Probing The Ringfence – Examining The Interface Of Patents And Trade Secrets In India

INTRODUCTION

Fostering competitive and innovative scientific temperament has been a cardinal aim of intellectual property protection for inventions. Competing regimes of patents in India and trade secrets have given refuge to inventors seeking protection of their inventions and proprietary information. This choice has now become an important decision in business strategy development. However, as inventions continue to increase in complexity, many inventors are now resorting to protect distinct aspects of their inventions through both, patents and trade secrets. Due to their fundamental contrast of disclosure and confidentiality, it was presumed that patents and trade secrets are mutually incompatible. Therefore, the existence of any complementariness between patents and trade secrets would have significant practical implications for inventors and legal practitioners alike. The possibility of integrating the two would have an overreaching impact on the interplay of limited protection and post-expiration competition under India patents law.

UNDERSTANDING THE INTERFACE

Patent protection in India is premised on the trade-off between limited exclusive rights over an invention and disclosure. In other words, inventors are enticed to disclose their inventions publicly in exchange for legal rights that confer exclusive control over the commercial horizons of the invention for a limited period of time. Conversely, trade secrets allow inventors to maintain the secrecy of commercially valuable information linked with inventions. However, unlike patents, they do not protect them from other interested parties who manage to get their hands on the invention through independent discovery or reverse-engineering.

Evidently, both patent and trade secret protection cannot be applicable to the same subject matter. However, the same cannot be said outrightly when different aspects of the same invention are considered. Distinct dimensions of one invention can form the subject matter of either a patent or a trade secret, thereby creating an overlap. Interestingly, doing so is not in violation of the legal policy of disclosure under patents law in India. This overlap becomes permissible since trade secrets can protect undisclosed information regarding the patented invention, which may have significant economic weight. This practice is known as layered protection. It allows inventors to protect all valuable information that has not been disclosed under the rigors of patent law, and to introduce additional dimensions of IP protection. Its validity was recognized in the landmark ruling of Wyeth vs. Natural Biologics Inc, wherein the manufacturing process of a drug was permitted to remain a trade secret, even after the expiry of the patent. This integrated model of protection is now increasingly gaining acceptance and businesses have begun developing their IP strategies keeping in mind the overlapping protection of patents and trade secrets.

However, fears regarding monopolization and the anti-competitive implications of such extended exclusivity have slowed down the complete legal recognition of this intersection. It is considered that by increasing the duration or strength of exclusive rights through the integration of patents and trade secrets would be in contravention of the fundamental bargain of patent law: limited exclusivity in exchange for disclosure. Growing acceptance of layered protection has put to rest such concerns. That being said, this tussle has been the source of landmark litigation and rulings.

THE INDIAN OUTLOOK

The integration of patents and trade secrets in India has unfortunately not been given much attention. Although a party to the TRIPS Agreement, India does not have any statutory laws for the protection of trade secrets. Using the flexibility of Article 39(2) therein, the absence of legislation was filled by judicial pronouncements in cases of breach of confidentiality.

The only judgment on this issue was delivered by the Hon’ble Delhi High Court in Prof. Dr. Claudio De Simone and Anr. vs. ActialFarmaceutical SRL. &Ors. In it, the Court discussed disclosure of best-mode under Section 10 of the Patents Act and concluded that such disclosure would also encompass the know-how in question, which was claimed to have been protected as a trade secret. In a nutshell, the Court argued that since patent disclosure requires inventors to disclose complete specifications of the invention, there can, therefore, exist no possibility of any trade secret protection being granted to it. Effectively, the Court rejected the layered-protection method and denied the complementariness of trade secrets and patents.

The inferences of this judgment lead to some other considerations that could form the basis of future disputes. Firstly, the judgment does not address the possibility wherein the best-mode disclosure under Section 10 does not include the most commercially viable method of using the otherwise patented invention. This would mean that inventors could still continue to protect relevant information under the veil of confidentiality while complying with the Patents Act. Secondly, it also does not venture into the possibility of the subsequent development of more efficient methods of production and uses being protected as trade secrets. Therefore, someone who is able to discover a better mode could, regardless of them being patent-holder in India or not, withhold from disclosing such information and protect it as a trade secret.

WHERE DO WE GO FROM HERE?

The lack of any settled statutory laws on trade secrets and the gap created by the judgment of the Delhi High Court has resulted in an unclear domestic position on the synergy between patents and trade secrets. Resort to practices followed in other leading IP jurisdictions could help guide inventors in the meantime.

In CFMT, Inc. vs. Yieldup Intern. Corp., it was held that enablement disclosure in patents is not synonymous with commercial efficiency. The dual-pronged approach was further validated in C&F Packing Co. vs. IBP, where the Court allowed trade secret protection over an aspect of the invention not covered under the patent. These decisions are premised on the fact that the competitive spirit and its resultant bargain under patent law cannot impede someone from taking a different form of protection. Rather, the coexistence of patents and trade secrets are premised on inter alia them serving different ethical and economic functions. The layered protection system was further reaffirmed in Texas Advanced Optoelectronic Solutions Inc. vs. Renesas Electronics America Inc. In Christianson v. Colt Industries Operating Corp., commercially relevant information was not considered to be a necessary facet of patent disclosure. Accordingly, inventors and manufacturers are at liberty to protect profitable manufacturing processes for mass production under trade secrets.

CONCLUSION

It is evident that outright denial of the complementariness of patents and trade secrets would be an untenable stance. Even though they push the limits of the initial patent bargain, the use of both patents and trade secrets allows for broader protection. That being said, a balance between the aims of preservation market competition and a robust IP protection environment must be made. Doing so would require for pronouncement of appropriate laws and rules. Domestic laws on trade secrets have, accordingly, become an incumbent need for India. It would bring much-needed clarity and allow businesses and inventors to strategize and manage their IP with more efficiency.

Author: Ritwik Sharma – a Student of Institute of Law, Nirma University, in case of any queries please contact/write back to us via email vidushi@khuranaandkhurana.com or contact us at IIPRD.

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