TRADE SECRETS & CONFIDENTIAL INFORMATION

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.

Google Algorithm

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.