PROTECTION OF TRADE SECRETS BILL, 2024 - REVIEW

INTRODUCTION:

In a recent development, the 22nd Law Commission of India headed by Justice Ritu Raj Awasthi has recommended in its 289th Report dated March 5, 2024 that there should be a special legislation for protection of Trade Secrets, with exception pertaining to whistleblower protecting, compulsory licensing and government use and public interest. While doing so, the Commission has looked at the Trade-Related Aspects of Intellectual Property (TRIPS) Agreement and India’s obligations arising from it. It has also explored the development of laws relating to trade secrets and economic espionage in other jurisdictions like the UK, USA, EU, and Germany while proposing a draft of Trade Secrets Bill, 2024.

On the subject of economic espionage, the report states that “even trade secrets held by the Government of India have been consistently targeted by foreign governments in acts of active and passive economic espionage”, and hence there is a need for a single statute to address “all issues related to trade secret leakages and economic espionage”.

Until now, trade secrets in India have primarily relied on stringent non-disclosure agreements or confidentiality clauses. Concerns among trade secret holders have revolved around the risk of unauthorized disclosure or theft of their closely guarded proprietary information. Many businesses have developed and deployed technology that might not be patentable but is confidential. This bill seeks to protect their confidentiality.

HIGHLIGHTS OF THE BILL:

The proposed bill comprises of IV chapters and 13 sections. Important highlights of the bill are as under:

1.???? Meaning of trade secret:

Trade secret means any information –

i.?????????????? that is secret in the sense that it is not, as a body or in the precise configuration and assembly of its components, generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question;

ii.????????????? that derives commercial value on account of being secret;

iii.??????????? that has been subject to reasonable steps under the circumstances, by the holder of such information, to keep it secret; and

iv.??????????? the disclosure of which is likely to cause damage to the holder of such information.

2.???? Holder of trade secret:

i.?????????????? means any person, natural or legal, having lawful control over the trade secret;

3.???? Rights of holder of trade secret:

i.?????????????? A holder of a trade secret shall have the right to use and disclose his trade secret, which includes licensing the trade secret.

ii.????????????? Any contract or agreement that the holder of trade secret enters into to protect his trade secret, restrict access to it or prevent the disclosure of such trade secret shall be subject to the provisions of the Indian Contract Act, 1872.

iii.??????????? A holder of trade secret shall be entitled to institute proceedings under this Act in respect of misappropriation of trade secret, to prevent further misappropriation or disclosure of trade secret in the public domain.

4.???? Compulsory license:

i.?????????????? The Central Government, if it is satisfied, that there exist circumstances of national emergency or extreme urgency involving substantial public interest, including situations of public health emergency, national security, etc., may require the holder of trade secret to issue compulsory license for use of his trade secret to third parties or to the Government.

ii.????????????? The license granted under Section 6 of the proposed Bill may be terminated by the Government at any time after the circumstances specified above cease to exist.

5.???? Relief in a suit for misappropriation of trade secret:

i.?????????????? If the misappropriation is proved then the Complainant will have the option to seek damages and order for surrender and/or destruction of the documents, objects, materials, substances, or electronic files in the possession or ownership of the misappropriating party that contain or embody the trade secret.

ii.????????????? They can also seek an order for recall, withdrawal, permanent removal, destruction of goods or products whose conception, features, functionality, manufacturing process, or marketing is substantially based on a trade secret that has been misappropriated.

6.???? Suit for misappropriation, etc., to be instituted before Commercial Court:

i.?????????????? Suit for misappropriation of a trade secret shall be instituted in a Commercial Court having jurisdiction to try the suit.

7.???? Confidentiality of proceedings:

i.?????????????? In relation to any proceeding concerning actual or apprehended misappropriation of a trade secret, the Court shall preserve the secrecy of the subject matter of the dispute claimed as a trade secret by reasonable means in such manner as may be prescribed.

8.???? Remedy in the case of groundless threats of legal proceedings:

i.????????????????? Obtain an injunction against the continuance of such threats; and

ii.????????????????? Recover such damages. if any, as he has sustained by reason of such threats:????

CONCLUSION:

The Law Commission has taken efforts to draft a bill aimed at protecting the interests of the holders of trade secret. However, only when it comes into force can we say whether it stands the test of advancement and time or not. Many years from now we may need to address some concerns, such as – extraterritorial jurisdiction, how non-compete restrictions make trade secrets even more important and artificial intelligence and trade secrets. However, for now, since India lacks a specific law for the protection of trade secrets, it is a significant step ahead.

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