A Critical Study of Legal Protection of Confidential Information Through Non-Disclosure Agreement in India

Abstract

The relevant information is valuable and requires legal protection. For the legal protection of information, the recognition of the law to protect the information is mandatory. Such protected information by law is intellectual property. In many situations, it is more advantageous to protect information under the legal regime of Confidential Information than other forms of intellectual property rights. It is necessary to understand the nature, legal definition, and classifications of confidential information to protect confidential information. The various nature of information such as know-how, data protection, test data, personal information, database protection, etc. may be protected under the legal regime of confidential information. If information qualifies all the essential legal requirements of confidential information, such information will be protected under the legal regime of confidential information. Some of the important questions to be answered to protect confidential information: Is the information capable of being protected? When do obligations of confidence arise? Are its obligations of confidence breached? The protection of confidential information must be understood at international and national levels. India is a signatory to TRIPs, and TRIPs require all the signatory states to take measures to protect confidential information. But TRIPs do not provide any specific legal modality to protect confidential information. Several countries including the U.S.A, U.K., and EU have enacted legislation to protect confidential information. The EU member country should protect confidential information, considering the minimum standards provided by EU Directive. The protection provided by EU member countries will be likely to protect confidential information vary from country to country under EU Trade Secrets Directive. It is important to note that at present Defend Trade Secrets Act, 2016 (DTSA) of the USA is the prominent and model law to protect confidential information in the world. India does not have special legislation codifying the protection of Confidential Information. At present, in India Confidential Information may be protected under breach of Contracts, Common Law Tort of breach of confidence, Unfair Competition, Privacy Laws, under Criminal Law, and other several statutes of India like the Information Technology Act of 2000, Competition Act 2002, Copyright Act of 1976, Securities Exchange Board of India (Prohibition of Insider Trading) Regulations 1992 and Indian Penal Code, are providing legal remedies for breach of confidential information. The existing legislation to protect confidential information does not provide comprehensive protection under one legislation. These legislations are not special legislations to protect confidential information. Protecting confidential information in employer and employee relationships is one of the important aspects. Particularly, Section 27 of the Indian Contract Act of 1872 is to be understood in detail to protect confidential information. The extent of validity of non-competition and non-solicitation covenants in protecting confidential information is important in protecting confidential information in the context of employer and employee relationships. India must enact the codified law to protect confidential information. Such codified law will make the legal regime to protect confidential information more predictable, comprehensible, and just. However, it should be noted that in India, parties primarily rely on contract law or common law to protect confidential information. If the transaction is commercial, it is observed that the parties prefer to protect confidential information under contract law. Therefore, it is relevant to understand the protection of confidential information under contract law, including drafting a Non Disclosure Agreement and its enforcement. Further, by Non-Disclosing Agreement, parties may overcome differences under different legal regimes and create specific rights and obligations of parties to protect confidential information, therefore the information will be better protected. Thus, it is in the interest of disclosing party of confidential information that the Non-Disclosure Agreement is to be executed before disclosing any information to the other party. Each Non-Disclosure Agreement should be meticulously drafted and reviewed to meet the needs of the situation to protect confidential information. It is important to note that even countries that have special statutes concerning the protection of confidential information often rely on Non-Disclosure Agreements to protect confidential information. Even though it is correct to state that Non Disclosure Agreement is one of the best ways to protect confidential information, however, to make the legal regime of confidential information more comprehensive, the special statute to protect confidential information and reasonable interpretation of courts is essential. Further, administrative methods must be employed to protect confidential information.