Module 7: Contemporary Issues in IPR

Management
Software patents
Intellectual Property Rights (IPR) management plays a critical role in protecting innovation,
promoting competition, and ensuring technological advancement. With the rapid growth of
digital technologies and globalization, software patents and trade secrets/know-how protection
have emerged as major contemporary concerns in IPR governance.

These issues influence innovation ecosystems, corporate strategy, research commercialization,

and legal frameworks worldwide.

Software Patents

Concept and Definition: A software patent refers to legal protection granted to computer
programs, algorithms, or software-related inventions that demonstrate novelty, inventiveness,
and industrial applicability.

However, many jurisdictions distinguish between:

1. Software per se (not patentable)

2. Software with technical application (patentable)

Example:

𝑆𝑜𝑓𝑡𝑤𝑎𝑟𝑒 + 𝑇𝑒𝑐ℎ𝑛𝑖𝑐𝑎𝑙𝐸𝑓𝑓𝑒𝑐𝑡 = 𝑃𝑎𝑡𝑒𝑛𝑡𝑎𝑏𝑙𝑒

Legal Challenges: Software patentability remains controversial due to interpretational

differences across jurisdictions.

Key Issues

1. Abstract Nature of Software

Software is often considered mathematical logic rather than a technical invention.

2. Jurisdictional Differences

Region Status

India Software per se not patentable

USA Allowed under certain conditions

Europe Allowed only with technical contribution

In India, Section 3(k) of the Patents Act excludes:

“mathematical methods, business methods, computer programs per se”

Advantages of Software Patents

1. Encourages Innovation
Protects developer investments

2. Competitive Advantage

Prevents imitation by competitors

3. Commercial Licensing Opportunities

Generates royalty revenue

4. Supports Technology Transfer

Facilitates collaboration between firms

Limitations and Criticism
Despite benefits, software patents face criticism:

1. Patent Troll Problem

Entities exploit patents without producing technology

2. Innovation Barriers

Small developers face litigation risks

3. Overlapping Claims

Multiple patents on similar algorithms create confusion

4. Rapid Obsolescence

Software evolves faster than patent duration

The software patent laws across major global jurisdictions as described in the sources:

Global Software Patent Jurisdictions

• United States (USA)

o Status: Software patents are allowed under certain specific conditions.

o Requirements for Patentability:

▪ Must demonstrate a technical improvement.

▪ Must contain an inventive concept.

▪ Must have a practical implementation.

• European Union (Europe)

o Status: Software is patentable only when it includes a technical contribution.
o Requirements for Patentability:

▪ The software must produce a specific technical effect.

▪ It must represent a technical advancement.

• India

o Legal Framework: Governed by Section 3(k) of the Patents Act.

o Exclusions (Software per se): The law specifically excludes mathematical

methods, business methods, and computer programs per se from being
patentable.

o Requirements for Patentability: Software is only patentable when it is integrated

with hardware innovation.

• General Global Distinction

o Non-Patentable: Software per se (often viewed as mathematical logic).

o Patentable: Software with a technical application.

o Alternative Protection: Many organizations use trade secrets (confidential

information like algorithms) to protect software when patenting is not viable or
desired
The "Patent Troll Problem" refers to a significant criticism of the software patent system
where entities exploit patents without actually producing or developing any technology.

According to the sources, this issue presents several challenges to the software industry:

• Innovation Barriers: Patent trolls create significant risks for small developers, who
often face litigation threats that can hinder their ability to innovate.

• Exploitation of Legal Frameworks: These entities leverage the legal exclusivity granted
by patents to demand royalties or settlements rather than using the protected invention
for industrial application.

• Compounding Complexity: The problem is exacerbated by overlapping claims, where

multiple patents on similar algorithms create confusion, making it easier for these
entities to claim infringement.
This phenomenon is considered a major limitation of software patents because it shifts the
focus from encouraging innovation to navigating complex legal battles and potential financial
exploitation.

Landmark judgments across global jurisdictions have defined the boundaries for software
patentability, shifting from absolute exclusions to more nuanced tests focused on technical
contribution and inventive concepts.

United States (USA)

The U.S. framework is primarily defined by the Alice/Mayo test, a two-step analysis
established to determine if a claim is a patent-ineligible "abstract idea".

• Alice Corp. v. CLS Bank International (2014): This seminal Supreme Court decision
held that simply implementing an abstract idea (like an escrow service) on a generic
computer is insufficient to grant patent eligibility. It established that claims must
contain an "inventive concept" that is "significantly more" than the abstract idea itself.

• Enfish, LLC v. Microsoft Corp. (2016): This case is a key example of software being
found eligible because the claims were directed to a specific improvement in computer
functionality (a self-referential database table) rather than an abstract economic task.

• DDR Holdings, LLC v. [Link] (2014): One of the first post-Alice successes for
software, where the court found eligibility because the solution was "necessarily rooted
in computer technology" to solve a problem unique to the internet.

• Berkheimer v. HP Inc. (2018): This judgment significantly impacted litigation by ruling

that whether a claim provides an unconventional inventive concept is a question of fact,
making it harder for courts to dismiss software patents early in a case without expert
testimony.
 • Other Key Cases: Bascom v. AT&T allowed for eligibility through a non-conventional
arrangement of generic pieces, while McRO v. Bandai Namco upheld claims that used
specific rules to automate 3D animation without preempting all methods.

European Patent Office (EPO)

The EPO excludes "computer programs as such" but allows patents for Computer-Implemented
Inventions (CII) that solve a technical problem with a technical solution.

• T 1173/97 (Computer program product/IBM) (1998): This landmark ruling abandoned

the "contribution approach" and established the "further technical effect" doctrine. It
held that software is not excluded if it produces a technical effect that goes beyond the
"normal" physical interaction between hardware and software.

• Hitachi (T 0258/03) and Comvik (T 0641/00): Together, these cases created the "two-
hurdle approach". Hitachi established that any claim involving technical means (like a
computer) passes the first hurdle of eligibility. Comvik established the second hurdle:
only features contributing to the technical character are considered when assessing an
inventive step.

• G 1/19 (Pedestrian simulation) (2021): A recent Enlarged Board of Appeal decision

confirming that computer simulations can be patentable and clarifying the intermediate
steps between eligibility and inventive step analysis.

India
India’s landscape is shaped by interpretations of Section 3(k) of the Patents Act, which excludes
"computer programs per se".
• Ferid Allani v. Union of India (2019): This is the turning point in Indian software patent
law. The Delhi High Court ruled that the prohibition is only for programs "as such" and
that inventions demonstrating a "technical effect" or "technical contribution" are
patentable.

• Accenture Global Service Gmbh v. Asst. Controller (2013): This judgment was crucial
in ending the "novel hardware" test, ruling that software can be patentable even if it
runs on existing, conventional hardware.

• Enercon India Ltd. v. Aloys Wobben (2010): Established that using a computer to
control a technical operation (such as wind turbine pitch adjustment) constitutes a
patentable technical process rather than a mere algorithm.
• Microsoft Technology Licensing LLC v. Assistant Controller (2023): Reinforced that
the Patent Office must assess if an invention provides a technical solution to a technical
problem rather than rejecting it simply for being implemented via software
The judgment in Ferid Allani v. Union of India (2019) represented a significant turning
point in Indian software patent law, effectively shifting how the "computer programs per
se" exclusion under Section 3(k) is interpreted.

The key changes and principles established by this landmark Delhi High Court decision include:

• Move Away from Categorical Rejection: The court clarified that Section 3(k) does not
categorically bar all computer-related inventions (CRIs). It observed that in the modern
digital era, where technologies like Artificial Intelligence (AI) and blockchain rely
heavily on software, it would be regressive to reject patents solely because they involve
a computer program.

• Establishment of the "Technical Effect" Doctrine: The judgment made the "technical
effect" or "technical contribution" doctrine the authoritative legal test in India. It ruled
that even if an invention is implemented via software, it is patentable if it demonstrates
a technical effect, solves a technical problem, or produces a concrete technical benefit.

• Focus on Substance Over Form: The decision directed the Indian Patent Office (IPO)
to move away from a literal reading of the statute. Instead of dismissing claims simply
because they involve algorithmic steps, examiners must now assess whether the
invention, when considered as a whole, demonstrates a technical contribution.
• Impact on Patent Prosecution: The court directed that software-implemented inventions
should be re-examined based on their technical merits rather than being summarily
dismissed for being computer programs. This shift has been reinforced in subsequent
cases, such as Microsoft Technology Licensing LLC v. Assistant Controller (2023),
which further emphasized that software-based implementations providing tangible
technical advantages are eligible for protection.
From the perspective of computer-related inventions (CRIs) and software patents in India,
the Computer Related Inventions (CRI) Guidelines, 2017 and the Patent Office Manual
(2019) together clarify how Section 3(k) of the Patents Act, 1970 should be interpreted
and applied during examination. They mark a significant shift from earlier restrictive
interpretations toward a technical-effect–based patentability approach.
Section 3(k) excludes: “a mathematical or business method or a computer programme
per se or algorithms”

• The key interpretative issue has always been the meaning of “per se”. The CRI
Guidelines 2017 and the Patent Office Manual 2019 clarify that:
• Pure software is not patentable: Software producing technical effect / technical
contribution may be patentable.
• Claim drafting matters significantly
• Thus, the focus shifts from form (software) to substance (technical contribution)
CRI Guidelines 2017: Examination Framework for Software Patents

The CRI Guidelines 2017 introduced a structured three-step test used by patent examiners.

Step 1: Properly Construe the Claim

The examiner determines:

• whether the invention is mathematical method

• business method

• algorithm

• computer programme per se

• or technical invention involving software

Example:
A claim for “method of calculating loan eligibility using formula X”
→ likely excluded as business method

Step 2: Identify Actual Contribution

The examiner examines:

Does the invention provide:

• technical solution?
• technical architecture?
• improved computing efficiency?
 • hardware interaction?

• improved data processing mechanism?

If contribution lies only in:

• program logic
• abstract computation

• automation of business workflow

→ Not patentable

Step 3: Determine Applicability of Section 3(k)

If invention demonstrates technical effect, it is not barred by Section 3(k).

Examples of accepted technical effects:

• higher processing speed

• reduced memory usage
• improved network security

• enhanced data compression

• improved user interface functioning at system level

• better hardware-software interaction

Example:
A software improving processor scheduling efficiency in distributed systems
→ Patentable subject matter

Removal of the “Novel Hardware Requirement”

Earlier practice (especially under CRI Guidelines 2016) required:

software must be tied to novel hardware

The 2017 Guidelines removed this requirement.

Now: Software alone may be patentable if it produces

technical effect, technical contribution. This aligns with judicial developments such as Ferid
Allani v Union of India
Types of Claims Allowed Under CRI Guidelines 2017

Patent Office permits:

(A) Method Claims

Example:

“A method for secure transmission of encrypted packets using adaptive routing protocol”

Allowed if:

technical improvement exists

(B) System Claims

Example:
“A distributed computing system configured to optimise memory allocation”

Usually stronger than pure software claims

(C) Computer Program Product Claims (Conditional Acceptance)

Acceptable when tied to:

technical application

Example:

“A computer program product stored on non-transitory medium for controlling robotic arm
movement”
Patent Office Manual (2019): Clarification of Examination Practice

The Manual of Patent Office Practice and Procedure (2019) supplements CRI Guidelines by:
3. standardising examiner interpretation
4. clarifying drafting expectations
5. harmonising Indian approach with global patent trends

It reinforces: substance of invention matters more than claim format

Key Principles from Patent Office Manual 2019 (for CRIs)

(1) Mere Automation Is Not Patentable

Example: manual attendance → automated attendance software

Not patentable unless: technical innovation exists

(2) Business Logic Disguised as Software Is Not Patentable

Example: online auction optimisation algorithm

Rejected as business method

(3) Technical Effect Must Be Demonstrable

Examples recognised by Manual:

• improved processor efficiency

• enhanced cybersecurity

• better image processing

• improved database search architecture

• efficient bandwidth utilisation

(4) Mathematical Algorithms Remain Excluded

Example: AI prediction formula alone

Not patentable unless: embedded in technical application

Example: AI-based medical imaging diagnostic enhancement

→ potentially patentable

Role of Claim Drafting Under CRI Guidelines + Manual

Patentability often depends on how claims are framed

Weak claim: “A computer program for managing inventory” (Rejected)
Strong claim: “A computer-implemented method for real-time inventory tracking using
adaptive sensor-based distributed processing architecture” (More likely accepted)

The 2025 Computer-Related Inventions (CRI) Guidelines issued by the Indian Patent
Office mark the most significant update to India’s software-patent examination
framework since the 2017 CRI Guidelines. They do not amend Section 3(k) of the Patents
Act, 1970, but they substantially clarify how software, AI, blockchain, and algorithm-
based inventions are examined for patentability.

The revised CRI Guidelines 2025 were officially released on 29 July 2025 after stakeholder
consultations across multiple Patent Office centres and public draft versions earlier in March
and June 2025. They aim to improve clarity, consistency, transparency, and alignment with
global software-patent practice.

These guidelines now replace the 2017 CRI Guidelines as the primary reference for examining
software-related inventions in India.

Key Objectives of the 2025 CRI Guidelines

The guidelines were introduced to:

• emerging technologies such as:

o Artificial Intelligence (AI)

o Machine Learning (ML)

o Deep Learning (DL)

o Blockchain

o Quantum computing
o Cloud-based systems

They aim to ensure predictable examination outcomes for computer-related inventions.

Major Changes Introduced in CRI Guidelines 2025

1. Structured Step-Wise Test Under Section 3(k)

The 2025 Guidelines introduce a clearer examination methodology for determining whether an
invention falls within excluded subject matter.

Patent examiners now evaluate:

1. whether the claim relates to a mathematical method / algorithm

2. whether it is a computer programme per se

3. whether it produces a technical contribution or technical effect

This structured approach increases examination uniformity.
2. Recognition of Emerging Digital Technologies

A major advancement in 2025 Guidelines is the dedicated examination framework for modern
technologies such as:

• AI / ML / DL

• blockchain systems

• quantum computing

• cloud-computing architecture
These are now assessed using scenario-based examples and disclosure requirements.

This is especially important for modern software-patent strategy in India.

3. Expanded Role of “Technical Effect” and “Technical Contribution”

The guidelines reaffirm the central doctrine from:

• Accenture (2013)

• Ferid Allani (2019)

• Microsoft Technology Licensing (2023)

They clarify that: computer-implemented inventions are patentable if they demonstrate
technical effect beyond software per se
Examples of acceptable technical contribution include:

• improvement in computing efficiency

• enhancement of hardware performance

• improved network security architecture

• control of industrial machinery

• signal-processing optimisation

4. Detailed Guidance on Algorithm-Based Inventions

The 2025 Guidelines clarify: Algorithms themselves are not patentable

However: Algorithm-based inventions may be patentable if they produce technical effect when
implemented in a system. This distinction reflects modern software-patent jurisprudence.
5. Dedicated Chapter on AI-Related Patent Examination

For the first time, Indian CRI Guidelines include a separate chapter on AI-related inventions,
covering:
• sufficiency of disclosure
 • technical application requirements

• evaluation examples

• eligibility under Section 3(k)

This is a major shift toward supporting frontier technologies.

6. Integration of Recent Judicial Precedents

The 2025 Guidelines explicitly rely on case-law interpretation of Section 3(k), including:

• Ferid Allani v. Union of India

• Microsoft Technology Licensing LLC v. Assistant Controller of Patents

• Accenture Global Services GmbH v. Assistant Controller of Patents

This makes the 2025 Guidelines more jurisprudence-driven than earlier versions.

7. Clarification on Business Method Exclusion

The Guidelines reaffirm: Business methods remain absolutely excluded from patentability.
Even technical implementation cannot override this exclusion unless the invention solves a
technical system-level problem rather than a commercial logic problem.
 Ferid Allani v. Union of India (2019)

In Ferid Allani v. Union of India, the Delhi High Court addressed whether a computer-related
invention involving a method and device for accessing information sources and services on the
web could be rejected solely on the ground that it involved a computer program. The Patent
Office had denied the patent application by applying Section 3(k), holding that the invention
constituted a computer program per se. However, the Court clarified that the exclusion under
Section 3(k) is not absolute, and inventions demonstrating a technical effect or technical
contribution remain patentable.

The Court emphasized that the term "per se" plays a crucial interpretative role and prevents
blanket exclusion of software-based inventions. It further observed that modern technological
innovations—particularly in artificial intelligence, blockchain, and digital communication—
are frequently implemented through software but still produce technical advancement.
Therefore, rejecting such inventions merely because they involve computer programs would
defeat the purpose of patent protection in emerging technologies. The Court directed the Patent
Office to re-examine the application using a technical-effect test, marking a significant shift
toward a more innovation-friendly interpretation of Section 3(k).

This judgment is widely regarded as a foundational decision that established the principle that
software-based inventions are patentable if they demonstrate technical advancement beyond
algorithmic implementation.

Microsoft Technology Licensing LLC v. Assistant Controller of Patents (2022)

In Microsoft Technology Licensing LLC v. Assistant Controller of Patents, the Delhi High Court
examined whether an invention relating to methods for generating and managing software
licenses and digital activation systems qualified as patentable subject matter under Indian
patent law. The Patent Office rejected the application under Section 3(k), stating that it involved
a business method implemented through software.

The Court disagreed with this reasoning and held that the Patent Office had failed to properly
analyze whether the invention produced a technical effect in computing systems. It emphasized
that inventions improving security architecture, hardware interaction, data processing
efficiency, or system functionality cannot be dismissed merely as software or business methods.
The Court reiterated that modern computing innovations often integrate software with
hardware functionality and therefore require careful technical evaluation rather than categorical
exclusion.

Importantly, the Court criticized the Patent Office for applying outdated interpretative
standards and directed it to adopt a substantive examination approach focused on technical
contribution rather than form-based classification. The ruling reinforced the principle
established in Ferid Allani and clarified that computer-implemented inventions improving
system-level performance remain patent eligible under Indian law.
Thus, the Microsoft decision strengthened judicial insistence that Section 3(k) must be
interpreted narrowly and in a technologically informed manner.

Accenture Global Services GmbH v. Assistant Controller of Patents (2023)

In Accenture Global Services GmbH v. Assistant Controller of Patents, the Delhi High Court
addressed the patentability of an invention relating to a method and system for generating
structured data from business processes using computerized techniques. The Patent Office
rejected the application under Section 3(k), arguing that the invention constituted a business
method implemented through software.

The Court overturned this rejection and clarified that merely labeling an invention as a business
method does not automatically render it non-patentable. Instead, the correct inquiry is whether
the invention produces a technical solution to a technical problem. The Court emphasized that
when software interacts with hardware components to produce measurable technical
improvement—such as enhanced processing capability, improved system architecture, or
efficient data structuring—it qualifies as patentable subject matter.
The judgment further highlighted procedural shortcomings in the Patent Office’s reasoning and
stressed that patent examiners must conduct detailed technical analysis rather than rely on
generalized statutory exclusions. The Court reaffirmed that the presence of business elements
within an invention does not negate patentability if the invention demonstrates technical
advancement.

This case significantly contributed to strengthening the jurisprudence that computer-

implemented inventions cannot be rejected solely because they involve business applications
when they produce technical effects.

Comparative Significance of the Three Cases

Taken together, these three judgments collectively transformed the interpretation of Section
3(k) by establishing three important doctrinal principles:

1. Software inventions are not automatically excluded from patentability.

2. The presence of a technical effect or technical contribution determines eligibility.

3. Patent examiners must conduct substantive technical evaluation rather than categorical
exclusion.

These rulings aligned Indian patent jurisprudence more closely with European Patent Office
(EPO) standards, where technical contribution serves as the primary test for computer-related
inventions.
Conclusion: The decisions in Ferid Allani, Microsoft Technology Licensing, and Accenture
Global Services represent a decisive shift in Indian patent law toward recognizing the
patentability of computer-related inventions demonstrating technical advancement.
Collectively, they clarify that Section 3(k) excludes only computer programs per se, not
software-driven innovations producing technical solutions. As a result, these judgments
significantly strengthened India’s innovation ecosystem by ensuring stronger protection for
emerging digital technologies.
 Trade Secrets and Know-how
Concept and Definition: A trade secret refers to confidential business information that
provides economic advantage over competitors.

Examples include:
• formulas

• manufacturing processes

• customer databases

• algorithms

• marketing strategies

Know-how refers to practical technical knowledge used in production or operation.

Example:

𝐾𝑛𝑜𝑤-ℎ𝑜𝑤 = 𝐸𝑥𝑝𝑒𝑟𝑖𝑒𝑛𝑐𝑒 + 𝑆𝑘𝑖𝑙𝑙 + 𝐶𝑜𝑛𝑓𝑖𝑑𝑒𝑛𝑡𝑖𝑎𝑙𝑃𝑟𝑜𝑐𝑒𝑠𝑠𝐾𝑛𝑜𝑤𝑙𝑒𝑑𝑔𝑒

Characteristics of Trade Secrets

Requirement Explanation

Confidential Not publicly available

Valuable Provides economic advantage

Protected Reasonable steps taken to maintain secrecy

Example: The Coca-Cola formula is one of the most famous trade secrets.
Legal Protection of Trade Secrets

Unlike patents, Trade secrets are protected through

1. contracts
2. confidentiality agreements (NDAs)

3. employment agreements

4. unfair competition laws

In India, protection exists under:

𝐶𝑜𝑛𝑡𝑟𝑎𝑐𝑡 𝐿𝑎𝑤 + 𝐸𝑞𝑢𝑖𝑡𝑦 𝑃𝑟𝑖𝑛𝑐𝑖𝑝𝑙𝑒𝑠

rather than a dedicated statute.

I. Protection under the Indian Contract Act, 1872

Trade secrets are most directly protected through confidentiality agreements, NDAs,
employment contracts, and non-disclosure clauses enforceable under contract law.

1. Section 10 — Validity of Agreements

Establishes that agreements become contracts if made with free consent, lawful consideration,
and lawful object.

Relevance: Confidentiality agreements and NDAs protecting trade secrets are enforceable if
they satisfy Section 10 requirements.

2. Section 27 — Agreement in Restraint of Trade

Declares agreements restraining trade void, but Indian courts recognize reasonable protection
of trade secrets even after employment ends.

Judicial interpretation: Courts consistently uphold clauses preventing disclosure of confidential

information—even post-employment—because they protect proprietary interests rather than
restrain trade.

Key principle: Protection of trade secrets ≠ restraint of trade.

It is treated as a legitimate proprietary safeguard.

3. Sections 73 & 74 — Compensation for Breach of Contract

Provide remedies for damages arising from breach.

Relevance: If confidential information is disclosed in violation of an NDA:

1. damages
2. injunctions
 3. compensation for business loss

4. Section 23 — Lawful Consideration and Object

Contracts with unlawful objects are void.

Relevance: Confidentiality clauses protecting proprietary information are treated as lawful

commercial safeguards.

II. Protection under the Competition Act, 2002

Competition law protects confidential information primarily in the context of anti-competitive
agreements, abuse of dominance, and regulatory confidentiality before the Competition
Commission of India (CCI).

1. Section 3(3) — Anti-Competitive Agreements

Prohibits agreements that:

• fix prices

• limit production

• share markets

• rig bids

Trade secret relevance: Exchange of confidential business information between competitors

may amount to cartelisation or collusion.

Example: Sharing pricing algorithms or customer databases between competitors = potential

violation.

2. Section 3(4) — Vertical Agreements

Covers agreements between enterprises at different production levels.

Relevant agreements:

• exclusive supply agreements

• refusal to deal

• resale price maintenance

Trade secret relevance: Disclosure of proprietary know-how under vertical arrangements

may raise competition concerns if it restricts market entry.

3. Section 4 — Abuse of Dominant Position

Prohibits dominant enterprises from:

1. denying market access
 2. imposing unfair conditions

3. leveraging dominance unfairly

Trade secret relevance: Misuse of confidential business information obtained from partners,
vendors, or licensees by a dominant firm may qualify as abuse.

Example: A dominant platform using seller data to compete against those sellers.

4. Section 57 — Confidentiality of Information (Most Direct Protection)

This is the most important statutory confidentiality protection under competition law.
Provides that: Information obtained by the Competition Commission during proceedings shall
not be disclosed without prior permission.
Implication:
Protects:

1. trade secrets
2. business strategies

3. pricing structures

4. technical know-how
submitted during investigations.

Case Laws

1. Saltman Engineering Co. Ltd. v. Campbell Engineering Co. Ltd. (1948) — Foundation
Case for Confidential Information

Facts: Saltman Engineering shared engineering drawings and manufacturing details with
Campbell Engineering strictly for limited production purposes. Campbell later used those
drawings beyond the agreed scope.

Issue: Whether confidential drawings, even if not protected by copyright or patent, could still
receive legal protection.

Judgment: The UK Court of Appeal held: Confidential information disclosed for a limited
purpose cannot be used beyond that purpose. Protection exists independent of intellectual
property registration.

Principle Established
Trade secret protection arises when:

1. Information has the quality of confidence

2. It is communicated in circumstances importing confidence
 3. There is unauthorized use causing detriment

This became the classic three-part test for breach of confidence, later adopted by Indian courts.

Importance in Indian Law

Indian courts repeatedly rely on Saltman because India lacks a dedicated trade secrets statute.
It forms part of the equitable doctrine of breach of confidence applied through:

• Contract law

• Equity principles
• Employment law obligations

2. American Express Bank Ltd. v. Priya Puri (Delhi High Court, 2006)

Facts: Priya Puri, an employee of American Express Bank, resigned and joined a competing
bank. The employer sought to restrain her from using customer lists and internal business
information.

Issue: Whether customer data and business information qualify as trade secrets.

Judgment: The Delhi High Court held: Customer lists are not automatically trade secrets unless
they satisfy confidentiality criteria.

However:

1. strategic internal data

2. proprietary business plans

3. sensitive operational information

may qualify as protectable confidential information.

3. John Richard Brady v. Chemical Process Equipments Pvt. Ltd. (Delhi High Court,
1987)
Facts: The plaintiff shared technical know-how and process information with the defendant
for collaboration. The defendant later used the information independently without authorization.
Issue: Whether technical know-how shared during negotiations remains protected even
without a formal confidentiality agreement.

Judgment: The Delhi High Court ruled:

Even without an explicit agreement, confidential information disclosed during business
negotiations remains protected.
The court restrained misuse of:
 • industrial drawings

• technical processes

• engineering know-how

Key Principle Established

Confidentiality obligations may arise:

1. expressly (contract)
2. impliedly (relationship circumstances)

This strengthened Indian trade secrets jurisprudence significantly.

Together, these decisions establish the Indian doctrine of trade secret protection:

Principle 1: Confidentiality Does Not Require Registration

Principle 2: Information Must Possess “Quality of Confidence”

Principle 3: Confidentiality Can Be Implied

Principle 4: Limited-Purpose Disclosure Restricts Use

Advantages of Trade Secrets

1. Unlimited Duration: Protection lasts as long as secrecy is maintained

2. No Registration Required: Immediate protection available

3. Cost-effective: No filing fees

4. Broad Coverage: Protects ideas not patentable otherwise

Challenges in Trade Secret Protection

1. Risk of Disclosure: Once leaked, protection disappears

2. Employee Mobility: Employees may transfer knowledge

3. Reverse Engineering: Competitors may independently recreate technology

4. Weak Enforcement Framework (India): No dedicated trade secret legislation yet

Landmark cases across various jurisdictions have defined the legal boundaries for
protecting trade secrets, particularly concerning the "inevitable disclosure" doctrine,
industrial espionage, and the distinction between confidential information and general
skills.

United States
In the U.S., trade secret law is largely governed by state-level adoptions of the Uniform Trade
Secrets Act (UTSA) and federal statutes like the Defend Trade Secrets Act (DTSA).
• PepsiCo, Inc. v. Redmond (1995): This is the seminal case for the "inevitable
disclosure" doctrine. The court enjoined a former manager from working for a
competitor because his new duties would inevitably lead him to rely on PepsiCo’s
strategic marketing and financial trade secrets. It established that misappropriation can
be proven if an employee’s new job duties make it impossible not to use the former
employer's secrets.

• E.I. du Pont de Nemours & Co. v. Christopher (1970): A landmark case regarding
industrial espionage. The court ruled that using a plane to take aerial photographs of a
competitor's unfinished plant to deduce a secret manufacturing process constituted
"improper means" of acquisition, even if no laws were technically broken during the
flight.

• Waymo LLC v. Uber Technologies, Inc. (2018): This case highlighted modern
challenges in the tech sector, specifically the theft of LiDAR technology data by a
former employee who moved to a competitor. It underscored the necessity of robust
legal protection against the digital theft of confidential data in highly competitive,
autonomous vehicle technology markets.
• Kewanee Oil Co. v. Bicron Corp. (1974): The U.S. Supreme Court reaffirmed that trade
secret protection is essential for fostering innovation and does not conflict with federal
patent laws.

United Kingdom

UK law protects trade secrets under the equitable jurisdiction of "breach of confidence"
and contract law, as there is no specific "trade secret" statute.

• Prince Albert v. Strange (1849): Considered the origin of the protection of confidential
information under English common law. The court granted an injunction to prevent the
unauthorized publication of private etchings, establishing "confidence" as a separate
cause of action from property rights.

• Coco v. A. N. Clark (Engineers) Ltd. (1969): This case established the authoritative
three-stage test for breach of confidence: (1) the information must have the "necessary
quality of confidence," (2) it must be imparted in circumstances importing an
 "obligation of confidence," and (3) there must be unauthorized use to the detriment of
the party.

• Faccenda Chicken Ltd. v. Fowler (1987): A key case for the post-employment context,
distinguishing between a "trade secret" (which can be protected after employment ends)
and other confidential information that an employee is free to use once they leave.

• Douglas v. Hello! Ltd. (2007): A high-profile case involving celebrity wedding photos.
The House of Lords ruled that the authorized publisher (OK!) could sue for commercial
confidence, treating the exclusive images as a form of trade secret regardless of their
private nature.

• Vestergaard Frandsen A/S v. Bestnet (2013): The Supreme Court confirmed that a third
party who unknowingly receives confidential information can still be liable for breach
of confidence once they become aware of its secret nature.

India

India lacks a dedicated trade secret statute and relies on common law principles of contract,
equity, and trust.

• Diljit Titus, Advocate v. Alfred Adebare (2006): A landmark Delhi High Court decision
establishing that employers (in this case, a law firm) have exclusive rights over
proprietary databases and client lists compiled during employment.

• American Express Bank Ltd. v. Priya Puri (2006): The court attempted to define trade
secrets as unknown formulae, technical/functional know-how, or specific business
methods adopted by an employer that provide a competitive advantage.
• Hi-Tech Systems v. Suprabhat Ray (2015): The Calcutta High Court ruled that software
developers could be restricted from using private information to solicit their former
employer's clients for a specific period after termination.

• Saltman Engineering Co. Ltd. v. Campbell Engineering Co. Ltd. (1948): Often cited in
Indian jurisprudence, this case affirms that the duty to maintain secrecy rests on
principles of conscientiousness and the need to protect information imparted in
confidence even without a formal contract.
 • Niranjan Shankar Golikari v. Century Spinning & Manufacturing Co. Ltd. (1967,
Supreme Court of India)

Facts: The employee (Golikari) entered into a five-year technical employment contract with
Century Spinning. During employment he gained access to confidential technical processes
relating to tyre-cord manufacturing technology. Before completion of the agreed term, he left
employment and joined a competing firm. The employer sought an injunction restraining him
from working with competitors during the contract period, arguing exposure to trade secrets
justified enforcement.

Legal Issue: Whether enforcement of a negative covenant preventing employment with

competitors amounts to restraint of trade under Section 27 of the Indian Contract Act.

Court’s Reasoning

The Supreme Court made a crucial distinction:

• restraints during employment are generally valid

• restraints after employment are usually void

• BUT confidentiality protection remains enforceable even after employment

The Court recognised that where employment involves access to trade secrets or proprietary
know-how, restrictive covenants protecting confidentiality are legitimate.

Judgment: The Court granted injunction in favour of employer and upheld enforceability of
contractual restriction during employment.

3. Burlington Home Shopping Pvt. Ltd. v. Rajnish Chibber (Delhi High Court, 1995)

Facts: The defendant was formerly employed with Burlington Home Shopping and later joined
a competing enterprise. He allegedly used:

• customer mailing lists

• marketing strategies

• distribution database

obtained during employment.

Employer claimed misuse of trade secrets.

Legal Issue: Whether customer databases and mailing lists qualify as trade secrets.
Court’s Reasoning: Court observed that customer lists prepared through labour, skill, and
investment constitute proprietary information. Such information gives competitive advantage
and therefore qualifies as confidential business information.

Judgment: Court granted injunction restraining misuse of database. Expanded trade-secret

doctrine beyond technical inventions to include:

1. marketing intelligence
2. customer analytics
3. distribution strategy

Important case for modern data-driven business environments.

3. Zee Telefilms Ltd. v. Sundial Communications Pvt. Ltd. (Bombay High Court, 2003)

Facts: Sundial Communications submitted a television programme concept and storyline

proposal to Zee Telefilms during negotiation discussions. Later Zee released a programme
allegedly based on the same concept without entering agreement with Sundial. Plaintiff claimed
breach of confidentiality.

Legal Issue: Whether idea submissions during negotiations are protected as confidential
information.

Court’s Reasoning: Court recognised that even where copyright protection may not exist,
confidentiality protection can apply if idea disclosed in circumstances implying trust.

The Court emphasised: Business negotiations create implied obligation of confidence.

Judgment: Court recognised enforceability of confidentiality obligations in pre-contractual

negotiations.

Important precedent for:

1. media industry
2. startup pitching
3. venture capital discussions
4. content licensing negotiations

Clarified protection of pre-agreement disclosures.

4 . Konrad Wiedemann GmbH v. Standard Castings Pvt. Ltd. (Delhi High Court)

Facts: German technology provider shared manufacturing process know-how with Indian
collaborator under technical collaboration arrangement. Later Indian company allegedly
continued using process after termination of agreement. Foreign company sought injunction.

Legal Issue: Whether continued use of licensed technical know-how after termination
constitutes breach of confidentiality.
Court’s Reasoning: Court recognised that technology transfer agreements inherently contain
confidentiality obligations.

Know-how shared under licence remains proprietary even after collaboration ends.

Judgment: Court restrained misuse of transferred technical information.