Trade Secrets

Topics: Trade secret, Secrecy, Injunction Pages: 6 (2228 words) Published: April 5, 2013

Submitted By
Sonal Biswas
5th yr LLB

This paper deals with trade secret and the various theories related to them. The researcher basically tries to take a look into what are problems with trade secrets and the tools that can be used to protect these trade secrets. To put it simply, every product, service or enterprise has something unique and original to it. The Original confidential information, knowledge and expertise lends that very business a competitive quality and edge which helps to attract customers. This very knowledge or information is considered a kind of intellectual property and is protected under the name of Trade secret. As given in restatement of torts also, Trade secret is 'any formula, pattern, device or compilation of information which is used in one's business and presents an opportunity to obtain an advantage over competitors who do not know or use it. There are some conditions for the information to be considered a trade secret. The conditions might vary depending on other factors like the state’s policy or legal regime etc. But, Art. 39 of TRIPS Agreement can be considered a reference for uniform guidelines: * The information must be secret (i.e. it is not generally known among, or readily accessible to, circles that normally deal with the kind of information in question). * It must have commercial value because it is a secret.

* It must have been subject to reasonable steps by the rightful holder of the information to keep it secret (e.g., through confidentiality agreements). Protected trade secrets can range from technical knowledge, formulas or ingredients, to strategic decision-making such as pricing, marketing strategies, product development and budget information. However trade secret is to be differentiated from confidential information. Person who receives valuable or sensitive secret information in confidence owes a duty neither to disclose nor make use of that information for any purpose other than, for which the disclosure was made without the consent. Confidentiality is an ethical principle associated with several professions e.g., medicine, law, religion, professional psychology, and journalism. The court made a distinction between access to an actual trade secret and less valuable confidential information, the latter not amenable to protection through non-compete concept. In Brown, the dispatcher was given access to a rate sheet listing his ex-employer's shipping rate and fuel surcharges. That sheet was adjusted at occasionally- sometimes monthly, sometimes annually. Relying on long-standing Missouri precedent, the court found that this type of confidential information was not a trade secret. Court specifically noted the key difference between the two legal concepts: confidential information is generally limited to a single or ephemeral event in the conduct of a business, whereas a trade secret is a process or device for continuous use in the operation of a business. There are various theories that explain what is the logic behind protecting the trade secrets and who owes duty to keep it protected. The duty can be moral, legal or contractual. Some of the theories are discussed herein under. Theory of Contractual Obligation

Trade secrets are given protection under the law of contract which gives rise to contractual obligation on part of parties to contract. Person having the trade secret may enter into contract with the person whom he will be sharing the information with that the person should not disclose the secret to others. Some parties also practise the incorporation of ‘non-disclosure’ clause in contracts. Doctrine of Unjust Enrichment

Misappropriation of thing that never belonged to the one amounts to unjust enrichment. Misuse of trade secret has impact on the owner who labored for gathering the information. It deprives the owner from enjoying the...
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