1Protection of Undisclosed Information
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Transcript of 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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Thank you