New law to protect trade secrets

News Excerpt:

The 22nd Law Commission headed by Justice Ritu Raj Awasthi recommended that new legislation be introduced to protect trade secrets with exceptions relating to whistleblower protection, compulsory licensing, government use, and public interest.

Trade secrets:

  • Trade secrets are intellectual property rights on confidential information that may be sold or licensed.
  • They derive their value from being kept secret. 
    • However, unlike other forms of intellectual property, which are limited in duration, trade secrets can be protected indefinitely.
  • Currently, India lacks a specific law for the protection of trade secrets. 
    • Instead, they are safeguarded under the general laws governing contracts, common law, criminal law, and principles of breach of confidence and equity.
  • The concept of trade secrets first came to the limelight in 1977 when the government asked Coca-Cola to hand over the formula for its cola drink, which led to the company exiting India to re-enter only a decade later.

Key Points:

  • Recently published, 289th Law Commission Report on ‘Trade Secrets and Economic Espionage’, states that the reference to the commission arose after deliberations in the government, where the need for legislation on the subject was felt.
  • The Department of Legal Affairs and the Legislative Department examined the issue of enacting the Economic Espionage Act and Trade Secrets Protection Act and prepared a concept paper along with a draft cabinet note and a draft Bill.
  • However, the matter was referred to the Law Commission in October 2017, requesting it to examine the possibility of enacting the laws and ensure a thorough evaluation.

Recommendations by Law Commission:

  • The Law Commission undertook a comprehensive study of the law on trade secrets and economic espionage, after extensive deliberations with domain experts from different spectrums like the judiciary, academia, government, and industry.
  • While doing so, the Commission has looked at the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement and India’s obligations arising from it. 
    • It 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 Protection of Trade Secrets Bill, 2024.
  • The National Intellectual Property Rights Policy, 2016, and the Parliamentary Standing Committee Report have brought back focus on the need for introducing legislation to deal with trade secrets.
  • 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”.

Law Commission of India:

  • The Law Commission of India is a non-statutory body and is constituted by a notification of the Government of India.
  • It carries out research in the field of law and makes recommendations to the Government (in the form of Reports) as per its terms of reference.
  • It has taken up various subjects on references made by the Department of Legal Affairs, Supreme Court and High Courts and submitted more than 200 reports.

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