Confidential Information and Trade Secrets
Law of Designs · Unit IV · Topic 9 of 13 · 6 min read
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Cases checked to exist. Read the judgment before quoting a holding.
Every case cited here has been checked to exist — the citation resolves and names the right parties. The propositions attributed to each case have not been verified line by line against the judgment. Case names link through to the full judgment: read it before quoting a holding in an examination answer, and never carry a proposition from notes into court on trust.
1. Nature of confidential information
The law of confidence protects information, not property in the ordinary sense. Its basis has been argued in several ways: equity (the conscience of the recipient is bound), contract (an express or implied term), property (information as an asset), and, more recently, privacy. English courts settled on an equitable obligation, independent of contract, though contract may reinforce it.
The foundation case is Saltman Engineering Co. v. Campbell Engineering Co. (Court of Appeal, 1948): drawings of leather-punching tools given to a contractor for a limited purpose were used to make tools for himself. Lord Greene MR held that information is confidential if it has the necessary quality of confidence, that is, it is not public property and public knowledge, even if it is made from public materials, provided that skill and work have gone into it.
2. The three elements (Coco v. A.N. Clark)
In Coco v. A.N. Clark (Engineers) Ltd. (1969), Megarry J. stated the elements that every answer should list:
- the information must have the necessary quality of confidence about it;
- it must have been imparted in circumstances importing an obligation of confidence; and
- there must be an unauthorised use of that information to the detriment of the party who communicated it.
Further points: in Seager v. Copydex Ltd. (Court of Appeal, 1967) the defendant unconsciously used ideas about a carpet grip disclosed during failed negotiations and was held liable; honesty is no defence. In Attorney-General v. Guardian Newspapers Ltd. (No. 2) (House of Lords, 1990, “Spycatcher”) Lord Goff restated the principle so that a duty arises whenever a person receives information he knows or ought to know is confidential, and recognised limits: no duty once the information is in the public domain, none for trivia, and a public interest defence where disclosure of wrongdoing outweighs confidentiality. Campbell v. MGN Ltd. (House of Lords, 2004) later developed a separate tort of misuse of private information.
3. Kinds of confidential information
- Commercial and technical: formulae, processes, designs before registration, customer lists, pricing, business plans.
- Personal: medical records, private life, marital confidences (Argyll v. Argyll, 1967).
- Governmental: Cabinet papers and security information, where the state must show that disclosure would harm the public interest (Attorney-General v. Jonathan Cape Ltd., 1976, on the Crossman diaries).
- Artistic and literary ideas before they are expressed, such as a television programme format (Fraser v. Thames Television, 1984). In India, Zee Telefilms Ltd. v. Sundial Communications Pvt. Ltd. (Bombay High Court, 2003) protected a television serial concept on the same principle.
4. How confidential information differs from trade secrets
| Point | Confidential information | Trade secret |
|---|---|---|
| Scope | Any information with the quality of confidence: personal, governmental, commercial, artistic. | Only commercial information that derives value from being secret. |
| Value | Need not have commercial value. | Must have actual or potential commercial value. |
| Source of duty | Relationship or circumstances of disclosure. | Also reasonable steps by the holder to keep it secret (TRIPS Art. 39(2)). |
| Duration | Until it enters the public domain. | Same, but often enforced also by contract terms. |
| Remedies | Injunction, damages, account of profits, delivery up. | Same, plus in some systems criminal sanctions (US Economic Espionage Act). |
Every trade secret is confidential information, but not every piece of confidential information is a trade secret. The distinction matters after employment ends: an employer can restrain a former employee from using trade secrets, but not from using the general skill and knowledge the employee acquired (Faccenda Chicken Ltd. v. Fowler, Court of Appeal, 1986), which drew a line between highly confidential trade secrets and mere confidential information that the employee may use after leaving.
5. TRIPS Article 39
Article 39(1) requires members, in ensuring protection against unfair competition under Paris Article 10bis, to protect undisclosed information. Article 39(2) protects information that (a) is secret, in that it is not generally known or readily accessible to persons in the circles that normally deal with it; (b) has commercial value because it is secret; and (c) has been subject to reasonable steps to keep it secret, against disclosure, acquisition or use “in a manner contrary to honest commercial practices”. Article 39(3) protects undisclosed test data submitted for marketing approval of pharmaceutical and agricultural chemical products against unfair commercial use, a provision India reads narrowly to avoid data exclusivity.
6. Comparative statutes
- United States: the Uniform Trade Secrets Act (1979), adopted by most states; the Economic Espionage Act, 1996, making theft of trade secrets a federal crime; and the Defend Trade Secrets Act, 2016, giving a federal civil action with ex parte civil seizure.
- European Union: Directive (EU) 2016/943 on the protection of undisclosed know-how and business information, adopting the TRIPS definition, protecting whistle-blowers and journalists, and implemented in the UK by the Trade Secrets (Enforcement, etc.) Regulations 2018.
7. The Indian position
India has no trade secrets statute. Protection rests on contract, equity and the common law:
- John Richard Brady v. Chemical Process Equipments Pvt. Ltd. (Delhi High Court, 1987): drawings and know-how for a fodder-production unit, given in confidence, were used by the defendants; an injunction was granted on the Saltman and Seager principles, even without a contract between the parties.
- Burlington Home Shopping Pvt. Ltd. v. Rajnish Chibber (Delhi High Court, 1995): a compilation of customer data could be protected both as a literary work and as confidential information.
- American Express Bank Ltd. v. Priya Puri (Delhi High Court, 2006): customer names and details known to an employee were not trade secrets once she left, and she could not be restrained from working for a competitor.
- Section 27 of the Indian Contract Act, 1872 voids agreements in restraint of trade. A covenant operating during employment is valid (Niranjan Shankar Golikari v. Century Spinning and Mfg. Co. Ltd., 1967 INSC 10), but a post-employment restraint is void (Superintendence Company of India (P) Ltd. v. Krishan Murgai, 1980 INSC 124). A non-disclosure obligation, unlike a non-compete, survives employment and is enforceable.
How this is examined
The 2025 question is the template. Begin with the nature of the obligation (equity, contract, property), give Coco’s three elements with Saltman and Seager, set out the table of differences, then TRIPS Article 39, the US and EU statutes, and the Indian cases. A problem may give an employee leaving with a client list: apply Faccenda, Priya Puri and section 27.
Now try the real questions: Law of Designs past question papers.