Guarding the invisible: trade secrets law in India

As economies steadily shift towards knowledge-driven industries in the digital age, the protection of intangible assets – particularly information – assumes greater importance.

Unlike physical assets – which can be identified, publicly recognised, and registered – intangible knowledge-based assets such as formulae, algorithms, chemical processes, secret recipes, manufacturing blueprints, clinical trial data, business strategies, cost and pricing models, projected capital investments, inventory marketing strategies, and client databases derive their worth specifically from being kept secret. A famous example is that of Coca-Cola’s secret recipe, which is very valuable and actively safeguarded through strong efforts to maintain confidentiality.

India became the fourth-largest global economy in 2025 and is the world’s fastest growing major economy, with real GDP growing at 6.5%. As the nation pushes forward with programmes such as Make in India and Digital India, the ability to safeguard proprietary know-how has become closely tied to innovation and long-term competitiveness.

Though India does not have a codified statute on trade secrets, courts in the country have gradually evolved a common law framework grounded in principles of equity, contract, and breach of confidence to safeguard proprietary information.

The primary foundation lies in private contracts. Employers and businesses rely on non-disclosure agreements, confidentiality clauses in employment contracts, and restrictive covenants that limit the post-employment misuse of sensitive information. Complementing this, Indian courts have articulated equitable duties of good faith, recognising that even without express contracts, confidentiality arises where information is shared under circumstances implying trust and confidence.

In Zee Telefilms v Sundial Communications (2003), the High Court of Bombay clarified that the obligation of confidence applies not only to the original recipient but also to third parties who knowingly receive such information, thereby extending protection against broader misuse. In this case, the court held that protection under law is strengthened when there is evidence that the original idea or concept was disclosed in confidence to the defendants, who thereupon developed and used it for their own commercial exploitation.

Whether certain information constitutes a trade secret depends on the facts of each case. However, three elements are critical for protection:

• The information must be secret and not publicly available;

• It must carry commercial value because of its secrecy; and

• It must be actively safeguarded by its owner.

Courts have also held that “routine day-to-day affairs of [an] employer which are in the knowledge of many and are commonly known to others cannot be called trade secrets”.

The Supreme Court of India, in the case of Niranjan Shankar Golikari v Century Spinning & Manufacturing (1967), has upheld the enforceability of post-employment confidentiality obligations, clarifying that they remain valid so long as they are designed to protect trade secrets rather than unduly restrict professional freedom.

Subsequent cases have expanded on the ambit of what counts as protectable information. In Bombay Dyeing and Manufacturing v Mehar Karan Singh (2010), the plaintiff had purchased software at a cost of INR 10 million and shared a manual of customised software with several employees, including the defendants. The defendant’s act of forwarding the software to a competitor of the plaintiff was held to be trade secret theft. In this instance, the High Court of Bombay outlined the following factors as relevant for classifying information as a trade secret:

• The extent to which the information is known outside the business;

• The extent to which it is known to those inside the business; that is, by employees;

• The precautions taken by the holder of the trade secret to guard its secrecy;

• The economic advantage and the value to the holder in having the information against competitors;

• The amount of effort or money expended in obtaining and developing the information; and

• The amount of time and expense it would take others to acquire and duplicate the information.

Furthermore, the court held that the absence of a specific clause on confidentiality in the agreement between the plaintiff and defendant was not relevant as the latter’s conduct was dishonest.

Trade secret protection provides a set of unique benefits. In industries where innovation cycles are short and technology evolves rapidly, companies rely on trade secrets as a dynamic form of protection. Compared with other intellectual property rights such as copyright, patent, or design protection, one of its strongest advantages is that trade secrets never expire. Protection depends primarily on internal compliance mechanisms such as non-disclosure agreements and robust data security systems.

In India, trade secret litigation demands pleadings that clearly and succinctly establish critical elements. The claimant must:

• Identify the information or data that is intended to be protected;

• Show its confidential nature;

• Assert proprietorship;

• Provide evidence of misappropriation; and

• Demonstrate the resulting harm or damage suffered.

The burden of proof lies firmly on the claimant to make out a prima facie case. In the case of Ambiance India v Shri Naveen Jain (2005), the High Court of Delhi denied an injunction to the plaintiff as the plaint did not specify the information that was sought to be protected as a trade secret. However, the dilemma of how much to disclose is a real one. If the trade secret or confidential information is disclosed with a considerable degree of detail in the plaint, then the lawsuit itself can compromise its secrecy and confidentiality, rendering the suit counterproductive to the objective of protecting the trade secret.

That said, here the court clarified that in a company, employees discharging their duties come across several pieces of information and not all information is a trade secret. For instance, if an employee has acquired business acumen or learnt ways of dealing with customers or clients, the same may not be regarded as secret. Furthermore, employment contracts prohibiting an employee from taking up employment with any past, present, or prospective customer of the employer for the next two years are an ‘arm-twisting tactic’, and such contracts are against public policy and void.

Misappropriation of a trade secret is understood broadly as the unauthorised acquisition, use, or disclosure of confidential information. Notably, Indian courts do not automatically presume that former employees will misuse proprietary information after leaving a company. The High Court of Delhi has recently clarified this position in two rulings.

In a significant case involving trade secrets in a client database and copyright in artistic works, Arjan Dugal & Anr. v Shubham Gandhi & Anr. (2025), the High Court of Delhi granted an ex parte ad interim injunction restraining the defendants from manufacturing, selling, or marketing garments alleged to have infringed the plaintiffs’ works. The plaintiffs contended that a former employee misappropriated proprietary design techniques, confidential methodologies, and a database of nearly 6,000 clients to set up a competing label. Recognising the sensitivity of the client database as a trade secret, the court allowed it to be filed under a sealed cover, and, subsequently, prohibited its misuse. Additionally, a local commissioner was appointed to inspect and seize infringing goods, lookbooks, fabrics, packaging, and digital records.

In Varun Tyagi v Daffodil Software (2025), the High Court of Delhi evaluated post-employment restrictions. Emphasising the balance between protecting proprietary interests and the fundamental right of an employee to work, the court held that non-compete clauses are unenforceable when they are unreasonable. It clarified that an employee cannot be confronted with the situation where they have to work for the previous employer or remain idle. In employer–employee contracts, the restrictive or negative covenant should be viewed strictly, as the employer has an advantage over the employee, and it is quite often the case that the employee must sign a standard-form contract or not be employed at all.

Meanwhile, in October 2025, a Division Bench of the High Court for the State of Telangana, in Venkateshwarlu Guduru v Siddhardha De Bathula, set aside an order of injunction granted by the Commercial Court, finding it overly broad and unsupported by evidence. The plaintiffs, engaged in oil seal manufacturing, alleged misuse of customer lists, purchase orders, and manuals by former associates but failed to identify any specific trade secrets or show steps taken to protect them. The court held that the single judge’s blanket restraint, based only on a commissioner’s inventory of documents, lacked specificity and unfairly restricted the defendants’ right to trade.

In terms of reliefs that may be sought in a lawsuit involving trade secrets, courts can grant:

• Injunctive relief (both interim and final);

• Compensatory damages (which may include actual losses), as well as punitive or exemplary damages in cases of particularly egregious conduct; or accounts of profits wrongfully earned through misuse of trade secrets;

• Orders directing the return, destruction, or sequestration of misappropriated confidential information; and

• The appointment of local commissioners to seize evidence, facilitating swift action to prevent further misuse and to gather proof.

Since India does not have courts dedicated exclusively to trade secret matters, such disputes are commonly handled by Commercial Courts constituted under the Commercial Courts Act, 2015. To safeguard sensitive information during litigation, courts often employ procedural mechanisms such as:

• Sealed covers;

• Confidentiality clubs limiting access to protected materials; and

• In camera hearings that prevent public disclosure.

Furthermore, though India lacks a dedicated penal offence for trade secret theft, prosecutors and complainants typically proceed under general criminal laws for theft, dishonest misappropriation, criminal breach of trust, and cheating, as well as under the Information Technology Act, 2000 for receiving stolen computer data, impersonation-based cheating using computer resources, and breaches of confidentiality or privacy. Where software or creative code is involved, copyright provisions may also be invoked.

Civil and criminal proceedings can run in parallel, allowing courts to grant swift interim injunctions and preservation orders on the civil side while criminal complaints move forward.

The May 2025 antitrust litigation decision by the Paris Court of Appeal involving Swiss watchmaker Rolex demonstrates how trade secrets can play a crucial role in the retail sector to sustain competitive advantage and brand equity. Here, the court upheld the confidentiality of Rolex’s production, sales, and availability data from 2018 onwards, recognising such information as vital trade secrets underpinning the brand’s strategic market positioning.

However, the court rejected Rolex’s claim to indefinite confidentiality for data older than five years, invoking the ‘five-year presumption’ increasingly prominent in European jurisprudence. Under this principle, business information older than five years is presumed to have lost its confidential status unless the claimant proves its ongoing commercial sensitivity.

A related facet is that of repelling cyber-attacks. Taking another example from the luxury goods world, Cartier’s June 2025 breach compromised customer names and contact details across several jurisdictions. Attackers deploy ever-evolving techniques, and stolen customer data can be used to impersonate legitimate companies and trick victims into giving away more sensitive data in the future, with cyber-criminals often content to play the long game.

Data indicates that India was the second most targeted nation for cyber-attacks in 2024. In the face of such threats, responding effectively is a sine qua non to preserve brand reputation. This demands a multipronged approach. Businesses must implement rigorous internal controls, including sensitive data classification, strict enforcement of non-disclosure agreements, zero-trust network architectures, and robust encryption in storage and transmission. Continuous employee training is critical to reduce human error – the most commonly exploited vulnerability. Complementing this, robust incident response plans and cyber resilience exercises ensure swift breach detection, containment, and remediation, minimising financial loss and brand damage.

This growing awareness is driving increased investment in AI-enabled cybersecurity solutions and specialised expertise tailored to the relevant sector’s distinctive vulnerabilities.

India’s trade secret regime is maturing through case law and procedural tools, but key gaps persist. Chief among them is the absence of a dedicated statute, which leaves outcomes to judicial discretion, produces inconsistent damages awards, and means the regime struggles with cross-border misappropriation in a digital, global economy.

The 22nd Law Commission of India issued a report titled Trade Secrets and Economic Espionage (along with a draft bill – Protection of Trade Secrets Bill, 2024) on March 5 2024 to recommend a sui generis legal framework to adjudicate claims related to trade secret disclosure. Commentators observe that such a law would offer companies clarity on the protection of confidential information; increase industry confidence and enable technology transfer to India; and facilitate negotiation of free trade agreements, where the absence of a clear law on trade secrets is often a point of concern.

Though still under refinement and not yet enacted, such a piece of legislation – paired with robust internal controls and evidence-ready secrecy measures – will shape how Indian enterprises innovate, collaborate, and compete in the years ahead.