What often gives a company its greatest value today is its intangible expertise, more than its structure and equipment. Both Coca-Cola’s secret syrup and Google’s search algorithm are carefully guarded to ensure that firms maintain their sustainability over rivals. They are protected due to the existence of trade-secret law. If a group thinks that knowing a certain formula, pattern, compilation, device, or process can help them earn money and if it isn’t publicly known, it may be considered a trade secret. Three things distinguish it: only a small number of individuals are aware of it, privacy actually translates into advantages, and the owner manages everything with rules and technologies to avoid leaks.

Copyrights, patents or trademarks are different from trade secrets, which come into existence automatically, last as long as desired and do not require any registration costs. If piracy or reverse-engineering occurs, the exclusivity of their items is gone, and it becomes very difficult for them to sue. For this reason, skilled firms reinforce their agreements, systems and online security to make weak privacy into a useful barrier.

This blog discusses trade-secret doctrine, shows how it is regulated around the world and in India and offers brief solutions to safeguard trade secrets.

Introduction 

Have you ever wanted to know the secret behind making Coca-Cola? How about Google’s algorithm? Unfortunately, since they are secret, you will rarely find out the answer. To protect their business secrets, businesses of all sizes rely on trade secrets. Is this enough to make the biryani recipe at your mother’s restaurant a trademarked secret? Perhaps, but she would have to do what she could to prevent anyone from discovering the truth. You can keep trade secrets as long as you use them. They require no registration, but once disclosed, they become hard to control.

What is a Trade Secret?

A trade secret includes a formula, pattern, device, idea, or process that gives a business a competitive edge. The information must remain unknown or hard to access. When a company keeps it confidential, it becomes a trade secret.

Main elements of a Trade Secret are:

• Not many people know about it.
• It provides some benefits due to its secrecy.
• You take steps to protect its confidentiality.

A person who obtains or uses this information without permission can be held responsible for a civil (and sometimes criminal) offence. The TRIPS Agreement of 1994, as mentioned in Article 39, requires WTO members to guard against commercial misuse of “disclosed information”. In India, there is no separate “Trade Secrets Act”, but the statutory support for Trade Secrets can be found in the Information Technology Act, 2000 (IT Act). Sections 43,72, and 72A of the Information Technology Act, 2000 (India) make a person liable for unauthorised access or disclosure of confidential records received and obtained by them.

India’s common law recognizes the duty of confidentiality. Higher courts uphold it when they find it in agreements, contracts, or similar situations.

Types of Trade Secret Data are financial data, techniques, formulas, patterns, programs, methods, drawings, processes, and technical data. etc, and some examples of potential Trade Secrets are: 

• A formula for a sports drink 
• Survey methods used by professional pollsters and recipes (food) 
• An invention for which a patent application has not yet been filed
• Marketing Strategies 
• Manufacturing Techniques 
• Computer algorithms  

For instance, among classic illustrations, we have the “7X” Coca-Cola syrup recipe, Google’s constantly evolving search algorithm and other hidden assets such as customer and supplier lists, as well as commercial plans and the company’s specific manufacturing styles. 

The government does not guarantee protection for trade secrets. Their safety depends on continuous secrecy and private enforcement. In contrast, patents and copyrights offer defined legal protection and terms. So, this is the biggest drawback with Trade Secrets as compared to patents and copyrights. 

Now we have a good idea of what a trade secret is, and we know that trade secrets are not as legally protected as patents are. But there are some legal structures for Trade Secret Protection.

International Stance 

• TRIPS Agreement: TRIPS Agreement is part of the World Trade Organisation (WTO) and addresses trade secrets as a main issue. Based on Article 39 of TRIPS, no member country can let trade secrets be taken, used or revealed by others, apart from those with express permission.
• Paris Convention: The Paris Convention adds trade secret protection by mentioning protection against unfair competition. Article 10bis of the Paris Convention explains the scope of undisclosed information protection against unfair competition, and the TRIPS Agreement goes further by protecting such information directly.
• WIPO Treaties: The World Intellectual Property Organisation (WIPO) plays a role in administering international treaties related to intellectual property, including trade secrets. 

Indian Stance 

Although India has no dedicated trade secrets law, existing legal frameworks still protect them.

• The Indian Contract Act, 1872: The Indian Contract Act, 1872 allows companies to enforce confidentiality. They can require employees and others to protect trade secrets through NDAs.
• The Information Technology Act, 2000: The 2000 Act outlines how to protect data. It also establishes cybercrime laws to prevent unauthorized access to trade secrets.
• Common Law Doctrine: Indian courts uphold the common law doctrine to punish those who misuse trade secrets. They can find a person guilty even without a written agreement.

Now, here are some ways to protect Trade secrets. The first and best way is to restrict access to the information, lock it away in a secure place, such as a bank vault, limit the number of people who know the information, and have the people who know the trade secret agree in writing not to disclose the information ( sign a non-disclosure agreement) and anyone that comes in contact with the trade secret directly or laterally sign NDA, also mark any written material about the Trade secret as personal. So, by following the given ways, you can secure your Trade secrets. 

Pros and Cons of Trade Secrets

Now we can discuss about the pros and cons of the Trade Secret. Some of the pros are Unlimited Duration: a trade secret could potentially last longer than a patent (20 years) and a copyright. Your production is theoretically worldwide, no application required, no registration cost, no public disclosure or registration with the government agency, Effective immediately. On the other hand, cons are; maintaining a trade secret is a costly affair. It offers no protection from independent innovation. Non-disclosure of the invention does not give others a chance to upgrade upon the original invention. It cannot be applied to many inventions, for example, equipment, design, plant, varieties, books, etc. 

Case Law

Trade secret protection faces serious challenges despite its advantages. Proving misappropriation is often extremely difficult. If a current or former employee leaks a secret whether out of revenge, profit, or due to job mobility it’s hard to stop or penalize them. In American Express Bank Ltd. vs Ms. Priya Puri (2006), the Delhi High Court dismissed the employer’s injunction and allowed Ms. Puri to use the data. The court held that the plaintiff failed to establish a prima facie case warranting such an injunction.

Emphasising the provisions under Section 27 of the Indian Contract Act, 1872, the court ruled that post-employment restrictions aiming to restrain trade are void unless they fall under specific exceptions. The court found the injunction both unreasonable and unenforceable. It upheld Ms. Puri’s fundamental right to seek employment without excessive restrictions. So we can analyse that the protection for trade secrets is not the same as patent protection or other IP.

Conclusion 

In the end, I will conclude by stating that Trade secrets are a unique way of protecting intellectual property, but they also come with both advantages and disadvantages. Unlike patents and copyrights, they can last forever and do not require any fees or requirement for making information public. The whole process relied on not revealing any information about the trade. Although India doesn’t have laws for guarding trade secrets. The Indian Contract Act, the Information Technology Act, and common law protect them. The TRIPS and the Paris Convention Agreement help to establish a secret protection in numerous  countries. 

Companies must avoid premature publicity, as it can expose them to idea theft. Proving or defending against outright copying is often difficult. The best way to protect trade secrets is through strong security, clear identification of critical information, and well-drafted confidentiality agreements. In today’s era of cyber espionage and employee mobility, maintaining trade secret protection is both crucial and costly.

References

1. American Express Bank Ltd. vs Ms. Priya Puri (2006) IIILLJ540DEL
2. Indian Contract Act, 1887
3. Information Technology Act, 2000 
4. Sharad Vadehra, Sikha Mittal and Rachana Bishnoi / Kan & Krishme Blogs, ‘Trade Secret Protection in India: A Comprehensive guide’ (06 March 2025/ 19 May 2025), https://kankrishme.com/trade-secret-protection-in-india-a-comprehensive-overview/#:~:text=Protection%20of%20Trade%20Secrets%20Bill,disclosure%20would%20harm%20its%20holder  
5. The Coca-Cola Company, ‘Coca-Cola’s Is at the World of Coca-Cola’ (19 May 2025), https://www.coca-colacompany.com/about-us/history/coca-cola-formula-is-at-the-world-of-coca-cola#tabs-5bcbe1efd8-item-bf11d1cc10-tab
6. IPTSE, ‘Understanding Trade Secrets’ (19 May 2025), https://iptse.com/understanding-trade-secrets/
7. TRIPS Agreement, Art. 39 (1994) 
8. Paris Convention for the Protection of Industrial Property, Art. 10bis (1883) 
9. World Intellectual Property Organization (WIPO), (1970)