Law Commission recommends new law to protect trade secrets

Currently, India lacks a specific law for the protection of trade secrets. Instead, they are safeguarded under the general laws governing contracts, common law, criminal law, and principles of breach of confidence and equity.

However, the 289th Law Commission Report, published on Tuesday on ‘Trade Secrets and Economic Espionage’, states that the reference to the commission arose after deliberations in the government, where the need for legislation on the subject was felt.

Subsequently, the Department of Legal Affairs and the Legislative Department examined the issue of enacting the Economic Espionage Act and Trade Secrets Protection Act and prepared a concept paper along with a draft cabinet note and a draft Bill, the report states.

However, owing to the inherent complexities of the subject matter, the matter was referred to the Law Commission through a letter in October 2017, requesting it to examine the possibility of enacting the laws and ensure a thorough evaluation.

In an opening letter to Union Law Minister Arjun Ram Meghwal, the Law Commission states that after extensive deliberations with domain experts from different spectrums like the judiciary, academia, government, and industry, it undertook a comprehensive study of the law on trade secrets and economic espionage.

While doing so, the Commission has looked at the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement and India’s obligations arising from it. It has also explored the development of laws relating to trade secrets and economic espionage in other jurisdictions like the UK, USA, EU, and Germany while proposing a draft Protection of Trade Secrets Bill, 2024.

The concept of trade secrets first came to the limelight in 1977 when the government asked Coca-Cola to hand over the formula for its cola drink, which led to the company exiting India to re-enter only a decade later.

However, the National Intellectual Property Rights Policy, 2016, and the Parliamentary Standing Committee Report have brought back focus on the need for introducing legislation to deal with trade secrets, the report informs.

On the subject of economic espionage, the report states that “even trade secrets held by the Government of India have been consistently targeted by foreign governments in acts of active and passive economic espionage”, and hence, there is a need for a single statute to address “all issues related to trade secret leakages and economic espionage”.