce a TV serial that closely mirrored the ideas contained in the show
conceived by the plaintiff. In an action seeking to restrain the defendants
from proceeding with their production, the High Court agreed with the
plaintiff’s claims both on the count of copyright infringement and
confidentiality. Curiously, the determination of both issues turned on the
similarities between the plaintiff and defendant’s concepts – which is
traditionally a determination relevant only to copyright cases.
10. Urmi
Juvekar- Chiang v. Global Broadcast News Ltd. (2008)
An idea per se has no copyright.
But if the idea is developed into a concept fledged with adequate details, then
the same is capable of registration under the Copyright Act
Summary:
In November 2005, Urmi Juvekar, a
documentary filmmaker, came up with a concept which she called ‘Work in
Progress”. The concept note, which was registered with the Film Writers
Association, Mumbai, disclosed the idea of a reality show on TV, which would
follow citizens from around the country as they took the initiative to solve a
civic problem of their choice in their locality. The show would follow the
citizens and telecast the hurdles that the citizens face in solving the problem
– the bureaucracy, the general attitude of the people and the final outcome.
The concept note was sent to
CNN-IBN, which initially took great interest in it and a number of meetings
with directors, line managers and producers followed. Discussions continued
until February 2007 and then stopped abruptly. On April 19, 2007, Ms.
Juvekar-Chiang saw promotions of the program titled “Summer Showdown” on CNN-IBN
which, in the words of Rajdeep Sardesai, CNN-IBN’s editor in chief, “promise[d]
to be a captivating account of citizens from across the country on the civic
conditions of their cities.” Mr. Sardesai further stated, “With inclusive
journalism as our mantra, CNN-IBN hopes to not only give voice to the plight of
citizens but also elicit among others a sense of civic responsibility.” The
program was to be aired daily in the form of short three-minute stories on
CNN-IBN’s news. Ms. Juvekar filed a petition claiming injunction and damages on
the grounds of breach of confidentiality and copyright infringement on May 21,
2007 before the Mumbai High Court.
11. Peter
Pan Manufacturing Cop. v. Corsets Silhouette Ltd. (1963)
A trader who receives
confidential information and makes no use thereof, is not thereby debarred from
making use of that knowledge when it is no longer secret.
Summary:
A licence agreement contained a
clause prohibiting the licensee from using, after termination of the agreement,
the technical information supplied under it. After termination, the licensee
manufactured a range of goods incorporating the patentee's designs. The
patentee sued for breach of confidence, and breach of contract, and contended
that the licensee was indefinitely precluded from using the patentee's methods
of construction, even though these might cease to be confidential. The patentee
further contended that the licensee should be restrained from using a material
of which particulars had been supplied to it in confidence, notwithstanding
that no use had been made of that information until it had ceased to be
confidential.
It was held that the patentee was
entitled to an injunction restraining further manufacture of the range of goods
immediately concerned, but not to the wider relief asked for.
The successful plaintiffs having
elected to take an account of profits:
It was held that they were
entitled to an order in the form of an account of the profits made by the
defendants from the sale of the offending goods, and not merely an account of the
additional profit made by the defendants as a consequence of their use of
confidential information.