Patents and trade secrets are the only two forms of protection available in the intellectual property regime that protect information. But the same innovation cannot enjoy protection under both forms of rights. Once a particular invention is patented, then the patentee cannot seek to protect the same invention and the information disclosed in the patent as a trade secret or confidential information by using a know-how agreement. While this is an established jurisprudence, what happens when information related to the patented innovation which is not disclosed in the patent is brought under claim for protection as trade secret? The Delhi High Court has answered this question while discussing the interplay between patents and trade secrets in the Indian jurisdiction its latest Judgment in Prof. Dr. Claudio de Simone v. Acital Farmaceuatica Srl [1].
In this case, the plaintiff was the owner of a patented formula for a drug under the US Law. He entered into a patent licence agreement with one of the defendant companies to manufacture and import the drug into India. He separately entered into a know-how agreement with the defendant for the information on the strain selection and the blending ration of the bacteria which was maintained as a trade secret and was not disclosed in the patent. With regards to India, the plaintiff did not have a corresponding Indian patent for the drug formula and just entered into a know-how agreement with the defendant. Once the US patent expired, the know-how agreements were also terminated by the plaintiff due to the cheaper ingredients used by the defendants without his approval. Thereafter, the defendant group manufactured their own product similar to that of the plaintiff claiming it to be the same as the plaintiff’s formula. The plaintiff moved to the court for an injunction of the same. The Delhi High Court had to now analyse “whether an invention which does not qualify as patented product and has no property right therein, can acquire property rights by the third person entering into an agreement of exchange of Know-How and thus claiming confidentiality”. The plaintiff aimed to protect the information about the strain selection and blending ration which was not mentioned in the patent as a trade secret in India.
The Delhi High Court held that the information about the strain and blending ration cannot be protected as a trade secret. The ration was that once the patent over the invention has expired, all the information related to the innovation has gone into the public domain and hence no information related to the innovation can be protected as a trade secret.
Though both patents and trade secrets are IP rights that protect information, it has been long established that the decision to choose between patents and trade secrets does not necessarily have to be an “either-or” situation for the inventor. Under the layered approach for protection of innovations, both the patents and the trade secrets can be used to protect different aspects of the same invention. It has been understood widely that even after a patent application is published, patent protection and trade secrets are mutually exclusive. Both forms of protection can be pursued and should be considered for protecting valuable innovation. Hence, a more important inquiry is to decide which aspects of an invention to patent and which aspects to protect as trade secrets as both offer different types and levels of protections, and a company can use both to maximise the benefits afforded by these protections. This approach has been approved in many foreign jurisdictions as in Wyeth v. Natural Biologics Inc[2], wherein, a pharmaceutical company protected the method of manufacturing the product as a trade secret even after the patent had expired. The California Court in Altavion, Inc. v. Konica Minolta[3] has also held that if a patentable idea is kept secret, the idea itself can constitute information protectable by trade secret law.
In contrast, in the present case, the Delhi High Court cited Navigators Logistics v. Kashif Qureshi[4] to hold that trade secrets and confidential information are not equated to property in India. The Court rejected the possibility that a patent can be different from know-how and trade secrets by explaining Section 10 of the Patents Act[5] which requires the invention to be “describe(d) sufficiently to indicate in the title the subject-matter to which the invention relates and to fully and particularly describe the invention and its operation or use and the method by which it is to be performed, the best method of performing the invention which is known to the applicant…”. The Court used the provisions of the Patents Act to state that all the information related to the functioning and the operation of the innovation are presumed to have been disclosed in the patent and hence once the patent expires, the entire information transfers to the public domain and no trade secret and know-how can be claimed on any information relating to the patent thereafter. The Court has in effect rejected the usage of the layered approach of innovation protection which has been firmly upheld in the foreign jurisdictions. The Court only holds good an ideal scenario in which the method of working described in the patent is the only method of operation of the innovation and there is no separate know-how for the successful implementation of the innovation. With due respect, in our opinion the independent understanding of patents and know-how has been blurred by the Court. The “best mode” of operation which is required to be disclosed under the patent may not be the most convenient commercially viable method of operation of the innovation and this possibility has been overlooked by the court. The Indian IP protection regime can seek light from the foreign jurisprudence, wherein the layered approach has been upheld and fetch clarity amidst this conundrum.
The intersection of patents and trade secrets can be described as a fine balance between disclosure and secrecy. The Indian IP domain still has enough room for discussion with respect to the aspect of protection of information under both patents and as trade secrets especially after the rejection of the layered approach of innovation protection by the Delhi Court. Furthermore, the position of India with respect to trade secrets is not clear as there is no proper law implemented with regards the same and hence, the law should be made for better understanding which further should also be able to provide more clarity to the IP regime that protects information.
*Final year and penultimate year students (resp.) from NALSAR University of Law, Hyderabad
[2]395 F.3d 897 (8th Cir. 2005).
[3] 226 Cal. App. 4th 26, 171 Cal. Rptr. 3d 714 (2014).
[5] The Patents Act, 1970, No. 39, Acts of Parliament, 1970 (India).