The modern age drives economies on technology, and businesses’ most valuable assets are now mostly intangible—such as algorithms, customer data, internal processes, pricing models, product roadmaps, source codes, etc. They are the cornerstones of competitive advantage in contemporary commerce. However, these assets are not always protectable under traditional forms of intellectual properties—therefore, these are clubbed into a category of their own—trade secrets—a form of intellectual property based on confidentiality rather than registration.  

However, India does not have a dedicated statute governing trade secret. Nevertheless, Indian law provides robust protection through a combination of contractual safeguards, equitable principles, and judicial precedents. For technology companies, understanding and leveraging these mechanisms is essential to safeguarding proprietary information. 

In the technology sector, trade secrets commonly include: 

  • Software source code and proprietary algorithms 
  • Machine learning models and training datasets 
  • System architecture and infrastructure design 
  • Product development strategies and research pipelines 
  • Customer databases and analytics frameworks 

Unlike patents, which require disclosure in exchange for time-bound exclusivity, trade secrets can theoretically enjoy perpetual protection, provided secrecy is maintained. 

What are Trade Secrets? 

“Trade secret” is defined in Indian Farmers Fertiliser v Commissioner of Central Excise (2007), as follows: 

“A trade secret is a formula, practice, process, design, instrument, pattern or compilation of information used by a business to obtain an advantage over competitors within the same industry or profession.” 

Therefore, trade secrets are confidential business information, that is—not publicly known; confers economic or strategic advantage; and is subject to reasonable efforts to maintain secrecy.  

The Bombay High Court in Beyond Dreams Entertainment v. Zee Entertainment Enterprises (2016) construed conditions for any information to qualify as confidential to the effect of being a trade secret:  

  1. The information itself must be confidential in nature 
  2. The information is communicated/imparted to the confidant under circumstances which cast an obligation of confidence on him; a relationship of confidence exists between the parties 
  3. The information must be shown to be used/threatened to be used by the confidant without authorisation.  

What is not Trade Secret?  

In Ambiance India v. Naveen Jain (2005), the Delhi High Court held that routine day-to-day affairs of employer which are in the knowledge of many and are commonly known to others cannot be called trade secrets. A trade secret can be a formula, technical know-how or a peculiar mode or method of business adopted by an employer which is unknown to others. 

In a business house, the employees discharging their duties come across so many matters, but all these matters are not trade secrets or confidential matters or formulae, the divulgence of which may be injurious to the employer. If the defendant on account of his employment with the plaintiff has learnt some business acumen or ways of healing with the customers or clients, the same do not constitute trade secrets or confidential information, the divulgence or use of which should be prohibited. 

The Bombay High Court in Star India Pvt. Ltd v. Laxmiraj Seetharam Nayak (2003), held that any one in any employment for some period would know certain facts and would come to get some information without any special efforts; cannot be said to know trade secrets or confidential information. Every information or general knowledge of facts cannot be labelled as trade secret or confidential information.

When Information = Trade Secret?

In Bombay Dyeing v. Mehar Karan Singh (2010), the Bombay High Court held that for information to be classified as a trade secret, the following factors may be considered: 

  1. The extent to which the information is known outside the business. 
  2. The extent to which it is known to those inside the business i.e. by the employees. 
  3. The precautions taken by the holder of the trade secret to guard the secrecy of the information. 
  4. The savings effected and the value to the holder in having the information as against competitors. 
  5. The amount of effort or money expended in obtaining and developing the information; 
  6. The amount of time and expense it would take for others to acquire and duplicate the information. 

India’s Unique Legal Position: No Dedicated Trade Secret law

India is a signatory to the WTO Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS), which requires member states to protect undisclosed information. However, India has not enacted a standalone legislation to implement trade secret protection. Instead, the protection framework has evolved through:  

  • The Indian Contract Act, 1872 
  • Principles of equity and breach of confidence  
  • Select provisions of the Information Technology Act, 2000 
  • Select provisions of the IPR laws 
  • Select provisions of Criminal laws 
  • Judicial precedents developed by High Courts and the Supreme Court 

Indian courts have consistently acknowledged the commercial value of confidential information and granted relief against its unauthorised disclosure or misuse.  

The 22nd Law Commission of India issued a report in 2024—Trade Secrets and Economic Espionage, to recommend new legal framework to adjudicate claims related to trade secrets. The report also recommended a new statute—Protection of Trade Secrets Bill, 2024, wherein it was stated that it is a bill to provide for effective protection of trade secrets against misappropriation so as to encourage innovation and fair competition.  

Dr. Sudipta Banerjee v. LS Davar & Co., (2022), highlighted how the Indian courts apply multiple legislations and judicial principles in deciding the matters pertaining to trade secrets. Injunction order was issued against former employees of a law firm, for disclosing trade secrets and confidential information acquired over the course of their employment. The Calcutta High Court stated that the ex-employees might not possess ‘trade secrets’ in the traditional sense, however, as long-associated members, they would certainly have access to privileged information. The Court implemented the principles and provisions of the Contract Act, English common laws, and Intellectual Property laws to come to their conclusion.  

Legal Foundations of Trade Secret Protection in India 

1. Contract Law as the Primary Safeguard

In India, contractual obligations form the cornerstone of trade secret protection. Businesses typically rely on:  

  • Non-Disclosure Agreements (NDAs) 
  • Confidentiality clauses in employment agreements 
  • Non-use and non-solicitation clauses 
  • Technology licensing and joint development agreements 

These contracts create enforceable obligations under the Indian Contract Act, allowing the aggrieved party to seek damages, injunctions, or specific performance in case of breach. Courts have consistently upheld confidentiality clauses.  

The parameters for determining whether the rights-owner of a trade secret has taken reasonable measures for protection of their trade secret vary from case to case. While there is no “straight jacket” formula, the following are a few illustrative measures that a rights-holder can adopt. 

It is reasonable for owners of trade secrets to insert clauses into a technology transfer or other licence agreement, stating that the technology transferred is of a confidential nature and that the licensee is obligated to maintain confidentiality, during the pendency as well as after its termination. 

Moreover, the owner may mandate the licensee to enter into appropriate secrecy agreements with their employees, subcontractors and visitors to their factory, to maintain secrecy about such trade secrets. Owners of trade secrets may even insert a cautionary notice into all technical manuals clearly stating that the information contained therein is of a proprietary and confidential nature. Trade Secrets 2025 – India | Global Practice Guides | Chambers and Partners 

2. Equitable Doctrine of Breach of Confidence 

Even in the absence of an express contract, Indian courts may intervene where confidential information is disclosed in circumstances implying trust. This principle, derived from English common law, recognises that a person receiving confidential information cannot use it to the detriment of the party who disclosed it.  

The judiciary has applied this doctrine to protect business plans, software designs, and proprietary processes shared during the negotiations, employment or collaborative arrangements.  

The Calcutta High Court in Hi-Tech Systems & Services Ltd v. Suprabhat Ray (2015), held that, if the plaintiff (owner of confidential information) is able to prove that there is an imminent danger/apprehension of injury, and disclosure of such information shall cause irreparable damage, and monetary compensation shall not be adequate; the principles of equity shall apply in such a situation, in order to prevent any damage being caused to the plaintiff.  

3. Civil Remedies, Criminal Actions and Other Statutes 

Trade secrets disputes are also contestable under the domain of ‘misappropriation’. Misappropriation can also be criminally contested under Sections 2(36) and 2(37) of the Bharatiya Nyaya Sanhita, 2023, dealing with “wrongful gain” and “wrongful loss”.  
Further, Section 63 of the Copyright Act also makes copyright infringement punishable with imprisonment up to three years and a fine of up to 2 lakh rupees.   

Furthermore, in pursuance of a civil action, the Courts may grant the following reliefs:  

  • Interim and permanent injunctions 
  • Damages for economic loss 
  • Orders preventing further disclosure or use of confidential information 

These remedies are particularly crucial in technology sector, where disclosure of source code or algorithms can cause irreversible competitive harm.  

4. Information Technology Act, 2000 

If misappropriation has been caused through computer resources, it will attract the provisions of the Information Technology Act, 2000— 

  1. Section 66B—Punishment for dishonestly receiving stolen computer resources or communication devices; either imprisonment for up to three years, or a fine up to one lakh rupees, or both 
  2. Section 66D—Punishment for cheating by personation using computer resources; either imprisonment up to three years, or a fine up to one lakh rupees, or both 
  3. Section 72—Penalty for breach of confidentiality and privacy; imprisonment up to two years, or a fine up to one lakh rupees, or both 

Judicial Recognition of Trade Secrets in India 

Indian courts have repeatedly affirmed that confidential commercial information is worthy of legal protection. Landmark decisions have clarified that:  

  • Trade secrets need not be registered to receive protection 
  • Confidentiality obligations survive termination of employment 
  • Misuse of confidential information constitutes a civil wrong even without explicit contractual terms.  

Through these decisions, the judiciary has effectively created a functional trade secret regime in the absence of legislation.  

Superintendence Company of India Pvt. Ltd. v. Krishan Murgai (1980) 

In this case, the company was a valuation and survey firm, that had developed proprietary testing techniques. When a former employee created a competing business, the company sought an injunction and damages as per the restrictions in the employment agreement during his tenure.  

The Supreme Court of India held that under Section 27 of the Indian Contract Act, any post-service restrictive covenant that extends an obligation beyond the termination of employment is void. However, the Court distinguished general professional skills and specific proprietary knowledge. Such specific proprietary knowledge can be protected through negative covenants especially made for protecting genuine trade secrets/confidential information even after the conclusion of employment.  

John Richard Brady v. Chemical Process Equipments Pvt. Ltd. (1987) 

The plaintiff invented a fodder production unit and shared its respective drawings, specifications, technical know-how to the defendant, to purchase specialised components, without a formal confidentiality contract. No order was placed with the defendant, and it was later found that they had built their own fodder unit based on plaintiff’s information. The Delhi HC granted injunction under broader principles of equity, holding that trade secrets are protected irrespective of a contract. It was confirmed herein that protection of confidential information in a business transaction is not dependant on a written agreement—but arises from the relationship itself. 

Burlington Home Shopping Pvt. Ltd v. Rajnish Chibber (1995) 

The Delhi High Court extended trade secret protection to a compiled customer database of a mail-order company, a former employee of which had copied the same and began competing with the company. The trade secret was granted in the domain of copyright as the database qualified as literary work. The Court further held that such data was independently also protected by confidentiality and trade secret principles. An interim injunction was granted, holding that information of the nature as contained within the customer database would cause real and significant harm to the company, if disclosed to a competitor, and therefore qualifies as trade secret.  

American Express Bank Ltd v. Priya Puri (2006)  

American Express Bank sought a permanent injunction against a former employee to prevent the use/disclosure of confidential information and solicitation of their customers. The Delhi HC held that Section 27 of the Indian Contract Act restricts any restrains on trade post-employment (except specific and narrow exceptions). The Court differentiated—general knowledge and experience (which a person is always free to carry and use), and—specific, identifiable trade secrets (which may attract protection).  

Navigators Logistics Ltd. Kashif Qureshi (2018) 

The plaintiff company sued its former employees, alleging proprietary data leakage (customer lists, internal communications) to competition. The company claimed copyright infringement and breach of confidentiality. The Delhi HC found—no valid copyright over alleged leaked data as it did not meet statutory standard; and non-compete clauses in the employment agreements, violating Section 27 of the Contract Act.  

Escorts Construction Equipment Ltd v. Action Construction Equipment Pvt. Ltd. (2016) 

The Delhi HC held that the primary ground for protection of a confidential information is for it to be confidential in nature; a formal contract to obligate non-disclosure is not always essential.  

The three situations recognised are: first, where confidential information is exchanged and the contract is silent on its treatment; second, where the defendant obtained the information — directly or indirectly — with or without consent; and third, where a party receiving confidential information is bound to maintain secrecy regardless of whether any contract existed. Indian courts have consistently relied on this framework to extend protection in fiduciary and commercial relationships beyond formal employment settings. 

The Technology Sector: Why Trade Secrets Matter More than Ever 

Technology companies are uniquely dependent on trade secrets, because:  

  1. Many innovations, such as algorithms and AI models, are difficult to patent or disclose without revealing core value. 
  2. Development cycles are rapid, making the patent process commercially and financially impractical. 
  3. Competitive advantage often lies in data, architecture, and internal workflows rather than in patentable inventions.  
  4. Life is indefinite, subject to secrecy, unlike patents, that have an expiration date 
  5. Subject matter of trade secret is varied, not everything qualifies for protection under other forms of IP—patents, copyrights, etc.  
  6. Inventions are now exposed to a non-human entity- Artificial Intelligence, which may be used to execute trade secret theft. Assignment and determination of AI actions remain a legal challenge  
  7. Globalisation might impact all sectors; however, the contemporary world is involved in a silent race towards technological superiority. Therefore, cross-border misappropriation of trade secrets is an imminent threat to innovation at home. Extraterritorial enforcement and safeguarding are another added challenge.  

Trade secrets constitute a majority of enterprise value for a most startups and SaaS companies in India. Even computer software qualifies for IP protection under Section 13 of the Copyrights Act, 1957, that labels computer programme as a ‘literary work’.  

Recently, in HCL Technologies v. Sanjai Ranganathan (2023), a Commercial Court held that an employee of a company cannot copy/transfer any data of the company without the company’s permission, into their personal email account. Discounting such practice could be seriously prejudicial to the functioning enterprises, should issues of confidentiality arises in future.  

How Contracts safeguard Trade Secrets 

As we have already established that India does not have a statutory protection for trade secrets, therefore, solid, fool-proof contracts become the primary instruments of risk management for businesses. Here are the different types of contracts that may be employed by a business to safeguard its trade secrets.  

Employment Agreements:  

Employment Agreements are not only a norm, but a necessity. It is especially beneficial for businesses to—  

  • Concretely define and demarcate “confidential information” 
  • Precisely stipulate post-employment confidentiality obligations 
  • Clearly identify IP ownership and its assignment mechanisms 
Vendor and Contractor Agreements:  

Not the most common form of agreements used, however, when a vendor-contractor relationship exists, these absolutely serve their worth if drafted keeping in mind— 

  • Purpose-specific disclosure and post-fulfilment restitution/deletion 
  • Audit and inspection rights of disclosure and restitution obligations fulfilment 
  • Data security obligations 
Technology Licensing and Collaboration Agreements: 

Most used by tech businesses, especially where products are co-produced under a collaboration. The highly successful stipulations to be added are— 

  • Restrictions on reverse engineering 
  • Confidentiality survival clauses 
  • Clear ownership of improvements and derivatives 

Courts in India often examine whether a company took “reasonable steps” to protect its information. The presence of structured contractual safeguards significantly strengthens enforceability.  

Therefore, in addition to fool-proof contractual measures, business houses are also advised to build clear, comprehensive policies and procedures that most exceptionally define what qualifies as confidential information, outlining the employee/associates’ obligations in safeguarding such information. Awareness and education development sessions are also instrumental for enhanced compliance obligations and legal/commercial ramifications in instances of breach.  

Challenges in Enforcing Trade Secrets in India 

Despite judicial support, businesses face practical challenges:  

  • Absence of criminal remedies in many cases 
  • Evidentiary difficulty in proving misappropriation 
  • Strict interpretation of Section 27 of the Contracts Act (restricting non-compete clauses) 
     

1. Lack of Dedicated Legislation 

An absent legislation dedicated to trade secrets creates ambiguity in determination of ‘trade secrets’, and every qualification must be decided on a case-by-case basis. This makes every judicial process very exhaustive. The current reliance on a patchwork of legislations and doctrines often lead to unpredictable judicial outcomes.  

There is no primary/secondary mention of ‘trade secrets’ in any Indian legislation as well. This is particularly challenging for the tech sector as it is largely driven on innovation and proprietary information that comes with it.  

2. Procedural and Evidentiary Difficulties  

When pursuing civil remedies, enterprises are often engulfed in lengthy litigation, that poses a significant risk of prolonged exposure of the confidential information in dispute. Further, in pursuance of any criminal trial for misappropriation, the victim is often required to demonstrate with strict scrutiny, the nature of the information in dispute to have been ‘confidential’.  

3. Contractual Safeguards Implementation 

While contractual safeguards are the first line of defence against the misappropriation of any trade secrets, and are the most popular choice as well, however, they often face a recurrent challenge—scope specification of confidential information. If a contract fails to specify such scope, it is very likely that very vague and wide conditions might be imposed within the contact, that may attract the exceptions of Section 27 of the Contract Act, 1872. These factors make proactive contractual drafting and internal governance indispensable.  

Conclusion 

India does not have a dedicated statute governing trade secret, but its current legal system—grounded in contract law and principles of equity—still offers substantial protection for confidential commercial information. For technology firms, safeguarding such information depends less on statutory provisions and more on carefully drafted agreements, robust internal governance, and forward-looking legal strategies. 

Accordingly, law firms working with tech companies should look beyond traditional intellectual property registration and prioritize building strong confidentiality regimes capable of standing up in court. In an environment where competitive strength often depends on intangible and undisclosed assets, trade secrets are both highly exposed and immensely valuable, making their protection an essential element of contemporary legal planning. 

Tech dynamics are also expanding the scope of tech-deceit in forms of added means of illegal survey, divulgence, acquisition, and copying confidential information/trade secrets. What exacerbates the situation is a globalised setup, that facilitates trade and (corporate) treason alike. Cross-border litigation and remedies (enforcement) are extremely challenging as law application, legal methodologies and jurisprudence might vary.