The Concept of Trade Secrets - Essay Example

? Trade Secrets as an Intellectual Property Rights As early as 1817 , English court first acknowledged a cause of action for trade secrets and in 1837 ?American court gave recognition to it. However, injunction relief against actual or endangered misappropriation came later. The doctrine of trade secrets developed out of the chain of associated common law torts namely; infringement of confidential association, infringement of confidence, unjust enrichment, unfair competition and torts associated to trespass or unlawful access to a claimant’s property. In USA, the Uniform Trade Secrets Act (UTSA) was enacted some twenty-five years back. (Dreyfuss et al 2011:113). Now, trade secrets can be justified as a guise not of customary property but of intellectual property. The incentive by way of IP protection to trade secrets is justifiable, mainly to offer a boost for new inventions. Offering legal protection for those new inventions not only promotes their creation, but also facilitates an inventor to cash his inventions by selling his new ideas to others. Through patent law, trade secrecy can be safeguarded as it is not only quicker but also cheaper to obtain patent over such business secrets as it extends safeguard to various varieties of business and manufacturing process information. Sometimes, court considers trade secret law as a common law tort instead of perusing the same under IP rights. Protection of trade secrets through IP promote pre-emption of “ unjust enrichment “ philosophies and other common law remedies that courts are enticed to offer the private parties legal control over information that is available in the public domain. In case of commercial scenarios, the cases of the breach of confidence most recurrently happen. It is to be noted that there exists a difference between a trade secret and just commercial “know-how.” It has been observed that mere know-how is not safeguarded under the law and to be safeguarded, it should be in the guise of a trade secret. Majority of the commercial know-how is no doubt having great value and hence, it is essential to keep it away from public dissemination. For instance, a chemical formula for a specific ingredient (for instance coca-cola) should be preserved under lock and key, which is known as the trade secret. Trade secret connotes information, including but not restricted to a pattern, formula, method, compilation, technique, programme or information or process embodied or contained in a product mechanism or devise which: may or is may be employed in a business or trade; b) is not normally recognised in that business or trade; c) has some economic value from not being generally be disclosed; d) Is adequate initiatives have been taken to maintain the secrecy under the scenario. (Sumpter 2006:100). Illustration of confidential information: Plans and Designs as held in Saltman v Campbell Swizzle sticks embellished with a cruise ship name where they are being widely used as held in Ackroyds (London ) Ltd v Islington Plastics Ltd1 A manufacturing process for establishing a confectionary as held in AB Consolidated v Europe Strength Food. Exhaustive information about assets, supplies, budgets, strategic planning and clients stored in computer files as held in Ravensdown Corp Ltd v Groves 2 Concepts and ideas gathered during negotiations in commercial opportunities as held in Pacifica Shipping Co Ltd v Andersen3 Disclosures made about the patented invention during the course of business negotiations as held in Seager v Copydex. Details stored about the requirements of clients and list of customers as held in Target Recruitment Services Ltd v Lewin4 Details of general information about the company which contains details about the products dealt with , chemical formulae , prices to be quoted in the tenders , budget forecasts and market information as held in AM Satterthwaite & Co Ltd v Gay 5 The genetic components of plant budwood that was stolen as held in Franklin v Giddins. If a new plant variety for which litigation is made is kept as secret or inaccessible, in such situation, the breeders of such a new plant can have a remedy under breach of confidence even though no grant is made for a plant variety right under the Plant Variety Right Act, 1987. For gourmet salads, its recipe as held in Chenel Pty Ltd Rayner6 (Sumpter 2006:101). However, in the following cases, it was observed by the Court after analysing the information of each case that there existed no quality of confidence. Sales techniques for a dietary and slimming programme as held in Slimquik v pargeter The method and formula for a commercial cleaning product as held in Ceiling Care The technique of commercial packing of kumara chips as held in Harlow v Griffins Foods Ltd Deciding about the Confidentiality of Industrial data The following four elements have been taken into consideration in evaluating whether information can be regarded as a confidential one for the industrial purposes. (Sumpter 2006:100). The owner of such secret information should believe that the dissemination of such information would be beneficial to his opponents or business rivals or might be disadvantageous to them. The owner of such confidential information should believe that the information is not in the public domain; There should be reasonability to the owner’s belief as regards to the above first and second elements. Such trade information must be adjudged in the background of practices and usages of the specific industry or trade concerned. (Sumpter 2006:101). In establishing confidential information, there should not be vague declarations like “sales methods” or “valuable company know-how” may not be sufficient as held in Chia v Haw Par Bros International Ltd. In the course of researching a book on aboriginal tribal secrets, the cultural details exposed in confidence has been protected by courts as held in Foster v Mountford & Rigby Ltd. As held in A-G for United Kingdom v Wellington News Paper Ltd, government’s secrets are from time to time comes under the ambit of the breach of confidence proceedings. (Sumpter 2006:101). Panoply of legal remedies is available for the trade secret misappropriations. An owner of a trade secret can obtain legal remedy depending upon the scenarios like criminal penalties under criminal law, injuries gauged by the greater of the owner’s loss or the defendant’s profit (a legal relief under tort law), an injunction under property law or a restricted “head start” injunction planned to place the parties back in the same scenario they would have been, had the embezzlement not happened (a remedy under the contract law). (Dreyfuss et al 2011:115). In Coco’s case, Megarry J viewed that just “petty tittle gossip “would not be safeguarded as a trade secret. Further, Cornish is of the view that the courts might not be prepared to safeguard material that has only associated with minimal intellectual initiatives, where the material may not be eligible for copyright protection.(Cornish 1999:131). In Nicrotherm v Percy, it was viewed that dissemination that a mechanical feeding mechanism was needed for pig keeping was obviously considered by the court as having the required quality of confidence. However, it is obvious, that a trade secret which does not meet the requirement under patent law of obviousness or inventiveness will still can be safeguarded as held by Lord Greene MR in Saltman Engineering Co Ltd v Campbell Engineering Co Ltd.(Kariyawasam 2011 :205). In Woodward v Hutchins, it was held that there was no leak of a trade secret as it fell into the public domain as all other remaining passengers on the board of a jumbo jet had been able to overhear the information, where the plaintiff disclosed a confidential information during a flight journey, and it was revealed latter by the defendant in a book. (Kariyawasam 2011:206). In this case, the main issue is disclosure of safeguardable information, which is protected by the Intellectual property law. The main case relating to this issue is Saltman Engineering Co Ltd v Campbell Engineering Co Ltd. In this case it was held that a trade secret which does not meet the requirement under patent law of obviousness or inventiveness still can be safeguarded. In this case, the defendant was engaged by the plaintiff to make leather punches from the copyrighted drawings supplied by the plaintiff. Reposing confidence on the defendant, the drawings were given by the plaintiff to the defendant. Unfortunately, the defendant made a punch out of drawings supplied to him. The Court of Appeal viewed that it was an unlawful strategy to employ the drawings for the own purpose of the defendant even though a skilled draftsman could have copied the drawings after examining one of the punches of the plaintiff , which were abundantly available in the market. This case showed how a breach of confidence can be regarded as an infringement of business secret passed on. (Colston 1999:139). Some kinds of this kind of information are commercial records, personal secrets and confidential information as held in Coco v Clark. Thus, as long as, trade secrets are kept in confidence and do not appear in the public domain, it can be protected. In Chantry Martin v Martin, it was held that if the trade information becomes public in any scenario, then it is no longer remained as private information. It was emphasised in the above case that if an individual had received secret information, even it is well known to him earlier, and he is still under a commitment to protect such information. In Carflow Products (UK) Ltd v Linwood Securities (Birmingham) Ltd and others, it was viewed that if an individual view the exhibition of an invention or a product, there cannot be a commitment for confidence as the exhibition at technical fairs or trade shows or even at private exhibitions, can make the good or product to be on the public domain and hence no longer warranted to a commitment for confidence. (Colston & Galloway 2010:252). James and Jeremy have designed a car engine that runs entirely on electricity. They have invested a lot of time and money in designing the engine. Richard takes some of the engine designs from their workshop and speaks to three large car manufacturers about the possibility of developing an entirely electric fuelled car. Thus, Richard has divulged a trade secret to competitors, and hence it would be regarded as a breach of confidence by the courts. However, as long as, if both the parties aware about the confidentiality of information, then it will be regarded as trade secret and this has been confirmed in FSS Travel and Leisure Systems v Johnson. In the above case, it was held that protection can be extended only to inventive and specific knowledge and cannot be extended to an acquired know-how or technical skill. In the given case, it is a new technology which is yet to be available in the public domain and hence will be regarded as a trade secret. Thus, if the information divulged by James and Jeremy and if Richard carries the same to a business rival or a competitor and dissemination of such information would definitely cause grave damage to the James and Jeremy and hence, it would be treated as a trade secret. (Holland & Burnett 2008:177). In the course of researching a book on aboriginal tribal secrets, the cultural details exposed in confidence has been protected by courts as held in Foster v Mountford & Rigby Ltd.(Lewinsky 2008:135). In Coco v Clark, it was held that confidential information is obvious when one individual passes on information to another individual on the stipulation that he would maintain it as a secret or is deduced where an individual request or employs to the other to gather information and keep it in confidence for him, and if he acknowledges that information is to be kept as confidential. If it could sensibly be considered that the information is offered to the recipient, this could be enough upon the recipient an equitable duty of confidence. (Gupta 2011:101). In majority of cases, the defendant’s disclosure or usage is regarded as unlawful due to pre-existing commitment to the plaintiff not to divulge or disseminate the trade secret. Such commitment can arise in any of the following two methods; either explicitly through a contract or implicitly, because of an implied obligation. A best illustration of an explicit contract arises in case of employees who are considered to have a duty to safeguard their employee’s interests in the employer’s secret trade information, practices, etc. In Nicrotherm v Percy, it was viewed that dissemination that a mechanical feeding mechanism was needed for pig keeping was obviously considered by the court as having the required quality of confidence. As per Lord Greene MR in Saltman Engineering Co Ltd v Campbell Engineering Co Ltd , in case if one wants protection under IP laws , the secret information should have “ the required quality of confidence about it as it must not be something, which is available in the public domain or not having public knowledge or public property.” Some other examples where protection is offered as under; Commercial Records ------------- Anton Piller KG v Manufacturing Processes Ltd “Trade Secrets ---------- Seager v Copydex “ “Personal Secrets ------------ Argyll v Argyll “ Liability may occasionally be able to bind the recipients who acquire confidential information innocently. Further, the liability arises at the juncture when a party is informed of the infringement of confidence as held in Printers and Finishers Ltd v Holloway &Stephenson Jordan v MacDonald and Evan. (Cavendish 2006:5). Richard cannot claim a defence to the breach of confidentiality under public interest defence. A public interest defence is allowable in cases of a breach of confidence where Richard has to prove that the trade secret is against the national security, perilous to public health or safety, etc as held in Berloff v Pressdam. Thus, James and Jeremy can initiate against Richard a criminal action under criminal law, or may seek a legal relief under tort law for injuries gauged by the greater of the their loss or the Richard’s profit , or may seek a remedy under the contract law or an injunction under property law or a restricted “head start” injunction planned to place the James and Jeremy back in the same scenario as they would have been, had the embezzlement not happened against Richard for leaking out their business secrets to their business rivals. List of References Cavendish. (2006) Intellectual Property Law. London: Routledge Taylor & Francis Group Colston, C & Galloway, J. (2010) Modern Intellectual Property Law. London: Taylor and Francis Group Colston, C. (1999) Principles of Intellectual Property Law. London: Routledge Taylor & Francis Group Cornish, W.R. (1999) Intellectual Property. London: Sweet & Maxwell Dreyfuss, RC, Strandburg, K & Newman, P. (2011) The Law and Theory of Trade Secrecy: A Handbook of Contemporary Research. New York: Edward Elgard Publishing Gupta, TS. (2011) Intellectual Property Law in India. London: Kluwer Law International Holland, J & Burnett, S. (2008) Employment Law 2008. Oxford: Oxford University Press Kariyawasam, R. (2011) Chinese Intellectual Property and Technology Laws. London: Edward Elgar Publishing Lewinski, S V. (2008) Indigenous Heritage and Intellectual Property. London: Kluwer Law International Sumpter, P. (2006) Property Law: Principles in Practice. Sydney: CCH New Zealand Limited Read More