Trademarks Law

Prof L. K. Deb
 Meaning of Trade Marks
• A trademark is a distinctive sign or indicator of
some kind which is used by an individual, business
organization or other legal entity to uniquely
identify the source of its products and/or services
to consumers, and to distinguish its products or
services from those of other entities
• A trademark is a device which can take almost any
form, as long as it is capable of identifying and
distinguishing specific goods or services.
 What is a trademark
• A trademark is typically a name, word, phrase,
logo, symbol, design, image, soundor a
combination of these elements. There is also a
range of non-conventionaltrademark
comprising marks which do not fall into these
standard categories,may therefore be visible
signs (e.g. colors, shapes, moving images,
holograms,positions), or non-visible signs (e.g.
sounds, scents, tastes, textures).
 Purpose of Trade Mark
• The purpose of trademark law is twofold:
• A trademark helps customers distinguish
between products
• A trademark protects the owner's investment
and reputation
 Law of Trademarks
• The law of trademark deals with the
mechanism of registration, protection of
trademark and prevention of fraudulent
trademark.The law also provides for the rights
acquired by registration of trademark, modes
of transfer and assignment of the rights,
nature of infringements, penalties for such
infringement and remedies available to the
owner in case of such infringement.
 Development of the Trademarks Law in
India
• The law of trademark in India before 1940 was based on
the common law principles of passing off and equity as
followed in England before the enactment of the first
Registration Act, 1875. The first statutory law related to
trademark in India was the Trade Marks Act, 1940 which
had similar provision like the UK Trade Marks Act, 1938.
In 1958, the Trade and Merchandise Marks Act, 1958 was
enacted which consolidated the provisions related to
trademarks contained in other statutes like, the Indian
Penal Code, Criminal Procedure Code and the Sea
Customs Act.
• The Trade and Merchandise Marks Act, 1958 (repealed) The
Trade Marks Act, 1999 (159 sections)
• It gives effect to TRIPS(Agreement on Trade Related Aspects
of Intellectual Property Rights). Though some aspects of the
unregistered trade marks have been enacted into the 1999
Act, but they are primarily governed by the common law
rules based on the principles evolved out of the judgments
of the Courts. Where the law is ambiguous, the principles
evolved and interpretation made by the Courts in England
have been applied in India taking into consideration the
context of our legal procedure, laws and realities of India.
 Indian Trademark Law
• Indian trademark law (159 sections) provides protection to
trademarks statutorily under the Trademark Act, 1999 and
also under the common law remedy of Passing Off. Passing off
is a common law tort which can be used to enforce
unregistered trademark rights. The tort of passing off protects
the goodwill of a trader from a misrepresentation that causes
damage to goodwill. Statutory protection of trademark is
administered by the Controller General Of Patents, Designs
and Trade Marks, a government agency which reports to the
Department of Industrial Policy and Promotion(DIPP), under
the Ministry of Commerce and Industry.
• Section 2 (zb) of the Trade Marks Act,1999, defines
trade mark as a mark capable of being represented
graphically and which is capable of distinguishing
the goods or services of one person from those of
others and may include shape of goods, their
packaging and combination of colours.” A mark can
include a device, brand, heading, label, ticket,
name, signature, word, letter, numeral, shape of
goods, packaging or combination of colours or any
such combinations
 Classification of Trademarks
• In India trademark is classified in about 45 different
classes, which includes chemical substances used in
industry, paints, lubricants machine and machine tools,
medical and surgical instruments, stationary, lather,
household, furniture, textiles, games, beverages
preparatory material, building material, sanitary material,
and hand tools, other scientific and educational products.
These classes again are further sub-divided. The main
objective of trademark classification is to group together
the similar nature of goods and services. Here are the
classes for product and for services.
 Products
• Class 1 (Chemicals) Class 2 (Paints) Class 3 (Cosmetics and
Cleaning Preparations) Class 4 (Lubricants and Fuels) Class 5
(Pharmaceuticals) Class 6 (Metal Goods) Class 7 (Machinery)
Class 8 (Hand Tools) Class 9 (Electrical and Scientific Apparatus)
Class 10 (Medical Apparatus) Class 11 (Environmental Control
Apparatus) Class 12 (Vehicles) Class 13 (Firearms) Class 14
(Jewelry) Class 15 (Musical Instruments) Class 16 (Paper Goods
and Printed Matter) Class 17 (Rubber Goods) Class 18 (Leather
Goods) Class 19 (Non-metallic Building Materials) Class 20
(Furniture and Articles Not Otherwise Classified) Class 21
(Housewares and Glass) Class 22 (Cordage and Fibers) Class 23
(Yarns and Threads)
 Products
• Class 24 (Fabrics) Class 25 (Clothing) Class 26 (Fancy Goods)
Class 27 (Floor Coverings) Class 28 (Toys and Sporting Goods)
Class 29 (Meats and Processed Foods) Class 30 (Staple Foods)
Class 31 (Natural Agricultural Products) Class 32 (Light
Beverages) Class 33 (Wines and Spirits) Class 34 (Smokers
Articles)SERVICES Class 35 (Advertising and Business) Class 36
(Insurance and Financial) Class 37 (Building, Construction and
Repair) Class 38 (Telecommunication) Class 39 (Transportation
and Storage) Class 40 (Treatment of Materials) Class 41
(Education and Entertainment) Class 42 (Computer, Scientific
and Legal) Class 43 (Hotels and Restaurants) Class 44 (Medical,
Beauty, and Agricultural) Class 45 (Personal and Social Services)
 Types of Trademarks that can be registered
• Under the Indian trademark law the following are the types of
trademarks that can be registered:
• Product trademarks: are those that are affixed to identify goods.
• Service trademarks: are used to identify the services of an entity, such as
the trademark for a broadcasting service, retails outlet, etc.
• Certification trademarks: are those that are capable of distinguishing the
goods or services in connection with which it is used in the course of
trade and which are certified by the proprietor with regard to their
origin, material, the method of manufacture, the quality or other specific
features
• Collective trademarks: are registered in the name of groups, associations
or other organizations for the use of members of the group in their
commercial activities to indicate their membership of the group.
 Absolute grounds for refusal of registration
(Section 9)
• (1) The trade marks
• (a) which are devoid of any distinctive character, that
is to say, not capable of distinguishing the goods or
services of one person from those of another person;
• (b) which consist exclusively of marks or indications
which may serve in trade to designate the kind,
quality, quantity, intended purpose, values,
geographical origin or the time of production of the
goods or rendering of the service or other
characteristics of the goods or service;
 contd
• (c) which consist exclusively of marks or
indications which have become customary in
the current language or in the bona fide and
established practices of the trade, shall not be
registered: Provided that a trade mark shall
not be refused registration if before the date
of application for registration it has acquired a
distinctive character as a result of the use
made of it or is a well-known trade mark.
 contd
• (2) A mark shall not be registered as a trade mark if:
• (a) it is of such nature as to deceive the public or cause
confusion;
• (b) it contains or comprises of any matter likely to hurt
the religious susceptibilities of any class or section of
the citizens of India;
• (c) it comprises or contains scandalous or obscene
matter;
• (d) its use is prohibited under the Emblems and Names
(Prevention of Improper Use) Act, 1950 (12 of 1950).
 contd
• (3) A mark shall not be registered as a trade mark if it
consists exclusively of—(
• a) the shape of goods which results from the nature of the
goods themselves; or
• (b) the shape of goods which is necessary to obtain a
technical result; or
• (c) the shape which gives substantial value to the goods.
Explanation.—For the purposes of this section, the nature
of goods or services in relation to which the trade mark is
used or proposed to be used shall not be a ground for
refusal of registration.
 Advantages of Trademark registration
• 1. Protects your hard earned goodwill in the business
• 2. Protects your Name / Brand Name from being used in a same or
similar fashion, by any other business firm, thus discourages others
from cashing on your well built goodwill
• 3. Gives your products a status of .Branded Goods.
• 4. Gives an impression to your customers that the company is selling
some standard Products or Services
• 5. The exclusive right to the use of the trade mark in relation to the
goods or services in respect of which the trade mark is registered.
• 6. To obtain relief in respect of infringement (misuse by others) of the
trade mark.
• 7. Power to assign (transfer) the trade mark to others for consideration.
Procedure/steps for Trademark Registration

• 1. Filing of an application for registration by a person

claiming to be the proprietor of a trademark, in the
office of the Trade mark Registry, within the territorial
limits of the place of business in India.
• 2. Examination of the application by the Registrar to
ascertain whether it is distinctive and does not conflict
with existing registered or pending trademarks and
examination report is issued.
• 3. Publication of the application after or before
acceptance of the application in the Trademark Journal.
• 4. After publication if any person gives notice of his
opposition to the registration within three months which
may be extended to the maximum of one month.
• 5. If the opposition has been decided in favour of the
applicant of the registration of trademark, the Registrar
shall register the Trademark.
• 6. On the registration of the Trademark the Registrar shall
issue to the applicant a Trademark Registration
• 7. Today, as per the Trademark Rules, 2002, the application
fees (similar to a tax) are Rs. 3500 per trademark.
 Term/Duration of a Trademark in India
The term of registration of trademark is 10 (Ten) years, but may
be renewed subject to the payment of the prescribed fee, in
accordance with the provisions of the Trademarks Act,1999.
An application for renewal of a trademark can be filed within
six months from Constantia the expiry of the last registration
of trademark.
Use of the .TM. and ® symbols. Generally, one who has filed an
application (pending registration) can use the TM (trademark)
designation with the mark to alert the public of his exclusive
claim. The claim mayor may not be valid. The registration
symbol, ®,may only be used when the mark is registered.
 Authorities
• Registrar of Trademarks
• Trademark Registry
• Appellate Board (Sec 83)
• The Appellate Board shall consist of a Chairman,
Vice-Chairman and such number of other Members,
as the Central Government may, deem fit and,
subject to the other provisions of this Act, the
jurisdiction, powers and authority of the Appellate
Board may be exercised by Benches thereof. (Sec 84)
 Benches
• Subject to the other provisions of this Act, a
Bench shall consist of one Judicial Member
and one Technical Member and shall sit at
such place as the Central Government may, by
notification in the Official Gazette, specify.
 Trademark Infringement
• Trademark Infringement is a violation of
exclusive rights attaching to a trademark
without the authorization of the trademark
owner or any licensee.
• Trademark infringement mostly occurs when a
person uses a trademark which may be either
a symbol or a design, which resembles the
products owned by the other party.
 Infringement of Trademarks
• A registered trade mark is infringed by a person who,
not being a registered proprietor or a person using by
way of permitted use, uses in the course of trade, a
mark which because of—
• (a) its identity with the registered trade mark and the
similarity of the goods or services covered by such
registered trade mark; or
• (b)its similarity to the registered trade mark and the
identity or similarity of the goods or services covered
by such registered trade mark; or
 infringement
• (c) its identity with the registered trade mark
and the identity of the goods or services
covered by such registered trade mark, is likely
to cause confusion on the part of the public,
or which is likely to have an association with
the registered trade mark.
 Legal Proceeding
• The trademark owner may begin a legal
proceeding against a party, which infringes its
registration.
 Punishment
• Offences shall be punishable with imprisonment
for a term of minimum six months but which may
extend to three years and with a minimum fine of
fifty thousand rupees but which may extend to
two lakh rupees or more.
• For adequate and special reasons mentioned in
the judgment. The court may impose a sentence of
imprisonment for a term of less than six months or
a fine of less than fifty thousand rupees
 Punishment
• Offences shall be punishable with imprisonment
for a term of minimum six months but which may
extend to three years and with a minimum fine of
fifty thousand rupees but which may extend to
two lakh rupees or more.
• For adequate and special reasons mentioned in
the judgment. The court may impose a sentence of
imprisonment for a term of less than six months or
a fine of less than fifty thousand rupees
 Cases/Examples
• The Gujarat HC in 2007 held that “Utterly Butterly Delicious”, Amul’s
name cannot be used by any other proprietor even if the company is
selling goods other than that sold by the proprietor, who has registered
the trademark. The Gujarat High Court has ruled that a registered
trademark user has the right to restrict others using their trademark for
different class or goods.
• The Kaira District Co-operative Milk Producers Union popularly Amul
Dairy and the Gujarat Co-operative Milk Marketing Federation (GCMMF)
had filed trademark infringement cases against two local shop owners,
Amul Chasmaghar and Amul Cut Piece Stores in the district court. While
Kaira Union owns brand Amul, GCMMF manages the brand. The district
court passed an order that it was a clear case of infringement and
restrained the two from using Amul trademark. Justice D N Patel of the
High Court upheld ruling of the district court.
 Permissible limits-Which do not amount to
infringement (sec 30)
• 30. Limits on effect of registered trade mark:
• (1) Nothing in section 29 shall be construed as
preventing the use of a registered trade mark by any
person for the purposes of identifying goods or
services as those of the proprietor provided the use
—(a) is in accordance with honest practices in
industrial or commercial matters, and
• (b) is not such as to take unfair advantage of or be
detrimental to the distinctive character or repute of
the trade mark.
 contd
• (2) A registered trade mark is not infringed where—(a) the use in
relation to goods or services indicates the kind, quality, quantity,
intended purpose, value, geographical origin, the time of
production of goods or of rendering of services or other
characteristics of goods or services;
• (b) a trade mark is registered subject to any conditions or
limitations, the use of the trade mark in any manner in relation to
goods to be sold or otherwise traded in, in any place, or in relation
to goods to be exported to any market or in relation to services for
use or available or acceptance in any place or country outside India
or in any other circumstances, to which, having regard to those
conditions or limitations, the registration does not extend;
 contd
• (c) the use by a person of a trade mark—(i) in
relation to goods connected in the course of trade
with the proprietor or a registered user of the trade
mark if, as to those goods or a bulk or which they
form part, the registered proprietor or the
registered user conforming to the permitted use has
applied the trade mark and has not subsequently
removed or obliterated it, or has at any time
expressly or impliedly consented to the use of the
trade mark; or
 contd
• (ii) in relation to services to which the
proprietor of such mark or of a registered user
conforming to the permitted use has applied
the mark, where the purpose and effect of the
use of the mark is to indicate, in accordance
with the fact, that those services have been
performed by the proprietor or a registered
user of the mark;
 contd
• (d) the use of a trade mark by a person in relation to goods
adapted to form part of, or to be accessory to, other goods
or services in relation to which the trade mark has been
used without infringement of the right given by registration
under this Act or might for the time being be so used, if the
use of the trade mark is reasonably necessary in order to
indicate that the goods or services are so adapted, and
neither the purpose nor the effect of the use of the trade
mark is to indicate, otherwise than in accordance with the
fact, a connection in the course of trade between any
person and the goods or services, as the case may be;
 contd
• (e) the use of a registered trade mark, being
one of two or more trade marks registered
under this Act which are identical or nearly
resemble each other, in exercise of the right to
the use of that trade mark given by
registration under this Act.
 contd
• (3) Where the goods bearing a registered trade mark are
lawfully acquired by a person, the sale of the goods in the
market or otherwise dealing in those goods by that
person or by a person claiming under or through him is
not infringement of a trade by reason only of—(a) the
registered trade mark having been assigned by the
registered proprietor to some other person, after the
acquisition of those goods; or
• (b) the goods having been put on the market under the
registered trade mark by the proprietor or with his
consent.
 Assignability and transmissibility of
registered trade marks. (Sec 38)
•  A registered trade mark shall be assignable
and transmissible, whether with or without
the goodwill of the business concerned and in
respect either of all the goods or services in
respect of which the trade mark is registered
or of some only of those goods or services.
  Assignability and transmissibility of
unregistered trade marks (Sec 39)
• An unregistered trade mark may be assigned
or transmitted with or without the goodwill of
the business concerned.
Registration of Assignment (Sec 45)
• Registration of assignments and transmissions.
• Where a person becomes entitled by
assignment or transmission to a registered
trade mark, he shall apply in the prescribed
manner to the Registrar to register his title, and
the Registrar shall, on receipt of the application
and on proof of title to his satisfaction, register
him as the proprietor of the trade mark in
respect of the goods or services
 Textile goods (Section 79)
• The Central Government may extend rules to textile
goods.
• Restriction on registration of textile goods (Sec 80)
• (1) In respect of textile goods being piece goods—
• (a) no mark consisting of a line heading alone shall be
registrable as a trade mark;
• (b) a line heading shall not be deemed to be capable of
distinguishing;
• (c) the registration of trade mark shall not give any
exclusive right to the use of a line heading.
 Stamping of piece goods, cotton yarn and
thread (Section 81
• (1) Piece goods, such as are ordinarily sold by length or by the piece,
which have been manufactured, bleached, dyed, printed or finished in
premises which are a factory, shall not be removed for sale from the
last of such premises in which they underwent any of the said
processes without having conspicuously stamped in international form
of Indian numerals on each piece the length thereof in standard yards,
or in standard yards and a fraction of such a yard, or in standard
metres or in standard metres and a fraction of such a metre, according
to the real length of the piece, and, except when the goods are sold
from the factory for export from India, without being conspicuously
marked on each piece with the name of the manufacturer or of the
occupier of the premises in which the piece was finally processed or of
the wholesale purchaser in India of the piece.
 Reciprocity (sec-155)
• Where any country does not accord to citizens of India
the same rights in respect of the registration and
protection of trade marks as it accords to its own
nationals, no national of such country shall be entitled,
• to apply for the registration of, or be registered as the
proprietor of, a trade mark;
• to be registered as the assignee of the proprietor of a
registered trade mark; or
• to apply for registration or be registered as a registered
user of a trade mark under section 49.
 Summary
• The trade mark is for protecting the name of the product or services
rather the product itself; Trade mark assures the customer about
the source of a product, though the quality of the product is not
assured by the trade mark; The trade mark should be distinctive;
Deceptively similar marks, geographical names etc. can not be
registered as a trade mark; In India, the Trade Mark Act of 1999 is
presently in force; The term of trade mark protection is 10 years,
which can be renewed from time to time, indefinitely; Trade mark
can be assigned or transmitted; Using deceptively similar marks,
falsifying the mark or using unregistered mark cause infringement
under Trade Mark Act; and The penalties against offences related to
trade mark can range from fine to imprisonment.
LANDMARK JUDGMENTS

TRADEMARK LAW
 Yahoo!, Inc. v Akash Arora & Anr 
[1999 (19) PTC 201 (Del)] 
• Landmark judgment in cybersquatting: the Delhi
High Court held that a domain name served the
same function as a trademark and was therefore
entitled to equal protection. As the domain names
of the plaintiff ‘Yahoo!’ and defendant ‘Yahoo
India!’, were nearly identical and phonetically
similar, there was every possibility that internet
users would be confused and deceived into
believing that the domain names had a common
source or a connection.
 contd
• The court further observed that the disclaimer used by the
defendants was not sufficient because the nature of the
Internet is such that use of a similar domain name cannot
be rectified by a disclaimer, and that it did not matter that
‘yahoo’ is a dictionary word. The name had acquired
uniqueness and distinctiveness and was associated with
the plaintiff.
• The Bombay High Court, in Rediff Communication v.
Cyberbooth & Anr 2000 PTC 209 also observed that the
value and importance of a domain name is like a corporate
asset of a company.
 DM Entertainment v. Gift House & Ors
(2010)
• Daler Mehndi, the most famous pop star hailing from
Punjab has created a niche audience and is immensely
popular amongst Punjabi-pop music lovers. The
appellant company was incorporated in 1996 to manage
the artist’s escalating career. The crux of the case is that
the defendants had prolific businesses in selling
miniature toys of Daler Mehndi and majorly cashed on to
his popularity. Majorly aggrieved, the plaintiff company
filed for permanent injunction from infringing the artist’s
right of publicity and false endorsement leading to
passing off.
 contd
• The plaintiff company had been assigned all the rights, titles
and interests in the personality of the artist along with the
Trademark, Daler Mehndi. It was contended by the plaintiff that
the unauthorized or unlicensed use of or any part of the
reputation of the artist, with respect to goods or services of any
manner will lead to make an impression on the public that the
goods or services are associated with the singer. And hence, it
was submitted that such a use would lead to passing off. It was
further averred by the plaintiff that such use was done for
commercial exploitation without adequate permission from the
person or any other authorized by him, shall constitute
infringement of the person’s right to publicity.
 contd
• Section 29 of the Trademark Act-1999 lays down the aspects of
infringement of trademark. It elucidates that a when a person is
using, in course of trade any mark, which is identical or deceptively
similar to a registered mark and which he is not entitled or licensed
to use shall be deemed to infringe onto the rights of the person who
has the lawful right over the mark.
• The Act does not give a specific description of passing off as a result it
has been derived through judicial precedents drawn from common
law. Put simply , passing off would occur when the mark is not only
being used deceptively similar to the mark of another but it is being
used to create confusion in the minds of the consumer that results in
the damage or loss of business for the person or company who/which
is the lawful owner of the trademark.
 contd
• Character merchandising is an area of law which is
unexplored in India. The first case that dealt with
this was Star India Private Limited v Leo Burnett
India (Pvt.) Ltd. The courts in India in these earlier
cases, had not dealt with publicity rights. In this
case the Court did so quite emphatically. The
court meted out a compensatory amount to the
tune of Rs. 1,00,000 to the Plaintiff. The intent of
the judiciary is clear.
 Milmet Oftho Industries & Ors. vs. Allergan
Inc. (1998)
• In this landmark case, the Supreme Court extended the protection
guaranteed under trademark law in India to a well-known foreign
brand. The court restrained an Indian company from using the mark
OCUFLOX. The court judgment was given irrespective of the fact
that the U.S. company has neither used the mark in the Indian
market, nor the mark was registered in India. The court held that
the respondent in this case was the first to enter the market and
adopt the mark. Also, the fact that the respondent has not used the
mark in India is insignificant, if they were the first to enter the world
market.
• It was also laid down that in the fields of health care and medicine,
all possibilities of deception and confusion should be prevented;
keeping in mind that public interest is not jeopardized.
 The Coca cola Co. vs. Bisleri International Pvt
Ltd. (2009)-The Maaza War
• The Delhi High Court held that if the threat of infringement
exists, then this court would certainly have jurisdiction to
entertain the suit.
• It was also held that the exporting of goods from a country is to
be considered as sale within the country from where the goods
are exported and the same amounts to infringement of trade
mark.
• In the present matter, the defendant, Bisleri by a master
agreement, had sold and assigned the trade mark MAAZA
including formulation rights, know-how, intellectual property
rights, goodwill etc for India only with respect to a mango fruit
drink known as MAAZA to Coca-Cola.
 contd
• In 2008, the defendant filed an application for registration of the
trade mark MAAZA in Turkey started exporting fruit drink under the
trade mark MAAZA. The defendant sent a legal notice repudiating the
agreement between the plaintiff and the defendant, leading to the
present case. The plaintiff, the Coca Cola Company also claimed
permanent injunction and damages for infringement of trade mark
and passing off.
• It was held by the court that the intention to use the trade mark
besides direct or indirect use of the trade mark was sufficient to give
jurisdiction to the court to decide on the issue. The court finally
granted an interim injunction against the defendant (Bisleri) from
using the trade mark MAAZA in India as well as for export market,
which was held to be infringement of trade mark.
Cadila Health Care v Cadila Pharmaceuticals Ltd (2001)-
Deceptive Similarity in a Passing off action
• In this case the Supreme Court held that It is immaterial whether the
plaintiff and defendant trade in the same field or in the same or similar
products. It identified the following criteria in order to decide an action of
passing off on the basis of unregistered trademark :
• The nature of the marks (i.e. whether they are word, label or composite
marks);
• The degree of resemblance between the marks;
• The nature of the goods for which they are used as trademarks;
• Similarities in the nature, character and performance of goods of rival
traders;
• The class of purchasers who are likely to buy goods bearing the marks;
• The method of purchasing the goods or placing orders; and
• Other circumstances that may be relevant.
TRADE SECRETS

Prof L. K. Deb
 What are trade secrets?

• A trade secret is a formula, practice, process,

design, legal instrument, pattern or
compilation of information which is not
generally known or reasonable ascertainable,
by which a business can obtain an economic
advantage over competitors or customers. In
some jurisdictions, such secrets are referred to
as “confidential information” or “classified
information”
• The term is very broad Trade secrets may
include:
• • sales methods
• • distribution methods
• • consumer profiles
• • advertising strategies
• • lists of suppliers and clients
• • manufacturing processes
 Example
• One of the most famous examples of a trade secret is the
formula for Coca-Cola. The formula, also referred to by the
code name “Merchandise 7X” is known to only two
employees at any 7X particular instance and kept in the vault
of a bank in Atlanta, Georgia. The individuals who know the
secret formula have signed non-disclosure agreements, and
it is rumored that they are not allowed to travel together. In
the past, you could not buy Coca-Cola in India because
Indian law required that trade-secret information be
disclosed. In 1991, India changed its laws regarding
trademarks, and Coca-Cola can now be sold in that country.
 International Trade and Trade Secrets

• Over the years, the importance of trade secret

in the sphere of intellectual property has
increased to a level beyond protection through
patents. Treaties like North Atlantic Free Trade
Agreement (NAFTA) and Agreement on Trade-
Related Aspects of Intellectual Property (TRIPs;
Art. 39) governs the law relating to the
protection of trade secret.
• At the GATT negotiations, it was declared that
if anyone uses information that is
‘confidential’ for another party, such a person
would be held liable for Unfair Practice. With
the view of fulfilling the above objective, S. 39
of the TRIPS says that information that is to be
treated as a trade secret can be protected under
Article 10 bis of the Paris Convention.
• It is the duty of all the members of the
company to protect undisclosed information
from commercial exploitation, and if a
company provides information or data to the
Government for further approvals or
regulatory, such data needs to be protected
from leakage or theft by third parties
 Determinants of Trade Secrets

• An exact definition of a trade secret is not possible. Some factors to

be considered in determining whether given information is one's
trade secret are:
• • The extent to which the information is known outside of one’s
business;
• • The extent to which it is known by employees and others involved
in one’s business;
• • The extent of measures taken by one to guard the secrecy of the
information;
• • The value of the information to one and one’s competitors; the
amount of effort or money expended in developing the information;
• • The ease or difficulty with which the information could be accessed
 Protecting Trade Secrets:

Some of the ways to protect a trade secret are as follows:

• Restrict access to the information (lock it away in a secure
place, such as a bank vault).
• Limit the number of people who know the information.
• Have the people who know the trade secret agree in
writing not to disclose the information (sign nondisclosure
agreements).
• Have anyone that comes in contact with the trade secret,
directly or indirectly, sign non-disclosure agreements.
• Mark any written material pertaining to the trade secret as
proprietary.
 Difference between T.S and Patent

• A patent is the exclusive right (or monopoly)

given by the Government to the owner of an
invention, in return for the sharing of his
knowledge and experiences in the making of
the invention. Only inventions can be patented.
The temporary monopoly on the subject matter
of the patent is regarded as a quid pro quo for
thus disclosing the information to the public.
 Reasons to Opt for a T.S over a Patent

• • If the invention is not likely to go out of date

for a long time, it may be better to protect it
as a trade secret rather than limit your
advantage to 20 years.
• • If the invention is not patentable
• • If you cannot afford the cost of obtaining
Patent status
 Benefits of trade Secrets
•Perpetual Protection: Not limited by time

•Involve no registration costs: The owner evades the

expensive patent application process

•A trade secret is not publicly disclosed like a patent;

therefore the inventor may make improvements to their
invention without competition from other businesses.
•Take immediate effect
•Do not require complex formalities such as disclosure to a
Government Authority
 Trade Secrets Protection in India

Due to the absence of law for the protection of trade secrets, the
Indian court relies on the common law remedies for the protection.
Reliance is placed by Indian courts on the case of Saltman
Engineering Co. Ltd. v. Campbell Engineering Co. Ltd., 1948
Trade secrets are protected either through contract law or
through the equitable doctrine of breach of confidentiality. It is
common to insert clauses that protect the confidentiality of the
secrets of the company in the agreement with the employees not
only during their employment period but also after they are
terminated. The law of contract has to be relied upon for the
protection of the secrets. However, in many cases the law that is
used is the law of tort of ‘breach of confidence’.
 What can be said to be a trade secret

A trade secret “can be a formula, technical know-how or a peculiar

mode or method of business adopted by an employer which is
unknown to others.” However, routine affairs of the employer which
are commonly in the knowledge of his employees and his
competitors cannot be called trade secrets. The acts that constitutes
as a breach of confidence that is used by the Indian courts are:
(1) The fact or the information must have quality of confidence in
it;
(2) There must be an obligation of confidence relating to such fact
or information;
(3) There must be an unauthorized use of that information to the
detriment of the party communicating it.
 Example
• A worked for a Bakery Company for a numbers of years after which
he decided to open his own Bakery Factory (selling ingredients) and
used the former company’s formula. The company found out that A
was using their formulas and selling the products in the market and
decided to take action against his company and the directors. There
are three directors, two (sleeping partners) and A (actively involved
in the operation of the business). The court awarded the injunction
to prevent A’s company from continuing the operation of the
business and filed a winding up notice against the company. The
Bakery Company also sued A (as the director of the company) for
damages. The Court demanded a settlement sum plus legal charges
from A (not from the company and the two other directors).
 Coca Cola v. Williams, Dimson, Duhaney

• A federal grand jury indicted three people on July 11, 2006 on a

misappropriation of trade secrets conspiracy charge alleging they
tried to sell Coca-Cola trade secrets to Pepsi and were willing to
give the information to the “highest bidder,” as new details
emerged about the scheme and the suspects. The alleged plans
were foiled after Pepsi, based in Purchase, N.Y., warned Coca-Cola.
Former Coca-Cola administrative assistant Joya Williams and ex-
cons Ibrahim Dimson and Edmund Duhaney pleaded not guilty at
their arraignment. The three were arrested on a criminal
complaint that included charges of wire fraud and unlawfully
stealing and selling Coke trade secrets. The indictment for a single
count of conspiracy sets the case on course for trial.
 The circumstance out of which proceedings
may arise
• (a) Where such fact of information that is secret has come
in the possession of an employee in the normal course of
his work, who passes that deliberately or carelessly, passes
that fact or the information to an unauthorized person;
• (b) Where such an employee who is claimed to be in
possession of such trade secrets has been invited to
provide such information by such an unauthorized person.
• (c) Where, in the case of a license, the licensee has
committed a breach of any condition that was expressly or
impliedly given in the licence.
 Requirements for making a claim for violation of Trade Secrets

• 1. Existence: The trade secret must be proven to exist.

• 2. Ownership: The plaintiff had ownership rights to the
trade secret information.
• 3. Access: The defendant had access to the trade secret
information.
• 4. Notice: The defendant knew or should have known that
the information was a trade secret of the plaintiff.
• 5. Use: The trade secret information was actually used by
the defendant.
• 6. Damages: A remedy exists within the power of the
court to apply.
 Remedies Available
In India, the only remedies available for the protection of trade secrets are
civil or equitable remedies for a breach of confidence cause of action. They
include:
an award of injunction “preventing the third party from disclosing the trade
secrets,” and “confidential and proprietary information,” and,
In the case of “for any losses suffered due to disclosure of trade secrets.” The
court may order any damages or compensation to be given to the plaintiff.
The court may also order the party at fault to “deliver up” such materials.
If an injunction is granted, the fact or the information is considered
confidential only for a limited period till which the injunction is given. If the
fact or the information is claimed to be confidential, but only for a specific
time, then interim injunction will be granted only for a period which will
depend on the circumstances and nature of the confidential information.
 Common Law Approach
• The Delhi High Court in American Express Bank Ltd.
v. Priya Puri, (2006) defined trade secret as
formulae, technical know-how or a method of
business adopted by an employer which is unknown
to others and such information has reasonable
impact on organizational expansion and economic
interests. Indian courts have approached trade
secrets protection on the basis of principles of
equity, action of breach of confidence and
contractual obligations.
 Equity
• In John Richard Brady v. Chemical Process
Equipments P. Ltd.,(1987-Delhi) it was held that
independent of an underlying contract or in the
absence of one, he who has received information in
confidence is not allowed to take unfair advantage
of it. This lays down that undue enrichment at the
expense or detriment of another goes against the
tenets of equity and fairness which need not be
dependent on contractual obligations.
 Breach of Confidence
• In Zee Telefilms Ltd. v. Sundial Communications Pvt. Ltd.,(2003-Bom) it
was laid down that in an action of breach of confidence, the obligation
of confidence is not limited to the original recipient but also extends to
those persons who received the information with knowledge acquired
at the time or subsequently that it was originally given in confidence.
In Diljeet Titus v. Alfred Adevare & Ors, it was held that the Court must
step in to restrain a breach of confidence independent of any right
under law and that such an obligation need not be expressed but be
implied and the breach of such confidence is independent of any other
right. Therefore, it is submitted that the protection of trade secrets
does not always necessarily stem from the owner of such secret having
a right per se in respect of the same but from the implied obligation to
maintain confidence by virtue of the nature of trade secrets in general.
 Contractual Obligations
• In Niranjan Shankar Golikari v. Century Spinning (1967 SC) it was
held that negative covenants in employment agreements
pertaining to non-disclosure of confidential information operative
during the period of the contract of employment and even
thereafter, are generally not regarded as restraint of trade and
therefore do not fall under Section 27 of the Contract Act, 1872 as
a former employee should not be allowed to take unfair advantage
of the employer’s trade secrets which are vital for business. Post
service restraint in maintaining confidentiality and also carrying on
any other business for a limited period is permissible under the
exception to Section 27 of the Contract Act, as was held in Homag
India Pvt. Ltd. v. Mr. Ulfath Ali Khan.(2012 Kar. HC)
 Injunctive Relief
• Even if the trade secret status is lost
unwillingly, the court may grant injunctive
relief

• • This means that although a third party may

have access to your trade secrets, they cannot
use the information for a given amount of time
 When is a trade secret lost?
• Negligent Disclosure

• Reverse Engineering

• Patenting