1protection of undisclosed information

8/2/2019 1Protection of Undisclosed Information

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Anti competitive practices in

contractual obligations

The Competition act of

India 2002


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COMPETITIVE MARKET

A competitive market is a market with a

sufficient number of both buyers and sellers

such than no one buyer or seller is able to

exercise control over the market or the price.

Efficiency is achieved because competitionamong buyers forces buyers to pay their

maximum demand price and competition

among sellers forces sellers to charge theirminimum supply price for the given quantity

exchanged.


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Anti-competitive practices are business or

government practices that prevent or reduce

competition in a market.


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TRIPS Agreement

The TRIPS Agreement requires undisclosed

information -- trade secrets or know-how-- to

benefit from protection. Article-39

The protection must apply to information that

is secret, that has commercial value because it

is secret and that has been subject to

reasonable steps to keep it secret.


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The Agreement does not require undisclosed

information to be treated as a form of

property, but it does require that a person

lawfully in control of such information must

have the possibility of preventing it from being

disclosed to, acquired by, or used by others

without his or her consent in a mannercontrary to honest commercial practices.


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Anti competitive practices in India are

governed by :-

A) The Monopolies And Restrictive Trade

Practices (MRTP) Act, 1969.

B) Protection of undisclosed information-Trade

secrets.

Both later on merged in The comp. Act Of India 2002


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A) The Monopolies And Restrictive TradePractices Act (MRTP) , 1969


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Competition laws in India were governed

earlier by the Monopolistic Restrictive Trade

Practices Act, 1969(MRTP) which was

substantially taken from U.K Legislations,

particularly the Restrictive Trade Practices Act,

1956 and Resale Prices Act, 1964.

This Act established the Monopolistic and

Restrictive Trade Practices Commission whose

main functions were to control restrictive andmonopolistic trade practices of big houses.


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The emphasis under the MRTP Act was in

respect of trade practices that adversely

affected competition and were subject to the

rule of reason whereas under the Competition

Act, the anti-competitive agreements and

practices are declared void.


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Under the MRTP Act till the cease and desist

order was passed by the MRTP Commission, a

particular trade practice was not considered

void or illegal whereas this is not the case

under the present Indian Competition Act

2002.


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For a market economy to function properly,

the competition must be free and fair. In acompetitive market, all the competitors try to

gain consumer confidence and increase its

market share by continuously trying to

improve the articulation of the exact need of

the consumer/user, build in quality in the

goods and services, to reduce prices and find

more efficient means of production anddelivery of the products and services.


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There is a very thin line of difference between

acceptable business practices and practices which are

considered to be anti-competitive in nature. Firms engaged in anti competitive activities do not

build up their business profits to their own advantage

but to basically by exploiting their superior

monopolistic position in the market based on

position in the market to the disadvantage of its

competitors or consumers.

Such activities usually lead to increase in prices,reduce output, decrease in quality, restrict consumer

choices, and create barriers for new entrants etc.


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Example : Apple Accused of Anticompetitive Practices

in India Over iPhone

Apple Inc. has been accused of engaging inanticompetitive practices in India and is under

investigation by the Competition Commission of India

(CCI).

The investigation comes in response to a complaint

lodged with the CCI that accuses Apple of limiting

access to the iPhone by only selling it through limited

carriers and by only offering the iPad through its own

stores.

Apple also stands accused of only allowing apps from

its iStore, the CCIs new branding for Apples App

Store.


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Apple has pleaded in response that it is doing

business in India the way it does in everyother market, by controlling its product line,

retailers that sell its goods, and the customer

experience.

These practices however are likely and

possible run afoul which could possibly run

afoul of Indian regulations, specifically section

4 of the Competition Act 2002.


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B) Protection of undisclosed

information

The Trade secrets


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With the increase in cut throat competition in

every field, businesses must ensure that theyadequately protect their business processes,

technical know-how and confidential

information from competitors. Whilst all businesses have some information

that is valuable and which they endeavor to

keep secret, many of them are they areunaware of how to legally protect such

information.


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Just as other intellectual property rights, trade

secrets can be extremely valuable to a

companys growth and sometimes even

critical for its survival.

In fact, it is only when some rival contender

improperly obtains the trade secrets, the

companies come to realize the significance ofTrade Secrets.


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2. What is a Trade Secret?

A trade secret refers to those valuable data orinformationrelating to the business which are notgenerally known to the public at large, and whichthe owner invested reasonably earlier and on a

continued basis attempts to keep for these secretand confidential.

Trade secrets generally give the business acompetitive edge over their rivals. Almost any

type of data, processes or information can bereferred to as trade secrets so long as it isintended to be and kept a secret, and involves aneconomic interest of the owner.


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For example, a business may have a specified

customer list or pricing policy or certain

internal business processes that it follows for

its day-to-day operations that give it an edgeover its competitors. All these are regarded as

trade secrets.


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The Agreement on Trade-Related Aspects ofIntellectual Property Rights (TRIPs) under the

auspices of the World Trade Organization (WTO)lays down the following three criteria forregarding any information as undisclosedinformation (or trade secrets):

It must not be generally known or readilyaccessible by people who normally deal with suchtype of information

It must have commercial value as a secret

The lawful owner must take reasonable steps tokeep it secret.


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Customer lists, business information, employee

details, financial records, data compilations,business plans and strategies, formulae, designs,drawings, algorithms et al, could all amount totrade secrets.

It is important to bear in mind that a trade secretneed not be something that is novel nor should ithave any real or intrinsic value to be protected.

The only important requirement is that it must bea secret, have commercial spin offs and bemaintained a secret.


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3. Tools to Protect Trade Secrets

Businesses must ensure that they protect theirtrade secrets from being misappropriated,

sabotaged, lost or stolen. Some tools that they

can adopt are outlined here in below: Trade Secret Policy

Non-disclosure Agreements (NDAs)

Employment agreement

Adequate Documentation

Security Systems


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1) Trade Secret Policy

Such a policy is a must for businesses that heavily

rely on their trade secrets. A basic step to develop

such a policy is to identify and prioritize the business

secrets based on their value and sensitivity.

Employees must be informed about the policy and

consequences of its breach before they agree to

abide by the policy and sign an acknowledgement to

that effect that they understand the organizations

trade secret policy very well and they will abide by it.


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2) Non-disclosure Agreements (NDAs)

Businesses can also enter into NDAs with thirdparties while discussing any business

prospects and ventures and while gaining any

access to companys inner working as some

state holder. In this way, the third parties can

be precluded from divulging any trade secrets.


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3) Employment agreement

Depending upon their needs, businessesshould include suitable confidentiality, non-

disclosure and non-compete clauses in

agreements with employees. These may

include the type of information that is likely to

be disclosed, the manner in which it should be

used and restrictions on disclosure post-

termination.


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4) Adequate Documentation

It is important for businesses to keep a trackof the trade secrets that are developed and

have sufficient records to show that the trade

secret was developed by them and belongs to

them. These records would be of evidentiary

value in case of a dispute. It would also be

useful for such businesses to conduct a trade

secret audit at regular intervals to and keep upto date with any changes.


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5) Security Systems

Access to trade secrets and confidentialinformation may also be restricted to only

select personnel who have to undergo regular

and proper security checks. In case of anelectronic environment, the businesses should

use adequate software programs, virus scans,

firewalls password protection policy and other

security and authentication technologies to

safeguard their trade secrets.


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4. Trade secret remedy in India

There is no specific law in India that protects

trade secrets and confidential information.

Nevertheless, Indian courts have upheld trade

secret protection on basis of principles ofequity, and at times, upon a common law

action of breach of confidence, which in effect

amounts to a breach of contractual obligation.


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In India it is possible to contractually bind a

person not to disclose any information that isrevealed to him/her in confidence. In one

case, the Delhi High Court has also upheld

that a claim that disclosure of informationwould amount to breach of confidence is not

defeated by the fact that other people in the

world already knew the information.


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The Supreme Court of India (i.e. the apex

court) has also upheld a restrictive clause in

an employment contract, which imposed

constraints on the employee to not reveal ormisuse any trade secrets that he or she has

learnt and obtained for his possesion whilst in

employment.


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The remedies available to the owner of trade

secrets would be to obtain an injunction

preventing a third party from disclosing the

trade secrets, return of all confidential andproprietary information, and compensation

for any losses suffered due to disclosure of

trade secrets.


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5. Trade secrets and patents Trade secret protection is the principal alternative

to patent protection. Like with patents, theowner of a trade secret can stop others fromusing his intellectual property.

But unlike patents, the owner of a trade secretcan only act against those who actually used hisinformation.

Someone who independently came up with the

same information through R&D and relatedinvestments does not infringe on the trade secretprotection.


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A patent holder however during the tenure of

a patent can stop anyone from making, using

or selling the invention, even when the

infringer developed the invention completely

independently without using any informationsupplied by the patent holder.

A trade secret is secret only up to that time

until some one makes it public through onesown independent efforts.


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Reference

http://www.wto.org/english/tratop_e/trips_e/intel2_e.htm

http://www.wto.org/english/docs_e/legal_e/2

7-trips_04d_e.htm
http://www.wto.org/english/tratop_e/trips_e/intel2_e.htmhttp://www.wto.org/english/tratop_e/trips_e/intel2_e.htmhttp://www.wto.org/english/docs_e/legal_e/27-trips_04d_e.htmhttp://www.wto.org/english/docs_e/legal_e/27-trips_04d_e.htmhttp://www.wto.org/english/docs_e/legal_e/27-trips_04d_e.htmhttp://www.wto.org/english/docs_e/legal_e/27-trips_04d_e.htmhttp://www.wto.org/english/docs_e/legal_e/27-trips_04d_e.htmhttp://www.wto.org/english/docs_e/legal_e/27-trips_04d_e.htmhttp://www.wto.org/english/tratop_e/trips_e/intel2_e.htmhttp://www.wto.org/english/tratop_e/trips_e/intel2_e.htm


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