By, Adarsh Vijayakumaran

Introduction[i]

The fast-growing technological advancement in India has made it necessary for the divine aura of intellectual property rights to include in its ambit the use of programmes and software. The RBI’s annual survey report of 2017-18 shows that the export of India’s software services increased by 11.6% to $108.4 billion.[ii]  The software is a pre-programmed functionary intended to perform a set of specific authorization. The fierce market competition has made software vulnerable to unnecessary economic losses and their ephemeral life prone to piracy and being copied. Section 2 (o) of the Copy Rights Act, 1957 includes computer programmes under the vague ambit of “literary works.” However, the law related to trade secrets regarding the use of software lacks a body. A trade secret is an intellectual property in the form of a formula or compilation of information used by businessmen for gaining an economic advantage over competitors or customers.[iii] Absence of trade secret has posed a crucial challenge against the safeguarding of valuable business information.

Trade Secret Protection in India

India lacks an express trade secret law, but the judicial prudence and Common law principles have always filled the vacuum. In a famous judgment of Govindan v. Gopalakrishna,[iv] the apex court held that – even if the originality in a person’s compilation is small, it is protected by law, and no person may steal another’s intelligence. The question regarding the copyright cases had mostly been concerning the substantial copying and, as to what portion of copyright protection falls under copyright protection.[v] In R G Anand v. Delux Films,[vi] the Supreme Court, in addition to the ‘look and feel test’ also delved into the ‘abstraction test’ of Nichols v. Universal Pictures.[vii] The Court found no violation of copyright and concluded that there was nothing to show the similarities of the defendant’s work were the result of copying, but the result of the common theme of both the workers.[viii] This precedent was followed in many other cases, also. Thus the Copyright Act does not protect the idea but the expression of it, and therefore, a trade secret law can be used to fill the gaps and afford the software developer more expanded protection.[ix]

Absence of legislation in trade secret law is perhaps one of the significant areas, where IPR laws in India is profoundly behind.[x] India is in dire need of trade secret laws, especially for protecting the software trade secrets. In its absence, software marketing has been facing significant weakness. Any enactment in this aspect would open doors to significant advancement, which is a significant need for this “make in India”[xi] era.

Software Trade Secret Laws Abroad

United States of America

The United States’ jurisprudence on the trade secret provides a perfect ambience to incorporate the rarity of the trade secret. The Thirty-six states of USA have ratified the Uniform Trade Secrets Act, 1970 (UTSA) with certain modifications. The UTSA gives due regard to the pillar elements of secrecy, novelty, economic value and business advantage requirement; and reverse engineering. The efforts required to maintain secrecy must be “reasonable under the circumstances;”[xii] Protectable information holds with itself a degree of novelty; In Electro-Craft Corp. v. Controlled Motion, Inc,[xiii] the holding suggests that an employer must have a substantial showing of property rights before it is found to be entitled to trade secret protection; and reverse engineering is the process in which method starts with the known product and move backwards to determine how it was developed.[xiv] The American policies in software protection are somewhat similar to the knowledge looked up by Indian Judges, if India is looking for a holistic follow up on Trade Secret laws, the American’s perhaps would be the best source.

Europe

The ratification of Berne convention was a significant step in the development of Trade Secret laws in Europe. The European Economic Community adamantly focuses on the creation of harmonious development and closer relation among member states.[xv] Internationally the Trade Secret is included under “know-how.”[xvi] In 1993, the commission proposed a less restrictive approach of “know-how,” independently of patent, but they failed to recognise its legal standing.[xvii] Significant questions regarding the trade secret laws of European nations are scattered in treaties and treatises. They would prove as a proficient source of legal knowledge regarding how the law in this genre is to be formulated.

Japan

The Japanese approach to trade secrets is reflected by the civil law pattern of legal development that it has adopted.[xviii] Japan recognises both express and implied contracts, but to protect a trade secret, it is mandatory to show that they have value. For breaches, damages equalling the license fee are made available; and for a criminal sanction, only the person is made culpable[xix] rather than the corporation as a whole. The Japanese law of trade secrets varies considerably in respect to America’s, but the jurisprudential approach that can be incorporated from the Japanese’ is considerably higher than the American’s because Japan has integrated its cultural aspects in lawmaking. Thus, if India requires the best approach to formulate trade secret laws, the Japanese jurisprudence would suit the best.

Conclusion

The Indian Contract Act and the Information Technology Act, in addition to Copyright Act, provides protection to software developers to some extent, but the ambit of protection is narrow and is mostly confined to the parties to the agreement, and is prone to third parties. The Government has to take a pro initiative step in framing a sui generis trade secret law in India.  A trade secret law in deference to these International conventions would be most propitious. Such a law would protect software from the illegal transfer of information and give leeway for innovation and prosperity. However, for the time being, software developers have to take cognisance of existing State Laws with caution and care, until legislation in this regard comes.

 

[ii] Rbi.org.in. (2019). Reserve Bank of India – Annual Report. [online] Available at: https://www.rbi.org.in/scripts/AnnualReportPublications.aspx?Id=1229 [Accessed 25 Jul. 2019].

[iii]Tom C.W. Lin , (2019). [ebook] Available at: https://scholarship.law.ufl.edu/cgi/viewcontent.cgi?referer=https://www.google.com/&httpsredir=1&article=1205&context=facultypub [Accessed 25 Jul. 2019].

[iv] AIR 1955 Mad 391

[v] Microsoft corporation v. Vijay Kaushilk and Anr, 2011 (46) PTC 335 (Del).

[vi] R G Anand v. Delux films, AIR 1978 SC 1613

[vii] Nichols v. Universal Pictures, 45 F. 2d 119, at 129

[viii] Id at 5

[ix]Bender, D. (1990). The More Things Change, The More They Stay the Same: An Unhurried Reflection on Software Protection Over the Years. 16th ed. RUTGERS COMPUTER & TECH. L.J.

[x] Sreenivas N.S. (2007). TRIPS complain intellectual protection in India: implications of trips in modifying cantors and canons of our system.3rd ed. INTELLECTUAL PROPERTY REPORTS

[xi] Pmindia.gov.in. (2019). Make In India | Prime Minister of India. [online] Available at: https://www.pmindia.gov.in/en/major_initiatives/make-in-india/ [Accessed 26 Jul. 2019].

[xii]  E.I. Du Pont de Nemours & Co. v. Christopher, 431 F.2d 1012, 1015 (5th Cir. 1970);

[xiii] In Electro-Craft Corp. v. Controlled Motion, Inc

[xiv] Unif. Trade Secrets Act, § 1(4), 14 U.L.A. 433, 438 (1985).

[xv] Phillips. (1990) Council for European Economic Community issues: amended proposal for software protection directive. 9th ed. Software protection 1

[xvi] Anne C. Keays, Software Trade Secret Protection, 4 SOFTWARE L.J. 577, 596 (1991)

[xvii] Id.

[xviii] Id.

[xix] Id.

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