WHAT CANNOT BE PATENTED?

o Section 3(a) • Frivolous inventions • Inventions contrary to well established natural

laws Examples • Machine that gives more than 100% performance • Perpetual
machine
o Section 3(b)
• Commercial exploitation or primary use of inventions , which Causes serious
Prejudice to
• health or
• human, animal, plant life or
• to the environment
Examples • Biological warfare material or device, • Terminator gene technology,
weapons of mass destruction • Embryonic stem cell.
o Section 3(c)
• Mere Discovery of a Scientific Principle or
• formulation of an Abstract Theory or
• discovery of any living thing or
• discovery of non–living substance occurring in nature.
Examples
• Newton’s Laws
• Superconducting Phenomenon as such
• Property of certain material to withstand mechanical shock
• Discovery of micro-organism
• Discovery of natural gas or a mineral
Section 3(c) • Excludes patents on • Naturally occurring Micro-organisms Effect •
Genetically modified microorganisms (GMOs) are however, patentable.
o Section 3(d)
• The mere discovery of a new form of a known substance which does not result
substances Examples in the enhancement of the known efficacy of that substance
Section 3 (d) Explanation: For the purposes of this clause, salts, esters, ethers,
polymorphs; metabolites, pure form, particle size; isomers, mixture of isomers;
complexes, combinations and other derivatives of known significantly in properties
with regard to efficacy. shall be considered to be the same substance, unless they
differ
Example • Crystalline forms of known substance
o Section 3(e) a substance obtained by a mere a mixture resulting only in the
aggregation of the properties of the components or a process for producing such
substance;
o Section 3 (f) the mere arrangement or re-arrangement or duplication of known devices
each functioning independently of one another in a known way; (g) Omitted by the
Patents (Amendment) Act, 2002
o Section 3 (h) a method of agriculture or horticulture;
o Section 3 (i) any process for the medicinal, surgical, curative, prophylactic diagnostic,
therapeutic or other treatment of human beings or any process for a similar treatment
of animals to render them free of disease or to increase their economic value or that of
their products.
 o Section 3(j) plants and animals other than micro organisms but including seeds,
varieties and species and essentially biological processes for production or
propagation of plants and animals.
o Section 3 (k) a mathematical or business method or a computer programme per se or
algorithms;
o Section 3(l) a literary, dramatic, musical or artistic work or any other aesthetic
creation including cinematographic works and television productions.
o Section 3 (m) a mere scheme or rule or method of performing mental act or method of
playing game.
o Section 3(n) a presentation of information
o Section 3(o) topography of integrated circuits
o Section 3 (p) an invention which in effect, is traditional knowledge or which is an
aggregation or duplication of known properties of traditionally known component or
components.
o Section 4: Inventions relating to Atomic Energy not patentable.

NON- OBVIOUSNESS

Non-obviousness and the patent act, 1970 :

 The Patents Act, 1970 of India specifies the provisions that are used by the Indian Patent
Office and the courts to determine whether a product or a process is worthy of a patent in
India.
 The Act, vide Section 2(1)(m), provides that a patent may be granted for an “invention”.
Further, the definition of “invention” is provided under Section 2(1)(j) of the Act as a
new product or process involving an inventive step and capable of industrial application.
 As per the definition of inventive step as set out u/s 2(1)(ja), a feature of an invention can
be considered to possess an inventive step if it satisfies two conditions : (i) the feature
either adds to existing technical knowledge, i.e., the prior art, or is substantially better in
terms of commercial viability; and (ii) it makes the invention non-obvious to a person
skilled in the art.
 If an invention lacks the presence of an inventive step, then, this deficiency can be
considered as valid grounds for opposition for the grant of a patent, under section 25 (1)
(e) and 25 (2)(e) and for revocation under section 64 (1)(f) of the Act.
 So Non-obviousness of the invention is one of the three desiderata for the grant of Patent,
others being novelty and industrial application. Hence, the inventive step must not be an
obvious step which the society would obtain automatically without any extra effort. An
ordinary person skilled in the art could provide solution to the problem, so there is no
need to reward for inventing such as others could also find it in due course.
 This test of non-obviousness is to be made with the perspective of a person having
ordinary skill in the art i.e. having average skills, and not an expert in that technology
(posita).
 Patent guarantee the right to exclude others from patented article. Excluding from an
object solution to a practical problem would be a problem someone or other to that of the
solution so there is no need to reward it with patent. According part of the solution would
amount to other problems too result in complications regarding liability. Non
obviousness is a use-based standard of liability but in absence of non obviousness, it is a
copy paste standard. In other words independent creation can be used as a defence but in
 use base standard, independent creation cannot be used as defence. So if we remove non-
obviousness we will have to introduce independent creation as a defence.
2003 patent amendment act
Non obvious requirement was brought in The Patent Act in 2003 in the term inventive step.
Before that there was no no non obvious requirement. But before that also the fourth stressed
on non-obviousness and read it in the term novelty itself.
Case laws
WORK OF MECHANICAL V. WORK OF INVENTOR(2 CASES)
Non obviousness found its origin from Hotchkiss v. Greenwood, (1851) case.
This case brought the non-obvious requirement as a substantive requirement to patent law
because prior to it non-obviousness was not a requirement for patentability. In this case, a
clay door knob was made and applicant sought patent for clay door knob. it was held that
artisans practising in this skill would come to such solution one day.
the courts applied a higher threshold for non-obviousness. It is the hindsight bias. The court
held that the required skill for patent is of an inventor and not that of a mechanic. NOT
GRANTED
Followed in Reckendorfer v. Faber, (1875), “an instrument or manufacture which is the
result of mechanical skill merely is not patentable.” Facts are given below:- eraser was placed
at the tip of the pencil and it was tried to be patented. It was held that any combination by that
combination was appear at this solution could be thought of by any other member of the
PHOSITA (having ordinary skill In The art) so it was obvious and hence it was not
patentable.
Period till 1952: Anti patent excesses
Anti- monopoly sentiments that arose during the depression period laid increasing stress on
difference between mechanical skill and patentable ingenuity. Result: The bar got too higher/
patentability became more elusive/ positive proof that it embodies a high level of inventive
accomplishment. Had two effects:
1.a) Cuno Engineering Corp. v. Automatic Devices Corp., (1941) “flash of creative genius.”
(subjective test).
FACTS: Before a patent was attempted to be obtained by Mead, patents for cigarette lighters
in automobiles already existed. The first patent was owned by Morris, who invented the
lighter and its functions in automobiles. Metzger then patented the wireless automobile
lighter. Mead looked to patent his wireless lighter which automatically ejected once it was
hot enough. His use of a thermostat made the automobile lighter easier and safer to use.
Issue - The question in the case was whether or not applying technology that already exists to
a patented product is means for a patent. The court requires patents to have the elements of a
“flash of genius”. The thermostat technology had existed for years in things like furnaces.
The question for the Supreme Court was whether or not Mead’s invention was a flash of
genius or was he merely applying an art to an already patented item.
HELD: Mead's combination performed a new and useful function did not make it patentable.
The new device, however useful, must reveal the flash of creative genius, not merely the skill
of the calling. Hence, The Supreme Court ruled that Mead did in fact infringe on previous
patents because the addition did not involve a flash of genius and merely applied an art.
b) Great Atlantic & Pacific Tea Co. v. Supermarket Equipment Co., (1950) “the whole of the
claimed invention in some way exceeds the sum of its parts”- demand for synergy (now
read it along with Cuno Standard the standard is insuperable arguably.)
Facts. The device patented by Plaintiff equipped cashiers’ counters with a three-sided frame
that moved the groceries along to the cashier by being pushed or pulled when the customer
put their groceries within it. The district court denied Defendant’s claim that the device was
obvious and therefore could not be the subject of a patent, must less an infringement suit. The
court found it was an original feature, and consisted of a new and useful combination of a
counter with an extension to receive the items that were placed upon a bottomless self-
unloading tray. The judgment was upheld by the court of appeals regarding the finding of the
district court as to obviousness as one of fact and not clearly incorrect.
Issue. If portions of prior art are merely brought together by a patentee, without any change in
their particular functions, will the patent be sustained?
Held. If portions of prior art are merely brought together by a patentee, without any change in
their particular functions, the patent will not be sustained. The combination of known
elements must contribute something; only when in some way the whole exceeds the sum of
its parts is the combination of old devices eligible for patent. In this case, each part is doing
what it has always done. The counter supports merchandise; the rack draws or pushes goods;
and the guide rails keep the goods from falling off the surface. When two and two are added
together, the total is still four. The Plaintiff’s patents have not added anything new to the total
stock of knowledge, but merely brought together parts of prior art claiming them in working
together a monopoly. The patents are invalid and judgment is reversed.
1953: Reset to Hochkins
 In 1952 the US law was amended and it was set back to the hochkins case. Section 103
introduced in USPA. It brought 5 changes:
 Adopts central perspective a PHOSITA (evoking ordinary mechanic of Hotchkiss)
 States a negative test i.e., deny patentability to which would have been obvious.
 Expressly prohibits hindsight bias: i.e. judge when the invention is made.
 Extra guard against hindsight by restricting it to pertinent prior art;
 Test is objective, not subjective (meaning CUNO is done away with and Hotchkiss is
restored)
These were put to test in Graham and Adams cases
The US Supreme Court has discussed the aspects involved in the non-obviousness analysis in
the landmark case Graham et al. v. John Deere Co. of 2 Kansas City et al. Three factors
were laid down as tests for which should be looked into while determining obviousness, these
are commonly known as Graham factors:
I. the scope and content of the prior art;
II. the differences between the prior art and the claims at issue; and
III. the level of ordinary skill in the pertinent art.
Apart from the above factors the US Apex Court also laid down secondary considerations as:
I. commercial success of the invention,
II. long felt but unsolved need, and,
III. failures of others could serve as evidence of nonobviousness.

United states v. Adams case in 1966 [it is a powerful example of non-obvious invention]
The prevailing information among PHOSITA was that electrolytes and electrodes must be
kept separate because if kept together they will not function but Adams was doing exactly the
opposite. he came up with a dry cell. The court held that Adams solution is an obvious
solution to the practical reasons prevailing in US at the time of World War 2.
Supplementing of Graham Inquiy with TSM test
TSM test: It required to prove a claimed invention would have been obvious, one must
prove that the prior art as a whole would have suggested the invention to one skilled in
the art.
The TSM test basically says that a patent claim is only proved obvious if some motivation
or teaching to combine the prior art teachings can be found in the prior art, the nature of
the problem or the knowledge of PHOSITA.
TSM test is the Teaching, Suggestion and Motivation test. It simply means, when
analysing the obviousness of an invention while comparing it with prior art, these are the
three questions that have to be asked:
A. Is the prior art quoted instrumental in teaching the reader the method of producing the
invention?
B. Does the prior art or any of its contents suggest any method of producing the invention in
question?
C. Does the prior art talk about problems related to a particular technology motivating an
invention in a particular manner?

Courts have defined what is not patentable: inventions that do not make a sufficient leap or
more specifically, those inventions that are obvious. Determining obviousness by assessing a
sufficient leap is subjective. To cut down on the variability of this determination, obviousness
is evaluated from the perspective of a Person Having Ordinary Skill in the Art (PHOSITA).
An invention therefore is obvious, and therefore not patentable, if a PHOSITA would find
that the leap was insufficient to make the invention non-obvious.
This prevented hindsight from creeping into the inquiry, which was critically important
because on some level everything is obvious once you know about it.
TSR Added a mechanism to avoid HINDSIGHT BIAS in addition to the statutory provision.
Hindsight bias: Now that what it has succeeded, it may very well seem very plain to any
one that he could have done it as well. (this is often the case with inventions of greatest
merit.)
However, when applied rigidly it fails to take into account ordinary artisan’s ordinary
creativity. A person of ordinary skill is also a person of ordinary creativity, not an
automation. KSR CASE TO THE POINT. The matter stood till 2007

CONCLUDING REMARKS
 Factual inquiries under GRAHAM are still the basis for determining obviousness.
 TSM transformed general principles of obviousness into rigid rules that affects Graham
FACTBASED inquiry.
 TSM test can be used as a basis for rejection, but it should not be the case that an
invention is non-obviousness simply because a rejection based on TSM cannot be made.
PATENT OF LIFEFORMS
 The Indian government's stance on patenting life forms has gradually changed over time.
Couple of decades earlier, India was against granting patents to life forms before 2002
and , the understanding was that there is no patent protection for invention relating to life
forms.

 But the decision by Calcutta High Court in 2001 in Dimminow AG v. controller of

Patent and Design held that the term manufactured covers even living organisms.
Therefore because of the above case and on the lights of Article 27 of TRIPS the Section
3 of Patents Act 1970 was amended. The amendment opened up new possibilities to
secure patent rights for new microorganisms and other areas involving microorganisms.
There are primarily two kinds of life forms that TRIPS agreement focuses on for
patentability, They are-
1. Microorganisms, per se
2. Non-biological and micro biological processes.
Therefore, section3 J of the Indian patents act allows patentability of microorganisms.
 Microorganisms can be patented, however it should be noted that a patent is not granted
for discovery rather for an invention which is novel, non-obvious; useful, and capable of
industrial application. Therefore patent can only be granted for a microorganism, when
there is a human intervention to create a new, non-obvious and useful microorganism by
way of genetic modification oblique engineering, cell fusion, gene therapy or other micro
biological or non-biological techniques.
 In India, the position was made clear after 2002 amendment to the Indian patent act. It is
stated that life forms can be patented given they fulfil the other requirements. These
improvements have resulted in a significant upthrust in the promulgation and
enforcement of patents in India. Now India can boast of one of the best patent laws in the
world.
 The Mashelkar committee report has clearly stated that microorganisms are patentable
subject matter in India. Inventions pertaining to Microorganisms and other Biological
material were subjected to product patent in India, unlike many developed countries. But
with effect from 20.05.2003 India has started granting patents in respect of invention
related to microorganisms, though India was not obliged to introduce laws for patenting
microorganisms per se before 31.12.2004.

Caselaw
The case of Diamond v. Chakrabarty in 1980s, opened gates for the patentability of
microorganisms.
o Anand Chakrabarty was working for General Electric. He developed a bacterium
named ‘Pseudomonas putida’ capable of breaking down crude oil. This could be used
for treatment of oil spills.
o Chakrabarty's patent claims were of three types:
1. process claims for the method of producing the bacteria;
2. claims for an inoculum comprised of a carrier material floating on water, such as
straw, and the new bacteria;
3. claims to the bacteria themselves.
o The Court ruled in favour of Chakrabarty.
 o It was held that a live, human made micro-organism is patentable subject matter under
35 U.S.C. § 101. The micro-organism constitutes a “manufacture” or “composition of
matter”.
o Court in the present case read the term “manufacture” in § 101 in accordance with its
dictionary definition to mean "the production of articles for use from raw or prepared
materials by giving to these materials new forms, qualities, properties, or
combinations, whether by hand-labor or by machinery”.
o Similarly, "composition of matter" had been construed consistent with its common
usage to include "all compositions of two or more substances and . . . all composite
articles, whether they be the results of chemical union, or of mechanical mixture, or
whether they be gases, fluids, powders or solids”.

Another case which apparently rejected the product of nature doctrine is Merck Co. v. Olin
Mathieson chemical corp. In this case, patent was claimed for vitamin B 12 active
compositions extracted from a certain strain of fungi. It was held by the court of appeals that
there is nothing in the language of the law which stop the issuance of patent upon a product
of nature when it is a new and useful composition of matter and there is compliance with the
specified conditions for patentability.

Bergy case involved two cases, both arising from rejections of product patent claims of
microorganisms. In re burgy, the applicant invented a process for the production of a familiar
antibiotic and while doing so discovered a previously unknown microorganism. The three-
judge majority held that there was clear legal precedent for patenting a purified product of
nature which is what bergy has argued. Major reliance was placed on the cases of Merek v.
olin Mathieson chemical and parke davis v. Mulford.

In the case of Harvard College versus Canada (oncomoure case) researchers at Harvard
medical school in 1980s produced a genetically modified mouse that was highly susceptible
to cancer. This case raised to key issues –
A. should patents be granted at all for animals or animal varieties?
b. how should moral implications be addressed in this regard?
– The Supreme Court of Canada held in 2002 that higher life forms what is not patentable
because they were not manufacture or composition of matter within the meaning of invention
under the patent act.

The landmark judgment by the Calcutta High court in the case Dimminaco A G v/s
Controller of Patent Designs & Ors" on January 2001 completely flipped the panorama of
patenting life forms in India.
 Dimminaco A G, a Swiss company approached the Hon'ble High Court of Calcutta upon
getting a refusal on its process patent that pertained to preparation of a live vaccine for
Bursitis.
 The company got denial on the grounds that, the invention containing a living organism
was not patentable as under section 2(1)(j). The Controller of Patents determined that the
process was not an invention, since the end product produced by the corresponding
process contained a living organism, thereby making it not patentable.
 On the contrary, the High Court applied the vendibility test to the invention and deemed
that the process results in a vendible item that is new and useful. Since the process
 resulted in a vendible item, patent was granted for the process and there was no
discussion about the end product containing living material in reaching this conclusion.
 The conclusion which could be drawn from the instant case is that, patent rights are
granted to a process rather than a product provided that the product produced using the
process is a vendible item.

In the recent Supreme Court’s judgment in the case of, Monsanto Technology Pvt. Ltd.
v. Nuziveedu Seeds,
 The plaintiff claimed that their patent in the man-made, chemical product called
NAS(Nucleotide Acid Sequence) containing the gene Bacillus thuringiensis (Bt gene),
capable of killing bollworms when inserted in cotton, was not an infringement under
section 3(j) of the patents act, 1970, as held by the Division bench of the Delhi High
Court.
 Nuziveedu’s claim was that, NAS was merely a chemical composition in-capable of
reproduction and not a man-made inventive microorganism, capable of industrial
application.
 The Supreme Court in this case set aside the order of the division bench and restored the
order of the single bench and reverted back the matter back to the single bench of the
Delhi High Court to be decided on the basis of expert advice and evidence, who had held
that, the claims on NAS was rightly entertained by the Indian Patent office and that the
parties shall remain bound to their sub-lease agreement.
 Thus, the current scenario in India w.r.t. patents in microorganisms is still at an infancy
stage and needs progression.

Conclusion:
 The micro-organisms with human interventions, accompanied by novelty, utility and
industrial applicability are patentable.
 The technological advancements in the field of micro-biology, genetics, etc., have
complicated the issues relating to patents in microorganisms.
 Therefore, scientific aspects and legal drafting of the invention should be done with due
precaution and consideration.
 Further even though, the issues involved in the Monsanto’s case was highly technical,
The Supreme Court missed its opportunity in deciding upon the facts in issue.

INEVITABLE DISCLOSURE
 The doctrine is a result of common law( i.e. developed in a series of case laws) involving
threatened misuse of valuable, technical TS by former employees hired away by
competitors seeking to gain entry into highly competitive markets.
 Originally, the doctrine was applied only to employees in technical fields, but courts have
expanded it to include employees in possession of a variety of trade secrets, including
financial, manufacturing, production and marketing information.
 In order to protect the Trade Secret, this Spring Board doctrine was established. This
doctrine basically acts as a protection given to the employers of the companies, which
they can use in order to help them secure their trade secrets. A Spring Board doctrine is
an injunction which is specifically designed to remove or to limit the advantage that an
employee has gained through any unlawful activity typically through the misuse of the
employer's confidential information.
 In its infancy the doctrine was designed to prevent an IMMINENT THREAT OF A TS
DISCLOSURE BY A FORMER EMPLOYEE, a particular form of unfair competition.
 The dispute: countervailing interests i.e. interest of society in protecting TS to encourage
investment in R&D versus protecting the employees right to use knowledge and skill that
may be inextricably interwoven with his knowledge of TS.
 E. I. duPont de Nemours & Co. v. American Potash & Chemical Corp.,
 Donald H. was a chemical engineer with duPont who had been involved in a long and
expensive process to develop duPont’s chloride process to manufacture certain pigments.
 American Potash failed in obtaining a license from dupont for the process it decided to
develop on its own, they hired Donald as tech manager for its new pigment mfg plant.
 Dupont bought a suit to enforce confidentiality agreement and secured pre injunction
stopping Donald from working for AP in field of chloride process development.
 Court relied on INEVITABILITY OF DISCLOSURE IN FINDING A SUFFICIENT
THREAT OF IMPROPER DISCLOSURE by Donald. INEVITABILITY (in terms of
probability) OF DISCLOSURE was the key factor.

 Allis-Chalmers Manufacturing Co. v. Continental Aviation & Engineering Corp.

 Striking factual similarity with duPont case Allis marketed a special type of fuel injector
pump. At that time only 3 co’s marketed this type and at least 8 companies failed to
develop comparable equipment.
 Negotiations on license failed between two parties. Continental hired George W. an
engineer instrumental in developing pump for Allis to design and develop for them.
 Court granted a preliminary injunction which prevented George from doing certain work
for continental the court found an “INEVITABLE AND IMMINENT” risk of TS
misappropriation. Court took into consideration facts of negotiations nature of work of
George it would b e impossible for him while working at Continental to the best of his
abilities witout in fact giving it the benefit of Allis TS.
 Court granted an injunction that prevented George from working in the design of
distributor type pumps, but allowed him to work on other projects.

 As in dupont court was mindful of the COMPETING legal principles at play and the
need to protect the rights of employees to market their general knowledge and skills
while at the same time protecting IP of employers. It therefore provided a limited pre
injunction one that was narrowly tailored to protect threatened TS.
 Both these cases represent the prevailing approach to the doctrine. Both cases involved
highly specialized and technical TS that give a substantial edge in the market. Both
involved competitors that were apparently attempting to acquire the protected tech by
hiring away high level scientific personnel. Because there was imminent threat of
misappropriation and an injunction against disclosure would not have been an adequate
remedy, the court grated narrow injunctions preventing employment of the former
employees in positions where TS was at risk.
PepsiCo, Inc. v. Redmond
FACTS: Defendant Redmond had been a member of upper management at PepsiCo and had
signed a confidentiality agreement, but not a noncompete agreement. After leaving his job at
PepsiCo for a similar position at competing company Quaker, PepsiCo brought an action to
enjoin Redmond from assuming his duties or divulging trade secrets.
The trade secret information of PepsiCo that Redmond knew about was strategic sales,
marketing, logistics and financial information:

It was argument of pepsico that his role at quaker will lead him to eventually disclose all this
information. Quaker argued that Redmond will be implementing a pre-decided paln. To this
pepsico argued that the plan can be redesined in which case Redmond will do Inevitable
disclosure.
Redmond also lied to Pepsico about the nature of his job and said that there is only a 60-40%
chance of him leaving, but left within 2 days pf telling pepsico.
Holding: In its decision, the district court highlighted Redmond’s bad faith conduct before
accepting his job at Quaker, combined with the finding that “unless Redmond possessed an
uncanny ability to compartmentalize information, he would necessarily be making decisions .
. . by relying on his knowledge of [PepsiCo] trade secrets.” Quaker was competing in the
same, narrow market segment of “sports drinks” and Redmond’s new position was very
similar to his old position at PepsiCo.
Difference b/w Pepsi co & [dupont & allis chamber] case
1. Dupont an Allis was about a specific manufacturing process. Here, Redmond was in
possession of huge amount of knowledge about PepsiCo business pan that they would
eventually rely on.
2. The ourt did not accept the argument that Redmond will not be using the info he had.
PepsiCo argued that it found itself "in the position of a coach, one of whose players [had] left,
playbook in hand, to join the opposing team before the big game. " the court accepted this
analogy.
3. Court relied on lack of forth-rightness/candor on part of Redmond in disclosing
Factors which govern the likelihood of disclosures:
Maxxim Medical,Inc. v. Michelson:

INDIA POSITION
Wipro v. Beckman Coulter International
Facts: Wipro Biomed was the sole distributor for Beckman Coulter International for around
17 years distributing its bio-medical products. Wipro Biomed and Beckman Coulter had
signed agreement having clause for “Employee Non-Solicitation” binding on both. The
clause required them to not solicit directly or indirectly employees of the partner’s
organization to join them or even the competitors of both organizations. However, both
organizations agreed that general means of recruitment of employees of the partners through
advertising in the open market would not amount to solicitation and therefore such
recruitments should be kept out of the purview of the non-solicitation agreement.
In 2005 ties were severed with Wipro Biomed and Beckman communicated its intentions to
carry out the distribution on its own. Subsequently, Beckman Coulter released a pan India
advertisement from Mumbai in one of the leading English newspapers in October 2005
seeking to recruit personnel for various positions in Sales, Marketing, Service and Support
positions. The advertisement read out,
“For all Sales and Marketing and Service and Support positions experience of working with
or having handled Beckman Coulter products and or similar products would be a distinct
advantage.”
However, shortly after the release of the above advertisement, Wipro Biomed was
flabbergasted as it received resignation letters from 21 employees across India possessing
considerable expertise and experience in their areas of specialization. The sudden exodus of
competent manpower created a fear psychosis across Wipro Biomed threatening to cripple its
operations and thereby end its business in the biomedical segment since their most valuable
assets i.e., the Sales, Marketing, Service and Support personnel were poached by their partner
Beckman Coulter.
Consequently, Wipro Biomed [petitioner] served a notice to Beckman Coulter [respondent]
regarding solicitation of its employees by the partner in violation of the non-solicitation
clause. It also approached the Delhi High Court to get an interim order to put a restraint on
the solicitation of Wipro Biomed employees by Beckman Coulter.
Holding:
the Delhi High Court decree said, “this advertisement was directed towards the employees of
Wipro Biomed and it was definitely a solicitation on behalf of Beckman Coulter.
Restraint of trade- The bar or restriction is on the petitioner and the respondent from offering
inducements to the other's employees to give up employment and join them. Therefore, the
clause by itself does not put any restriction on the employees. The restriction is put on the
petitioner and the respondent and, therefore, has to be viewed more liberally than a restriction
in an employer-employee contract. In my view, therefore, the non-solicitation clause does not
amount to a restraint of trade, business or profession and would not be hit by Section 27 of
the Indian Contract Act, 1872 as being void.
Beckman Coulter is restrained during the pendency of the arbitration proceedings from taking
out any other or further advertisements to solicit Wipro’s employees.
Employees were allowed to join Beckman Coulter as they were third party to contract and
there was no privity of contract for them but, the respondent would be liable to compensate
the petitioner for such breach of the non-solicitation clause, if so established in the pending
arbitration.
The court laid down the four basic commandments of restrictive covenants. These
commandments are based on various judgments of the High Courts and the Supreme Court
(1) restrictive covenants during the subsistence of a contract would not normally be regarded
as being in restraint of trade, business or profession unless the same are unconscionable or
wholly one-sided
(2) post-termination restrictive covenants between employer and employee contracts
restricting an employee's right to seek employment and/or to do business in the same field as
the employer would be in restraint of trade and therefore void
(3) courts take a stricter view in employer-employee contracts than in other contracts the
reason being that in employer-employee contracts, the norm is that the employer has an
advantage over the employee and
(4) the question of reasonableness as also the question of whether the restraint is partial or
complete is not required to be considered at all whenever an issue arises as to whether a
particular term of a contract is or is not in restraint of trade, business or profession.
TRADE SECRET
 Trade secret is a formula, process, device, method, technique or other business
information that is kept confidential to maintain an advantage over competitors. Three
requirements for something to be a trade secret:
 Information has actual or potential independent economic value,
 The information is not being generally known to, and not being readily ascertainable by
proper means by, other persons who can obtain economic value from its disclosure or
use; and
 Reasonable efforts have been made to maintain its secrecy
[Link] of economic value
Information can be of 3 types

2. not being readily ascertainable by proper means by, other persons who can obtain
economic value from its disclosure or use
If the information is simple, it can be arrived at by independent creation or reverse
engineering. Both of them act as effective defense to TS misappropriation claim. Therefore,
in case of independent creations lack of proper paper trail can lead to false negatives.

Amoco Prod. Co. v. Laird - (Ind. 1993)

Facts: Plaintiff Amoco Production Company undertook extensive research and travel to
locate potential oil fields in the United States and, as a result, developed a certain map
delineating locations of such sites. The map and research was done by relying on and
expanding upon already available public information regarding possible locations of oil
fields. The map was largely produced by geologist John , an employee of plaintiff. Believing
that plaintiff would not act on his advice, John provided defendants individuals and company
with information contained on the map he developed, which defendants actively pursued the
oil reserves. When plaintiff discovered defendants' activities, it sought and obtained
injunctive relief barring defendants' efforts on the grounds that the information obtained and
used by defendants was a trade secret. The trial court granted a preliminary injunction The
court of appeals reversed.
Holding:
On petition to transfer, the state supreme court reversed, holding that the duplication of
plaintiff's alleged trade secret information required a substantial investment of time,
expense, or effort, such information may be found "not being readily ascertainable" so
as to qualify for protection under the Indiana Uniform Trade Secrets Act. Therefore, the
trial court's finding that methods of acquiring the information pertaining to the location of
the Indiana oil reserve sites "were not simple or easy to accomplish, and are expensive to
develop," is sufficient to support its conclusion that such information was not readily
ascertainable and thus entitled to trade secret protection. A trade secrets plaintiff need not
prove that every element of an information compilation is unavailable elsewhere. Such a
burden would be insurmountable since trade secrets frequently contain elements that by
themselves may be in the public domain but taken together qualify as trade secrets.
The standard is how difficult it was to arrive at the ts info. It is not that it was impossible
to arrive at that info.
2. CDI energy v. west river services
Facts: Plaintiff CDI Energy Services, Inc. ("CDI") sold and serviced equipment for use in the
oil field industry. Defendants worked in CDI's North Dakota field office. CDI filed a lawsuit
in federal district court against the Employees and their new company, defendant West River
Pumps, Inc. ("West River"), claiming that the Employees stole proprietary information
[i.e., client list] and solicited business from CDI's clients while still employed by CDI. The
complaint asserted, among other claims, state-law claims of breach of loyalty, trade-secret
misappropriation, and business interference. CDI obtained an initial, ex parte temporary
restraining order and then sought preliminary injunctive relief. The district court denied the
motion for a preliminary injunction and dissolved the temporary restraining order. CDI
appealed.
It was held that it does not require substantial effort to generate given only few people live in
that area.

3. Reasonable efforts
This factor acts as objective evidence that owner subjectively believed his information to be a
trade secret. The more efforts made to keep the info a secret, the more imp it is to the
organization [intensity of efforts is directly proportional to importance of info]
 It indicates three things:
A. Objective evidence of the steps taken is some evidence that the TS owner subjectively
believed the info was valuable as a secret and thus worth protecting. That subjective belief in
turn is evidence that the info did in fact has value as a secret;
B. The intensity of efforts indicate the relative value of the secret; and
C. The more the effort the owner put in keeping the info secret, the more likely the info
remained a secret. That is to say, it is more likely than it would otherwise be that he or she
obtained it in an improper way.

Rockwell Graphic Systems, Inc. v. DEV Industries, Inc

 Rockwell a manufacturer of printing presses and their parts for newspapers claims
misappropriation of TS in a suit against competitor DEV and its president (a former
employee of Rockwell)
 District Court finding: No TS as Rockwell failed to take reasonable efforts to maintain
secrecy.
 Background facts: Rockwell manufacture replacement parts (wear or piece parts) and
entire presses. They does not always manufacture the parts themselves they subcontract
the manufacture of it to an independent machine shop, i.e., a vendor. Vendors are given
piece part drawings indicating material, dimensions, tolerance and methods of
 manufacture. Rockwell has no patent and believes that they can not be reverse
engineered or by inspection, drawings are required.
 Central issue: whether Rockwell tries hard enough to keep piece part drawings secret
(though not of course from the vendors)
 Fleck and Peloso were employed by Rockwell and they had been granted access to piece
part drawings. Fleck later joined as president at DEV later Peloso joined after being fired
on being caught removing drawings from Rockwell plant.
 Pretrial discovery showed DEV in possession of 600 drawings of which 100 were
rockwell
 Rockwell claims DEV obtained either by stealing or obtaining unlawfully from vendors.
DEV claims to have obtained them lawfully either from customers or vendors.
 DEV major contention before the district court was that Rockwell was “impermissibly
sloppy in its efforts to keep the piece part drawings secret” they claim thousands of
drawings were in the hands of vendors and customers of piece parts.
 The drawings held by customers were in fact not drawings but assembly drawings i.e.
instructions for assembling like eg, instructions for assembling a piece of furniture.
 On the central issue Rockwell kept the drawings in a vault/ access to vault is limited to
authorized personnel who display id/ they are mainly engineers who are to sign non
disclosure agreements/ one who needs a drawing needs to sign it out from the vault and
return it when he is finished with it/ they are permitted to make copies which they had to
destroy once work is done/ only outsiders are vendors but they are required to sign
confidentiality agreements/ vendors can make copies for internal working and to return
the drawings once work is done BUT ROCWELL DOES NOT ENFORCE THIS
REQUIREMENT (reason vendors would need it again if Rockwell reorders)/ it also
permits unsuccessful bidders to keep the drawings on the theory that the high bidder this
round may be the low bidder.
 The DEV is pressing on highlighted points pointing Rockwell’s failure to maintain
secrecy and its failure to segregate piece part drawings from assembly drawings. Which
is the reason for district court finding.
 Whether Rockwell giving piece part drawings to vendors meant it forfeit trade secret in
them? Not necessarily, it was given to a limited number of people for a limited purpose,
in fact it is often necessary for efficient exploitation of TS and imposes a duty of
confidentiality on whom its being disclosed.
 But, with engineer workforce and vendors included tens of thousands of those drawings
were floating outside Rockwell.
 Significance of requirement of reasonable efforts to maintain secrecy:
Two fold: evidentiary and remedial and this regardless of two different conception of TS
protection prevails.

Two Conceptions of TS protection:

a. More common one gives a remedy for deprival of a competitively valuable secret as the
result of an independent legal wrong (conversion, trespass, breach of employment contract or
confidentiality agreement). Secret being taken by improper means give rise to liability. And
significance is it only allows to obtain damages on the competitive value of information
taken.
b.
c. TS picks out a class of socially valuable info that the law should protect even against
nontrespassory or other lawful conduct. (eg. E.I. duPont de Nemours & Co. v. Christopher,
1970 photographing a competitors roofless plant from the air while not flying directly
overhead hence not trespassing or committing any other wrong. However it was found to be
improper means which is key to liability in the first conventional conception.)
 It is unclear how two conceptions are different, it is not as if Christopher court called
everything improper means, it specifically mentioned reverse engineering as proper,
though not explained but it rests on two fold idea that RE involves use of technical skills
that we want to encourage and anyone should have a right to take apart and study a
product that he has bought.
 It is better to describe these conceptions as different emphases. The first emphasize the
desirability of deterring efforts that have their sole purpose and effect the redistribution
of wealth from one firm to another. The second emphasize the desirability of encouraging
inventive activity and protecting it from sterile wealth redistributive- not productive
efforts. The approaches differ at all only in that in second it does not limit the class of
improper means in preexisting pigeonholes, but its also the case in the first approach in
the sense that it also does not assumes a closed class of wrongful acts either.

 Under first approach, Rockwell has to prove wrongful act (illustrated here by
unauthorized removal of piece drawings by the former employees in violation of
confidentiality and employment contracts, Rockwell was not able to prove it directly
about those 100 drawings/ but if they can show that the probability of obtaining them
otherwise- not by wrongdoing is slight than it would have been crucial for recovery
under the first theory. The greater the precautions the lower the probability that DEV
obtained them by lawful means and higher the probability of use of wrongful acts.)
 Under the second theory, the owner’s precautions would have evidentiary significance,
but now primarily to show that TS has real value. How defendant acquired is of less
importance though not completely unimportant. (eg. Christopher court spoke of reverse
engineering.) If Rockwell invested paltry resources to maintain secrecy, why law should
bother? The info in drawing could not have been worth much if Rockwell did not think it
worthy to take serious efforts to maintain secrecy.

 If plaintiff has allowed his TS to fall into public domain then it would be mean to be a
windfall for him if he is permitted to recover damages merely because defendant took the
secret from him, rather than from the public domain which he could have done with
impunity. Its like punishing someone for stealing that he believes is owned by another
but that actually is an abandoned property.
 If it were true, as apparently it is not, that Rockwell had given drawings to customers
without confidentiality requirements, DEV could have obtained them without
committing any wrong. The harm to Rockwell would have been the same as if DEV had
stolen but it would not have no remedy, having parted with its right to the trade secret.
 This is true whether the TS is regarded as property protected against wrongdoers or as
property protected against the world. In the former, defendant is perfectly entitled to
obtain it by lawful conduct if he can and he can if the property is in the hands of persons
who themselves have committed no wrong in obtaining it. In the second case the
 defendant is entitled to obtain the property when abandoned by giving away without
restrictions by the plaintiff.
 Can be understood by trade mark analogy. It is the duty of TM owner to police
infringement of his mark, failing it would mean that it had been deemed abandoned or to
become generic or descriptive, thus unprotectable. Failure of TM owner shows that he
does not consider it valuable and creates a situation in which an infringer may have been
unaware that he was using a proprietary mark because the mark had drifted into the
public domain. As DEV contends about Rockwell piece part drawings.

What is reasonable precaution?

 Answer depends on balancing of costs and benefits which will vary on a case to case
basis.
 On one hand the more owner of TS spends he demonstrates that TS has a real value
deserving legal protection and is really hurt by its misappropriation and there really was
misappropriation. On the other hand the more he spends the higher is his cost (both direct
and indirect). If Rockwell imposes severe controls restricting access to drawings the
harder it would be for engineers and vendors to do what is expected from them. Eg. If
Rockwell prohibits copying of drawings engineers had to share a single drawing passing
it around them working in the same room and would it require vendors to come work
inhouse Rockwell.
 This kind of pattern of work and production would be far from costless and therefore
PERFECT SECURITY IS NOT OPTIMUM SECURITY.
 Rockwell took some precautions both physical(vault, security guards) and contractual to
maintain confidentiality. Could they have done more? Yes, but at a cost. The question is
whether the additional benefit of those extra measures outweighs the cost?
 It can’t be answered with precision but it can not be said that Rockwell indeed had done
enough and misappropriation can be inferred from a combination of precautions taken by
Rockwell and DEV’s inability to establish the existence of a lawful source of the piece
part drawings in its possession.
 DC judgement was reversed and matter remanded back for further proceedings consistent
with this opinion.
 Take away idea: This case highlights the importance of TS in maintaining competition in
market. If they are protected only when their owner take extravagant, productivity
impairing measures to maintain secrecy the incentive to invest in discovering efficient
means of production would be reduced and with it the amount of invention. The future
depends on efficiency of industry which depends on protection of IP