What is a Trade Secret?

December 28, 2024

Registrationwala

A trade secret is one of the common types of intellectual property rights. One advantage of trade secrets is that their exclusivity doesn’t come with a time limit. As long as a trade remains confidential, the business control over its usage doesn’t expire. Moreover, trade secrets aren't required to be registered, making them easy to establish and maintain unlike certain other intellectual property rights.

In this cool blog post, we shall explain what trade secrets are, the laws governing them in India, and how they’re totally different from patents. Enjoy reading!

Trade Secret Definition

Trade secret definition can be explained as a type of intellectual property that broadly embraces all forms and types of information (such as formulas, methods, techniques, patterns, plans, research, analysis data and compilations) that provide a competitive/economic advantage to its owner since the information isn’t generally known to or available through proper means by other individuals who, from its use/disclosure, can gain economic benefit.

One example of Trade Secret is Coca-Cola beverage’s secret recipe.

A trade secret is subject to reasonable efforts by its owner to maintain its secrecy. If the secrecy isn’t maintained and information becomes public knowledge, the trade secret loses its protection.

Now, imagine the exact secret recipe of Coca-Cola becomes publicly available. It will no longer be considered a trade secret. Other competitors might want to replicate the beverage, and sell it for half the price. This would significantly impact Coca-Cola's market share and profitability.

Trade Secret Law in India

There is codified law in India that protects trade secrets. However, trade secrets do get protection in India. The Indian legal system relies on common law, precedents, and statutes like the Indian Contract Act, 1872, and the Information Technology Act, 2000 to protect trade secrets in India.

With that being said, the Government of India is making efforts to enact a law for the trade secrets. The 22nd Law Commission of India has recommended a dedicated Trade Secrets Bill 2024. The bill includes the following recommendations such as defining trade secrets based on secrecy and commercial value, including exceptions for compulsory licensing and public interest and designating commercial courts as the jurisdiction for suits related to misappropriation of trade secrets in India. So far, the bill hasn’t received the green light.

Difference Between Trade Secret vs Patent

Both trade secrets and patents are types of intellectual property but they differ in many ways. While trade secrets protect information, patents protect new inventions and innovations.

Patent law in India is codified in the Patents Act of 1970. However, trade secret law in India remains uncodified till date. Patent protection lasts for 20 years from the filing date of the application. After its expiry, the invention/innovation ends in public domain. However, a trade secret can last for centuries unless it is leaked, disclosed to an unauthorized party, or independently discovered by others.

Conclusion

A trade secret refers to confidential information that is not generally known by the public and requires reasonable efforts to maintain its secrecy. Unlike other intellectual property rights, trade secrets do not expire and can remain indefinitely unless they are leaked or disclosed. Although there is no codified law for protecting trade secrets in India, certain laws, like the Indian Contract Act, 1872, and the Information Technology Act, 2000 offer protection to them.

Registering with the Spice Board of India helps a business follow legal rules and supports protecting secret recipes by making the business official in the industry. Connect with Registrationwala for assistance in securing the Spice Board Registration.