How to Protect a Trade Secret in Practice

In one line

Protection is built, not asserted: identify the secret, restrict who sees it, bind everyone who does, control the technical environment, manage departures, and keep the audit trail a court will ask for.

Why this chapter exists

Because India has no trade secrets statute, protection is what the holder does. In a patent system the state gives you a right and you enforce it. Here the holder must manufacture the evidence of secrecy in advance, because the court will ask for it.

The six factors in Bombay Dyeing are, read the other way round, a compliance programme. The one the holder controls is the third, "the precautions taken by the holder to guard the secrecy of the information", and everything below is an elaboration of it. Neill LJ's third and fourth matters in Faccenda Chicken, whether the employer impressed confidentiality and whether the information can be isolated, are the same instruction.

Step one: identify and classify

You cannot protect what you cannot name. Emergent Genetics and Navigators Logistics both failed on this.

Maintain a register of trade secrets. For each entry record what it is, where it lives, who owns it, who may see it, when it was created, what it cost, and why it matters.

Classify in tiers, for instance: public, internal, confidential, restricted. Each tier carries a handling rule. The tiers must be used, because a scheme nobody applies is worse than none: it shows the holder had a policy and ignored it.

Do not mark everything confidential. Universal marking is evidence that the marking means nothing, and it makes Neill LJ's fourth matter, isolation, impossible.

Step two: restrict access

Need-to-know is the governing principle, and it addresses factor 2 of Bombay Dyeing, the extent to which the information is known inside the business.

In practice. Role-based access on systems. Physical restriction of laboratories and server rooms. Splitting a process so that no single person holds all of it. Separate storage for the crown-jewel document. A log of who accessed what and when.

Access logs are the single most useful artefact in litigation, because they prove both the precaution and, later, the copying.

Step three: bind everyone who sees it

The non-disclosure agreement

Use one before any disclosure to an outsider, and remember Saltman and Brady: an obligation can arise without it, but proving it is much harder.

The clauses that matter.

• Definition of confidential information, by category and by reference to marking, with a catch-all for information a reasonable person would understand to be confidential.
• Permitted purpose, stated narrowly. This is the line that makes later use unauthorised, chapter 980.
• Permitted recipients, and an obligation to bind them on the same terms.
• Exclusions: information already public, already known to the recipient without obligation, independently developed, or received from a third party free of obligation.
• Term: an obligation that survives the agreement, and for a true trade secret, no expiry.
• Return or destruction on demand or on termination, with a certificate.
• No licence and no representation as to accuracy.
• Remedies: an acknowledgment that damages may be inadequate and that injunctive relief may be sought.
• Governing law and forum.