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Confidential Information and Trade Secrets

Law of Designs · Unit IV · Topic 9 of 13 · 6 min read

The equitable action for breach of confidence (Saltman, Coco v. Clark, Spycatcher), how confidential information differs from trade secrets, TRIPS Article 39, the US and EU statutes, and India's contract-and-equity approach with Brady, Burlington, Golikari and Krishan Murgai.

On this page
  1. 1. Nature of confidential information
  2. 2. The three elements (Coco v. A.N. Clark)
  3. 3. Kinds of confidential information
  4. 4. How confidential information differs from trade secrets
  5. 5. TRIPS Article 39
  6. 6. Comparative statutes
  7. 7. The Indian position
  8. How this is examined
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.

The examinable core. 2025: “Explain the nature of confidential information. How does confidential information differ from trade secrets?” Answer in three parts: (1) the nature of the obligation of confidence and its three elements; (2) the distinction, with a table; (3) the Indian position and the case for a trade secrets statute.

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:

  1. the information must have the necessary quality of confidence about it;
  2. it must have been imparted in circumstances importing an obligation of confidence; and
  3. 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

4. How confidential information differs from trade secrets

PointConfidential informationTrade secret
ScopeAny information with the quality of confidence: personal, governmental, commercial, artistic.Only commercial information that derives value from being secret.
ValueNeed not have commercial value.Must have actual or potential commercial value.
Source of dutyRelationship or circumstances of disclosure.Also reasonable steps by the holder to keep it secret (TRIPS Art. 39(2)).
DurationUntil it enters the public domain.Same, but often enforced also by contract terms.
RemediesInjunction, 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

7. The Indian position

India has no trade secrets statute. Protection rests on contract, equity and the common law:

Reform. The Law Commission of India, in its 289th Report on trade secrets and economic espionage (2024), recommended a separate statute defining trade secrets, providing civil remedies and whistle-blower exceptions. Against a statute: equity already works, and a rigid definition may narrow protection. For it: foreign investors want certainty, criminal sanctions for industrial espionage are absent, and courts differ on standards. Use this debate to end the answer.

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.