Law Commission proposal on Trade Secrets Bill 2024 (2024)

Guarding Secrets: Law Commission proposal for Trade Secrets Bill 2024

Introduction

Those who forget history are condemned to repeat it, the Battle of Plassey fought in 1757 which was the turning point of our Indian history was lost because confidential information and war strategy were leaked to the British by the Indian Mughal Commander. With time, safeguarding and protecting trade secrets and information have become important. According to WIPO trade secrets are“Intellectual Property rights in confidential information which may be sold or licensed”[1]. However, keeping in mind the current economic scenario where everything is driven by technology, maintaining confidentiality with just NDAs and contracts seems difficult. Meeting the challenges head-on and understanding the dire need for a codified law that specifically protects Trade Secrets,the 22ndLaw Commission of Indiaheaded by Hon’ble Justice Mr. Ritu Raj Awasthiin its 289th Reporthas proposed theTrade Secrets Bill 2024.

Significance of the Bill

In the report Hon’ble Justice Ms. Prathiba M. Singh of the Delhi High Court in her comment highlighted the increase in the number of cases pertaining to Trade Secrets filed before the Delhi IP Division and the need to have a separate law for the same. [2]At present, India does not have a codified law yet that protects trade secrets. So when issues about trade secrets arise courts in the absence of an act have to rely on precedents, interpretation, and judge-made laws to address such problems.

According to Justice Singh, having a clear law on trade secrets would help companies and businesses keep their secrets safe and understand what remedies are available if someone tries to steal their trade secrets. It would also makebusinessesfeelsafeabout sharing their technology with India. Lastly having a clear law on trade secrets can help India avoid problems when entering into trade agreements with other countries.[3]

The Commission studied the TRIPS Agreement and the obligation of India arising out from it. The commission has also explored the best practices followed in other countries like the UK, USA, EU, and Germany, before proposing the Bill.[4]

Highlights of the Bill

• Definition of Trade Secret

The newly recommended Bill underSection 2(f)defines Trade Secret as any information that is secret in the sense that it is not generally known among or readily accessible to people, derives commercial value on account of being secret, has been subject to reasonable steps under the circ*mstances by the holder of such information to keep it secret and disclosure of such information is likely to cause damage to the holder of such information

• Appropriate Jurisdiction

Section 8of the bill states that all suits on misappropriation of trade secrets should be instituted at the Commercial Courts having jurisdiction.

• Rights of holder of Trade Secrets

Section 3provides that the holder of the trade secret has the right to use and disclose his trade secrets. It gives the holder of the trade secret the right to institute suits in case of misappropriation or disclosure of the trade secret. Further, it states that if the right holder enters into any contract/agreement to safeguard its trade secret, restricts access, or prevents disclosure of such trade secret then he shall be governed by the provisions of the Indian Contract Act, of1872.

• Remedies

Section 7of the act deals with the relief that a court may grant to the Plaintiff in any suit for misappropriation of Trade Secrets, the reliefs include injunction, damages/accounts of profit, destruction of documents, objects, materials, etc., andpecuniaryremedies.

Conclusion

The Law Commission’s effort to recommend the Trade Secrets Bill marksasthe first step in safeguarding trade secrets through a codified law. If this bill progresses and is enacted as an Act this would not only support large corporations but also small businesses like MSMEs and start-ups, leading to enhanced economic growth.

[1] https://www.wipo.int/tradesecrets/en/

[2] 22nd Law Commission of India 289th Report (Part 3) (Para. c)

[3] 22nd Law Commission of India 289th Report (Part 3) (Para.d)

[4] https://indianexpress.com/article/india/law-panel-head-bats-for-robust-legal-framework-in-india-to-protect-trade-secrets-9199005/

Bayer Case Analysis: Navigating Patent Law’s Complexities

By Swaraj singh Raghuvanshi and Bani Mittal

The Hon’ble High Court of Delhi vide its order dated March 13, 2024, delivered a significant ruling in the case of Bayer Pharm Aktiengesellschaft versus The Controller General of Patents and Designs. The Court’s judgment addresses pivotal aspects of patent law and procedure under the Indian legal framework, particularly focusing on the nuanced interpretation of Section 3(e) and 3(i) of the Patents Act, 1970. The Hon’ble Court allowed the appeal filed by appellant and held that the working examples provided in a patent specification are only to demonstrate the workability of the invention and do not define the scope of the patent. The Court ruling emphasized the paramount importance of precise claim interpretation, guided by the description and examples provided in the patent application, thereby reshaping the landscape of patent enforcement and innovation protection in India.

BACKGROUND AND FACTS OF THE CASE:

Bayer Pharm Aktiengesellschaft (hereinafter referred to as “appellant”) filed a patent application, having its application number 5818/DELNP/2006, seeking protection for a multiphase contraceptive formulation. However, the Controller rejected the appellant’s application under Section 15 of the Patent’s Act, 1970, primarily relying on Section 3(e) and 3(i) of the Act.

The Controller of Patents and Designs vide order dated May 16, 2012 refused the appellant’s patent application, citing objections under sections 3(e) and 3(i) of the Patents Act 1970. The rejection as outlined in the impugned order dated May 16, 2012 was based on the failure to demonstrate the synergistic effect of the composition over prior art, and establish that the invention is not a method of treatment under Section 3(i).

CONTENTIONS OF THE APPELLANT

The appellant contended that the procedural fairness was compromised as they were not afforded a fair opportunity to address objections u/s 3(e) of the Act, and the specific ground was not raised in the hearing notice and the lacuna undermines procedural fairness. Further, there was critical misinterpretation of section 3(i) wherein the respondent failed to differentiate between a composition and a method/process treatment.

CONTENTIONS OF THE RESPONDENT

The respondent countered by asserting that the examples conclusively illustrate that the claims of invention relates to a method of treatment, with Claim 1 specifically describing a composition designed for administration. The respondent pointed out that the specification outlined both the composition and a dosing regimen intricately linked to treatment of menstrual cycle disorders.

Furthermore, the respondent countered that the appellant’s classification effectively rendered it as a method of treatment, thereby falling within the exclusion specified u/s 3(i) of the Patents Act.

COURT ORDER

Upon considering contentions from the appellant and the respondent, the Hon’ble Court determined that non communication of objection u/s 3(e) breached the principles of natural justice and constituted procedural irregularities. Additionally, the Court noted deficiencies in the order passed by the Ld. Controller lacking substantive basis.

Concerning Claim 1, the Court observed that it pertained solely to a product rather than a process. Blunt recitations of the unit numbers of component in Claim 1 did not preclude it from patent protection u/s 3(i). Notably, there was neither any reference to disease/treatment nor to any modes/manner.

The Court underscored that patent claims set out the legal limits and extent of protection granted, whereas working example reveals practical implementation of the invention. The working examples illustrated scalability, feasibility, workability and how it can be exercised in practice.

Accordingly, the working example does not define patent scope but bestow support and understanding for the claimed invention. Hence, the rational for applying section 3(i) of the Patent Act was deemed misplaced.

In addition to above, the court cited a prominent case of Societe Des Produits Nestle SA v. The Controller of Patents and Design and Anr. The Court referred to the Manual of Patent Office, Practice and Procedure, and held that the claims in respect of the composition are patentable, and not governed by Section 3(i) of the Act.

ANALYSIS

The Delhi High Court emphasized that the claim 1 did not render the application non-patentable and allowed the appellant’s appeal. The Court set aside the order by the respondent and directed the respondent to provide the appellant a fresh hearing delineating the objections.

AMBIGUITY IN SECTION 3(i):

While the Hon’ble Delhi High Court’s judgement in Bayer Pharm Aktiengesellschaft versus The Controller General of Patents and Designs brings clarity to various aspects of patent law, particularly concerning Section 3(e), it also sheds light on the challenges posed by the interpretation of Section 3(i). The Court’s thorough analysis underscores the significance procedural fairness and substantive examination in patent proceedings. However, the ambiguity surrounding Section 3(i) highlights the complexity of distinguishing between patentable compositions and excluded methods of treatment, As the legal landscape evolves, addressing this ambiguity will be crucial to ensure a balanced approach that promotes innovation while safeguarding public health interest.

Amul: the Taste of India and Its Stalwart Reputation

In a recent judgment, the Hon’ble Delhi High Court’s decision on April 04, 2024, in the case of Kaira District Cooperative Milk Producers Union India Ltd. & Anr. V. D N Bahri Trading as the Veldon Chemical and Food Products & Anr ., has affirmed the strength and recognition of well-known trade marks in India. This recognition is not just a testament to AMUL’s enduring legacy in the Indian market, but also a significant milestone in the realm of intellectual property rights. This article delves into the key points of the case, the legal issue at stake, the court’s decision and the importance of trade mark search under Rule 33 of the Trade Marks Rules.

I. Background of the case

The Petitioner, Kaira District Cooperative Milk Producers Union India Ltd., which operates under the name “AMUL”, had filed a rectification petition under Sections 47 and 57 of the Trade Marks Act, 1999 against D N Bahri trading as the Veldon Chemical and Food Products challenging their registration for the mark provide Registration No. 1182469 in Class 32.

II. Submissions by the Parties

1. On Behalf of the Petitioner

   1. The Petitioner also referred to as “AMUL” (earlier known as ANAND MILK UNION LIMITED), is a well-established name in the Indian market, and has several registrations for the mark AMUL and variations thereof in various classes including Class 32, few of which are tabulated below-

      Registration No.	Application Date	User Claim	Trade Mark	Class and goods	Status
      236457	July 16, 1966	February 15, 1956		CLASS 05 – Infants and invalids foods; and dietetic foods.	Valid and subsisting registration
      810876	July 20, 1998	Proposed to be used		CLASS 32 – Mineral and aerated waters and other non- alcoholic drinks, syrups and other preparations for making beverages.	Valid and subsisting registration

      The Petitioner had demonstrated that AMUL was in all kinds of edible products including non-alcoholic drinks (under AMUL tru), and not just dairy.

   2. The Petitioner’s had argued that “AMUL” is a well-known trade mark, recognized as such since 2011, by the IPAB. They also stated that they have numerous court decisions in their favour granting them special recognition in India and it has become a common household word for dairy products (Gujarat Cooperative Milk Marketing Federation Limited & Ors. v. Maruti Metals ). Apart from the statutory right that flows from the registration, they drew the attention towards the net annual financial report of “AMUL” for the year 2021-22 in sales which were Rs. 46, 480/- crores in 2021-22, the marketing / promotional expenses were in the range of Rs.1,187/- crores.
   3. The Petitioner had claimed that the Respondent’s mark vide Registration No. 1182469 in Class 32 was filed on March 12, 2003, with a user claim of December 1957 however, no supporting documents have been filed in this regard. Therefore, the registration shall be removed under Section 47 of the Act for non-use.
   4. Moreover, it was contended that such goods of Petitioner and Respondent No.1 would be stocked on similar shelves and shops and therefore, the likelihood of confusion is extremely high. Reference was also made to a decision of the High Court of Calcutta in CS/107/2020 dated 22nd March 2021, being Kaira District Cooperative Milk Producers Union Ltd & Anr. V. Maa Tara Trading Co. And Ors. wherein the defendant’s mark was injuncted, where the defendant was using the ‘AMUL’ mark for candles being sold at cake shops and confectioneries.
   5. The Petitioner also placed reliance on a decision of IPAB in “M/S. F K Bearing Machine Co. Ltd. v. M/s. Modern Machinery Stores”, a decision dated December 16^th, 2020 which endorsed that under Rule 33, the Registrar is obligated to cause an extensive search amongst registers/ pending marks for ascertaining whether there is an existing mark on record identical /similar to trade marks sought to be registered.

2. On behalf of the Respondent

   1. The Respondents had argued that their mark is structurally and visually different from the Petitioner’s mark in Class 32-

      

      They further argued that any similarity was purely coincidental, and claimed that their branding strategy was independently developed and did not infringe on the Petitioner’s mark. They had further claimed that the Petitioner’s main area of business is milk and milk products, whereas they deal in mineral aerated water.

   2. They argued that “AMUL” is a generic word and cannot be monopolized as a trade mark as it is derived from the Hindi word “AMULYA”.
   3. The Respondent claimed that their user claim of 1957 precedes the proposed to-be-used claim of the Petitioner in their application filed in 1998 in Class 32, and further claimed non-use against the Petitioner’s registration in Class 32. Further reliance was placed on a decision of the Hon’ble Supreme Court in Nandini Deluxe v. Karnataka Cooperative Milk Producers Federation Limited[1], in particular, paragraph no. 32 to assert that “if a manufacturer has no bona fide intention to trade in goods and articles falling under the same classification, it should not be allowed to enjoy the monopoly in respect of all the articles in the said classification.”
   4. As regards the well-known mark declaration under Section 2 (z) (g) it was only made in 2011 and the Respondent’s impugned mark was already registered much prior and could not therefore be struck off the Register merely on that basis.

3. Issues:

   1. Whether the impugned mark “AMUL” should be removed from the register of trade marks for non-use under section 47 of the Act?
   2. Whether the registration of Respondent no.1’s mark was valid despite the Petitioner’s claim of being a well-known trade mark?

4. Court’s decision:

   1. The Hon’ble Delhi High Court, presided over by Hon’ble Mr. Justice Anish Dayal, ruled in favor of the Petitioner, acknowledging the “AMUL” trade mark’s widespread and long standing significance across the country. The court determined that AMUL mark had developed a distinct reputation and goodwill, warranting broader protection against unauthorized use, including non-competing products. The court noted the distinctiveness of the word ‘AMUL’ as the acronym for Anand Milk Union Ltd. and its recognition as a well-known trade mark in 2011.
   2. The High Court emphasized “…There is little doubt that the trade mark ‘AMUL’ has gained a wide, expansive, comprehensive and nation-wide reputation and products of ‘AMUL’, which have gone far beyond milk and milk products are available not only in shops and retail stores, but also in shops which are operated or franchised by AMUL, selling ‘AMUL’ products exclusively. The mark ‘AMUL’ has therefore acquired huge, undiluted, enduring significance and is relatable to the source of goods of Petitioners. Also, its protection would transcend all classes having been declared a well-known mark…”
   3. Hon’ble Mr. Justice Dayal rejected the Respondent’s plea that “AMUL” was a generic term, emphasizing the mark’s distinctiveness. The court also noted that the Respondent did not submit any documentary evidence to support their claims of using the “AMUL” mark since 1957, whereas the Petitioner has registered for AMUL since 1956 in various classes.
   4. Hon’ble Mr. Justice Dayal also observed that Rule 33 is prefaced by ‘shall’ and is therefore mandatory and also directs the Registrar to search not only the registered marks but also those that have been applied for. Not only that, the mark ‘AMUL’ had a reputation since much before 1998 and it was incumbent upon the Registrar to have taken notice of the many registered marks in various classes.

      

      In view thereof, the rectification petition was allowed, and the Respondent’s trade mark was ordered to be removed from the register of trade marks.

5. Conclusion:

   1. The Hon’ble Delhi High Court’s decision to recognize AMUL as a well-known trade mark, not only honors the legacy of a brand that has become a household name in India but also establishes a legal precedent for the protection of popular and well-known marks. This particular judgment reflects the changing landscape of intellectual property rights in India, providing a framework for robust, comprehensive, and inclusive brand protection. As we move forward, this decision will undoubtedly serve as a cornerstone for future cases involving well-known trade marks, guiding both the judiciary and businesses in their efforts to protect the integrity of brands from infringement in the Indian markets.The Trade Mark Registry has recently included 150 new trade marks that have been officially recognized as well-known. This expanded list underscores the significance and enhanced legal protection for famous trademarks, safeguarding substantial investments companies have made in their businesses.