QUESTIONS:

trade secret law with regard to concept notes.

FACTS OF ZEE TELE FILMS:

The company of the plaintiff, named sundial communication private Limited was
involved in the video making program, multimedia, serials for television
production etc. They create new, innovative, concepts which are produced
through pictures, crafts, sketches, notes. These concepts were also registered
under the Films Writers Association and the Indian Motion pictures producers
association also registers the titles of the programmes. Approximately in the
year 2002, the plaintiff came with a concept which is titled ‘kanhaiyaa’. After
some time the title got changed to ‘Krish kanhaiyya’ and which detailed record
of the notes made, character sketches, plots of the episodes were sent to the
defendants. The plaintiff and the defendant met and discussed the price but
after that, no confirmation was provided from the defendant’s side. Since they
did not get any proper explanation, they proceed with the same concept with
Sony Entertainment Television. But they actually directly disagreed to produce
such because they pointed out that on the same concept which the plaintiff was
producing; the defendant had already started working. By getting to know
regarding this the plaintiff filed a suit against the defendant for misusing the
confidential information and also charged them for infringement of copyright.
Holding:
The principle of confidentiality includes both published and unpublished ideas which may be merely
disclosed or to be disclosed in a relationship of trust basis. Here, in this case, there was the concept of
breach of confidentiality since there was some amount of similarity between the concept of the plaintiff
and the concept of the defendant. An injunction can be granted as there was a breach of confidentiality.
It also lay down that under breach of confidence, it is not just to the extent of original work or recipient
rather it also extends to those persons who get the information with the knowledge acquired at that
point of time or who have the knowledge that the original information which was provided was in
confidence and still disclose it.

Elucidate trade secrecy law with regard to concept of agreements in restraint of trade. -WIPRO CASE

Discuss trade secret protection vis- a- vis right of employees.

Discuss the concept of trade secrecy in an employer-employee relationship in view of

Wipro case judgement.

S.A.

Three requirements for something to be a trade secret.

What is the difference between confidential information and a trade secret, if any?

How patent law is complementary to the trade secrecy law?

Trade secret is a formula, process, device, method, technique or other business

information that is kept confidential to maintain an advantage over competitors. Three
requirements for something to be a trade secret:

1. Information has actual or potential independent economic value,

2. The information is not being generally known to, and not being readily
ascertainable by proper means by, other persons who can obtain
economic value from its disclosure or use; and
 3. Reasonable efforts have been made to maintain its secrecy

1.Information of economic value

Information can be of 3 types

--

2. not being readily ascertainable by proper means by, other persons

who can obtain economic value from its disclosure or use

If the information is simple, it can be arrived at by independent creation or

reverse engineering. Both of them act as effective defense to TS
misappropriation claim. Therefore, in case of independent creations lack of
proper paper trail can lead to false negatives.

Refer to cases: Amoco Prod. Co. and CDI energy

3. Reasonable efforts

This factor acts as objective evidence that owner subjectively believed his
information to be a trade secret. The more efforts made to keep the info a
secret, the mor imp it is to the organization [intensity of efforts is directly
propotional to imporatnace of info]

Refer to rockwell graphic systems v. dev industries

FACTORS TO CONSIDER NATURE OF TRAE SECRETS

1. The extent of measures taken to guard the secrecy of the information;

1. 5.The amount of effort or money expended by the business in

developing the information;
Defenses against claim of ts misappropriation

1. Nature of Information: not a TS

Reasonable efforts
rockwell graphic systems v. dev industries
Holding/rule: Only in an extreme case can what is a "reasonable"
precaution to protect a trade secret be determined on a motion for
summary judgment because the answer depends on a balancing of costs
and benefits that will vary from case to case, and so require estimation
and measurement by persons knowledgeable in the particular field of
endeavor involved.

2. Readily ascertainable
1. Amoco Prod. Co. v. Laird - 622 N.E.2d 912 (Ind. 1993)

Facts: Plaintiff Amoco Production Company undertook extensive research and travel to locate potential
oil fields in the United States and, as a result, developed a certain map delineating locations of such
sites. The map and research was done by relying on and expanding upon already available public
information regarding possible locations of oil fields. The map was largely produced by geologist John
Clemdenning, an employee of plaintiff. Believing that plaintiff would not act on his advice, Clemdenning
provided defendants individuals and company with information contained on the map he developed,
which defendants actively pursued the oil reserves. When plaintiff discovered defendants' activities, it
sought and obtained injunctive relief barring defendants' efforts on the grounds that the information
obtained and used by defendants was a trade secret. The trial court granted a preliminary injunction The
court of appeals reversed.

Holding:

On petition to transfer, the state supreme court reversed, holding that the
duplication of plaintiff's alleged trade secret information required a
substantial investment of time, expense, or effort, such information
may be found "not being readily ascertainable" so as to qualify for
protection under the Indiana Uniform Trade Secrets Act. Therefore, the
trial court's finding that methods of acquiring the information pertaining
to the location of the Indiana oil reserve sites "were not simple or easy to
accomplish, and are expensive to develop," is sufficient to support its
conclusion that such information was not readily ascertainable and thus
entitled to trade secret protection. A trade secrets plaintiff need not
prove that every element of an information compilation is unavailable
elsewhere. Such a burden would be insurmountable since trade secrets
frequently contain elements that by themselves may be in the public
domain but taken together qualify as trade secrets.
The standard is how difficult it was to arrive at the ts info. It is not that it
was impossible to arrive at that info.
2. CDI energy v. west river services
Facts: Plaintiff CDI Energy Services, Inc. ("CDI") sold and serviced
equipment for use in the oil field industry. Defendants John Martinson,
Dale Roller and Kent Heinle ("Employees") worked in CDI's North Dakota
field office. CDI filed a lawsuit in federal district court against the
Employees and their new company, defendant West River Pumps, Inc.
("West River"), claiming that the Employees stole proprietary
information [i.e., client list] and solicited business from CDI's clients
while still employed by CDI. The complaint asserted, among other claims,
state-law claims of breach of loyalty, trade-secret misappropriation, and
business interference. CDI obtained an initial, ex parte temporary
restraining order and then sought preliminary injunctive relief. The district
court denied the motion for a preliminary injunction and dissolved the
temporary restraining order. CDI appealed.
HOLDING:

2. Reverse engineering
The United States Supreme Court has ruled that state trade
secret laws may not rule out “discovery by fair and honest
means,” such as reverse engineering.
The Supreme Court also upheld the legitimacy of reverse
engineering in Bonito Boats, Inc. v. Thunder Craft Boats, Inc.,
where it declared that the “public at large remained free to
discover and exploit the trade secret through reverse
engineering of products in the public domain or by
independent creation.”
A trade secret law, however, does not offer protection against discovery by . .
. so-called reverse engineering, that is by starting with the known product
and working backward to divine the process which aided in its development
or manufacture"
The protections of state trade secret law are most effective at the
developmental stage, before a product has been marketed and the threat of
reverse engineering becomes real. During this period, patentability will often
be an uncertain prospects.
EMPLOYER/EMPLOYEE

Inevitable disclosure doctrine

The inevitable disclosure doctrine arises out of the concept of threatened misappropriation. The
doctrine proposes that an employee “may be enjoined by demonstrating that the employee’s new job
duties will inevitably cause the employee to rely upon knowledge of the former employer’s trade
secrets.” Originally, the doctrine was applied only to employees in technical fields, but courts have
expanded it to include employees in possession of a variety of trade secrets, including financial,
manufacturing, production and marketing information.
In order to protect the Trade Secret, this Spring Board doctrine was established. This
doctrine basically acts as a protection given to the employers of the companies, which
they can use in order to help them secure their trade secrets. A Spring Board doctrine is
an injunction which is specifically designed to remove or to limit the advantage that an
employee has gained through any unlawful activity typically through the misuse of the
employer's confidential information.

1. duPont de Nemours Co. v. American Potash Chemical Corp

FACTS: the plaintiff, duPont, was engaged in the production of pigments using a specific chloride
process. At the time of trial, duPont was the only pigment manufacturer to develop successfully this
chloride process. For nearly seven years, the defendant Donald E. Hirsch worked for duPont on the
lengthy and expensive development of the chloride process. In 1962, defendant American Potash &
Chemical Corp. (“Potash”), began to recruit personnel for a new plant that manufactured pigments with
a chloride process. Potash recruited Hirsch who then resigned from duPont and accepted a position with
Potash to work at the new plant. Shortly thereafter, duPont sought and received a restraining order
prohibiting Hirsch from engaging in any work for Potash in the operation or development of a chloride
process for pigments. Hirsh never signed a non-compete agreement with dupont. Defendants Hirsch and
Potash filed a motion for summary judgment. In response to this motion, duPont offered evidence that
Hirsch would inevitably disclose trade secrets concerning the chloride process. Furthermore, duPont
claimed that evidence of such inevitable disclosure would support, without more, injunctive relief
because the threat of unlawful disclosure is implicit in the factual circumstances. In opposition, the
defendants asserted that courts should not consider the inevitability of a trade secret’s disclosure when
determining the existence of threatened trade secret disclosure.

HOLDING: Although not expressly holding that an injunction could ensue from a mere showing of
inevitable disclosure and basing the judgement on Hirsh’s fiduciary duty, the court held that “the
degree of probability of disclosure, whether amounting to inevitability or not, is a relevant factor to
be considered in determining whether a ‘threat’ of disclosure exists.” The court, after finding that the
defendants failed to meet their burden of foreclosing the possibility of the trial court’s finding a
substantial threat of unlawful disclosure, denied the defendants’ motion for summary judgment, and
thus upheld the restraining orders against the defendants.

2. alis chambers manufacturing v. Continental Aviation Eng

Facts: In Allis-Chalmers, the employee was the head of the fuel system laboratory
and became intimately involved in the development of a specified distributor fuel
The employee
injection pump and all functional research and testing of this pump.
then wanted to work for a competitor developing the same type of fuel injection
pump. The court enjoined him from working on the design and development of
distributor type pumps, but allowed him to continue to be employed with his new
employer performing other duties.
Holding: court emphasized the importance of striking the "proper balance between
the public policy of protecting and encouraging the right of the individual to pursue
his livelihood in the vocation he chooses, including the right to migrate from one job
to another, and the rights of an employer to its accumulated body of trade secrets
obtained by the expenditure of great amounts of time and money." Allis-Chalmers,
the courts found that it would be a "virtual impossibility" for the plaintiff's former
employee to perform his prospective duties to the best of his ability for his new
employer without giving the new employer "the benefit of [plaintiff's] confidential
information."In Allis-Chalmers, the courts imposed an injunction prohibiting the
defendants from working for direct competitors for a particular time.
3. PepsiCo, Inc. v. Redmond

FACTS: Defendant Redmond had been a member of upper management at PepsiCo and had signed a
confidentiality agreement, but not a noncompete agreement. After leaving his job at PepsiCo for a
similar position at competing company Quaker, PepsiCo brought an action to enjoin Redmond from
assuming his duties or divulging trade secrets.

The trade secret information of PepsiCo that Redmond knew about was strategic sales, marketing,
logistics and financial information:

It was argument of pepsico that his role at quaker will lead him to eventually

disclose all this information. Quaker argued that Redmond will be implementing a
pre-decided paln. To this pepsico argued that the plan can be redesined in which
case Redmond will do Inevitable disclosure.
Redmond also lied to Pepsico about the nature of his job and said that there is only
a 60-40% chance of him leaving, but left within 2 days pf telling pepsico.

Holding: In its decision, the district court highlighted Redmond’s bad faith conduct before accepting
his job at Quaker, combined with the finding that “unless Redmond possessed an uncanny ability to
compartmentalize information, he would necessarily be making decisions . . . by relying on his
knowledge of [PepsiCo] trade secrets.” Quaker was competing in the same, narrow market
segment of “sports drinks” and Redmond’s new position was very similar to his old
position at PepsiCo.
When upholding the district court’s injunction, the Seventh Circuit Court of Appeals
emphasized that “a plaintiff may prove a claim of trade secret misappropriation by
demonstrating that the defendant’s new employment will inevitably lead to [the
disclosure of trade secrets],” but the mere fact that the defendant assumed a
similar position at a competitor does not alone make disclosure inevitable. Also,
although the trade secrets at issue were not in the common technical and scientific
categories, the information at issue was not “general skills and knowledge,” but
rather “particularized plans and processes . . . which give the employer an
advantage over his competitors.”
Difference b/w Pepsi co & [dupont & allis chamber] case
1. Dupont an Allis was about a specific manufacturing process. Here, Redmond was
in possession of huge amount of knowledge about PepsiCo business pan that they
would eventually rely on.
2. The ourt did not accept the argument that Redmond will not be using the info he
had. PepsiCo argued that it found itself "in the position of a coach, one of whose players [had] left,
playbook in hand, to join the opposing team before the big game. " the court accepted this analogy.

3. Court relied on lack of forth-rightness/candor on part of Redmond in disclosing

Factors which govern the likelihood of disclosures:

Maxxim Medical, Inc. v. Michelson:
INDIA POSITION

Wipro v. Beckman Coulter International

Facts: Wipro Biomed was the sole distributor for Beckman Coulter International for around 17 years
distributing its bio-medical products. Wipro Biomed and Beckman Coulter had signed agreement having
clause for “Employee Non-Solicitation” binding on both. The clause required them to not solicit directly
or indirectly employees of the partner’s organization to join them or even the competitors of both
organizations. However, both organizations agreed that general means of recruitment of employees of
the partners through advertising in the open market would not amount to solicitation and therefore
such recruitments should be kept out of the purview of the non-solicitation agreement.

In 2005 ties were severed with Wipro Biomed and Beckman communicated its intentions to carry out
the distribution on its own. Subsequently, Beckman Coulter released a pan India advertisement from
Mumbai in one of the leading English newspapers in October 2005 seeking to recruit personnel for
various positions in Sales, Marketing, Service and Support positions. The advertisement read out,

“For all Sales and Marketing and Service and Support positions experience of working with or having
handled Beckman Coulter products and or similar products would be a distinct advantage.”

However, shortly after the release of the above advertisement, Wipro Biomed was flabbergasted as it
received resignation letters from 21 employees across India possessing considerable expertise and
experience in their areas of specialization. The sudden exodus of competent manpower created a fear
psychosis across Wipro Biomed threatening to cripple its operations and thereby end its business in the
biomedical segment since their most valuable assets i.e., the Sales, Marketing, Service and Support
personnel were poached by their partner Beckman Coulter.

Consequently, Wipro Biomed [petitioner] served a notice to Beckman Coulter [respondent] regarding
solicitation of its employees by the partner in violation of the non-solicitation clause. It also approached
the Delhi High Court to get an interim order to put a restraint on the solicitation of Wipro Biomed
employees by Beckman Coulter.

Holding:

the Delhi High Court decree said, “this advertisement was directed towards the employees of Wipro
Biomed and it was definitely a solicitation on behalf of Beckman Coulter.

Restraint of trade- The bar or restriction is on the petitioner and the respondent from
offering inducements to the other's employees to give up employment and join
them. Therefore, the clause by itself does not put any restriction on the employees.
The restriction is put on the petitioner and the respondent and, therefore, has to be
viewed more liberally than a restriction in an employer-employee contract. In my
view, therefore, the non-solicitation clause does not amount to a restraint of trade,
business or profession and would not be hit by Section 27 of the Indian Contract
Act, 1872 as being void.

Beckman Coulter is restrained during the pendency of the arbitration proceedings from taking out any
other or further advertisements to solicit Wipro’s employees.
Employees were allowed to join Beckman Coulter as they were third party to contract and there was no
privity of contract for them but, the respondent would be liable to compensate the
petitioner for such breach of the non-solicitation clause, if so established in the
pending arbitration.
The court laid down the four basic commandments of restrictive covenants. These
commandments are based on various judgments of the High Courts and the
Supreme Court
(1) restrictive covenants during the subsistence of a contract would not normally
be regarded as being in restraint of trade, business or profession unless the same
are unconscionable or wholly one-sided
(2) post-termination restrictive covenants between employer and employee
contracts restricting an employee's right to seek employment and/or to do business
in the same field as the employer would be in restraint of trade and therefore void
(3) courts take a stricter view in employer-employee contracts than in other
contracts the reason being that in employer-employee contracts, the norm is that
the employer has an advantage over the employee and
(4) the question of reasonableness as also the question of whether the restraint is
partial or complete is not required to be considered at all whenever an issue arises
as to whether a particular term of a contract is or is not in restraint of trade,
business or profession.

BREACH OF CONFIDENCE

Mr. Diljeet Titus, Advocate vs Mr. Alfred A. Adebare

Facts:

Three ingridients for B.O.C.

First, the information itself, must 'have the necessary quality of confidence about it.'
Secondly, that information must have been imparted in circumstances importing an
obligation of confidence.
Thirdly, there must be an unauthorised use of that information to the detriment of the
party communicating it.
Proof required TO BE furnished by plaintiff for B.O.C
that for a plaintiff to succeed in a breach of confidence action he had to address at least
four matters; i.e. (i) he had to identify clearly what was the information he was relying on;
(ii) he had to show that it was handed over in the circumstance of confidence; (iii) he had to
show that it was information of the type which could be treated as confidential; and (iv) he
had to show that it was used without his licence or there must be threat to use it. It was
added that at interlocutory stage, the plaintiff does not have to prove (ii) and (iv) as he will
at the trial. But he must address them and show that he has at least a seriously arguable
case in relation to each of them. [Medical Innovation GMBH an Anr. v. Phytopharm PLC,]
mention – zee teleflims and Urmi case
TRAE SECRET V. CONFIDENTIAL INFORMATION

Trade secret information is a subset of confidential information. All information

that qualifies for trade secret protection is confidential information. But not all
“confidential information” is ts.
Information may be defined as “confidential information” by contracts and
agreements such as employment agreements, non-disclosure agreements,
letters of intent and purchase/sale agreements. These contracts and agreements
define the scope of what is deemed protectable as well as the consequences of
misuse of the information. Confidential information may be any information about
a business that is not generally known to the public, and the category of
potentially protectable confidential information is more encompassing than a
business’s trade secrets.
The distinction between a trade secret and confidential information is somewhat
blurred in the Indian context and the two terms are often used interchangeably.
The difference between the two concepts has also faded in the wake of various
Indian judicial precedents, whereby a rightful owner has sought protection
against the illegal or unauthorised use of proprietary information without
classifying such information as either a trade secret or confidential information.
Although an overlap between the two concepts is certainly possible, it appears clear and reasonable
that the importance and commercial worth of a trade secret is greater than those of confidential
information. In the 1986 UK case of Faccenda Chicken Ltd v Fowler, confidential information was
categorised as ‘trade secrets’, ‘highly confidential information’ and ‘less confidential information’. It was
held that information would be protected only after cessation of a person’s employment if it could be
properly classified as a trade secret or, while not a trade secret, as material of such a highly confidential
nature as to require the same protection as a trade secret.

The term ‘confidential information’ has generally been limited to a single or ephemeral event in the
conduct of a business, whereas a trade secret may be a process, device for continuous use or
compilation of data that is used repeatedly to generate profit and retain a competitive advantage.
Therefore, once it has been established that a certain piece of information would qualify as a trade
secret by virtue of its commercial significance, this would have a direct and positive bearing (subject to
satisfaction of other legal requirements) on a court’s inclination to issue an injunction against an illegal
or unauthorised user.