Safeguarding Trade Secrets in the Digital Age: Legal Framework and Challenges in India
Shiva Tiwari 14 Sep 2023


With the rapid advancement of technology and the ease of sharing and storing information in the digital realm, businesses face a significant challenge in safeguarding their confidential data. This sensitive information can encompass business strategies, client databases, designs, and more. Not all types of information qualify for patent or copyright protection, and some valuable data arises from day-to-day operations without formal protection sought. Protecting this information is increasingly challenging due to the various tools available for data transfer, both online and offline, and threats can come from external sources as well as internal ones, such as employees and contractors.

Trade Protection under Various Laws

While India lacks specific trade secrets legislation, the courts have upheld trade secrets protection under various legal frameworks. These include contract law, copyright law, equitable principles, and common law actions like breach of confidence. Section 72 of the Information Technology Act 2000 also offers limited protection for electronic records.

Contract Law: In India, individuals can be bound by confidentiality agreements not to disclose information shared with them in confidence. Courts have even extended protection in cases where no formal contract exists, invoking equitable jurisdiction to grant injunctions.

Copyright Law: Some Indian courts recognize systematically arranged data, like client databases, as copyrightable material under the Copyright Act of 1957. This protection extends to works involving intellectual effort and a minimum degree of creativity.

Judicial Rulings for the Protection of Trade Secrets

Although there's no specific trade secrets law, Indian courts and tribunals have upheld trade secret protection and actions against misappropriation. Breach of confidence and third-party unauthorized access to confidential information can lead to misappropriation. Courts have identified three sets of circumstances:

  1. When employees, in the course of their work, transfer confidential information carelessly or deliberately to unauthorized persons.
  2. When unauthorized persons, including new employers, incite employees to provide such information.
  3. When a licensee, under a know-how license, breaches a condition to maintain secrecy.

Indian courts have emphasized that, in the absence of legislation, they will protect trade secrets through common law to support businesses.

Remedies for Infringement of Trade Secrets

In cases of trade secret infringement, remedies may include injunctions or damages. Indian courts often lean toward granting injunctions, both interim and permanent, based on factors like the plaintiff's prima facie case, the balance of convenience, and the potential for irreparable injury.

Trade Secrets in Consonance with Intellectual Property Rights

Intellectual property rights in India have territorial jurisdiction, resulting in varying trade secret protection. Although the courts have not provided an exhaustive list, they emphasize the importance of secrecy over novelty.

Employees as Threats

Employees pose a significant threat to intellectual property protection. Companies are advised to continually innovate and transform their trade secrets to counter this risk.

National Innovation Act

India lacks specific trade secrets legislation, but the draft National Innovation Act aims to protect confidential information, trade secrets, and innovation. It promotes public-private partnerships and the codification of confidentiality laws.

Drafting Comprehensive Trade Secret Policies

Creating comprehensive trade secret policies for employees is essential to raise awareness of confidentiality issues and potential consequences of breaches.

Enforceable Agreements

Enforceable contracts and agreements that prohibit the wrongful disclosure and misappropriation of confidential information can effectively protect trade secrets.

Due Diligence and Non-disclosure Agreements

Conducting due diligence on employees and reviewing non-disclosure agreements can help maintain confidentiality.

Trade Secret Audits

Regular audits can identify significant trade secrets, verify ownership, and ensure that confidentiality procedures are consistently followed.


Defendants in trade secret cases may use defenses such as general knowledge, parallel development, reverse engineering, innocent acquisition, public interest, or statutory obligation.


Trade secret protection in India is in its early stages, and developing robust legislation is crucial for creating a business-friendly environment. This protection is essential for off-shoring companies and entrepreneurs seeking opportunities in India, ensuring that their innovations and confidential information remain secure in a competitive landscape.

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