Wednesday, October 08, 2008
by: Kamakhya Srivastava

The government's endeavour in bringing out a comprehensive legislation to boost research and innovation in the country has crossed the first milestone. The Draft National Innovation Act 2008 (hereinafter draft Innovation Act), put in place by the Department of Science and Technology, has a three pronged approach as evident by its preamble. The draft Innovation Act undertakes to encourage innovation through an Innovation support system facilitated by the public, private or public-private partnership. The second approach strategy is evolving into a National Integrated Science and Technology Plan. The third and last objective is the codifying and consolidating the law of confidentiality in aid of protecting Confidential Information, trade secrets and Innovation.
Pan-European Intellectual Property Summit 2008

The draft Innovation Act was widely speculated to be modeled on America COMPETES Act (America Creating Opportunities to Meaningfully Promote Excellence in Technology, Education, and Science Act). The America COMPETES Act, through its preamble "To invest in innovation through research and development, and to improve the competitiveness of the United States" focuses on three primary areas of importance of maintaining and improving United States' innovation in the 21st Century: (1) increasing research investment, (2) strengthening educational opportunities in science, technology, engineering, and mathematics from elementary through graduate school, and (3) developing an innovation infrastructure.

The draft National Innovation Act through its first two objectives - an Innovation support system facilitated by the public, private or public-private partnership and a National Integrated Science and Technology Plan - seems to be taking care of the three focus areas of the America COMPETES Act.

Codification and consolidation of the law of confidentiality, the third highlight in the preamble of the draft Innovation Act demonstrates the significance of trade secrets and confidential information within the realm of innovation. Innovative ideas, products and business practices help enterprises to maintain competitive superiority in the market alongside furthering their economic interests. It is for this reason that there is a need to prevent others from taking advantage of the breakthrough ideas and knowledge or in ordinary parlance the confidential information or trade secrets.

Under the TRIPs Agreement 'trade secrets' are referred as 'Undisclosed information'. Any information is prevented from being disclosed so long as such information: (a) is secret in the sense that it is not, as a body or in the precise configuration and assembly of its components, generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question; (b) has commercial value because it is secret; and (c) has been subject to reasonable steps under the circumstances, by the person lawfully in control of the information, to keep it secret.

In India protection of trade secrets is Common Law based. However section 27 of the Indian Contract Act provides some sort of limited remedy, it bars any person from disclosing any information which he acquires as a result of a contract. The grant of statutory protection to trade secrets is the need of the hour.

Under the draft Innovation Act, trade secrets and confidential information are elucidated in Chapter VI titled as "Confidentiality and Confidential Information and Remedies and Offences". The chapter explicates on Obligations of Confidentiality and Remedies to protect and preserve confidentiality. The obligation to maintain confidential information, under the draft statute, rests on the contractual terms and conditions, governmental recommendation and on any right arising in equity. Remedy in the form of preventive or mandatory injunction restrains misappropriation of Confidential Information and mandatory damages on proof of breach of confidentiality. Exceptions to misappropriation of confidential information form one of the sections under the chapter. Interestingly, disclosure of the confidential information in public interest forms one of the exceptions.

To spur innovation through planned and systematic investments and incentives is a dynamic idea which is amply reflected in the draft Innovation Act but the sore patch seems to be the part dealing with protection and preservation of trade secrets and confidential information. There is no doubt that innovation, as defined in the draft Innovation Act, relates to incremental developments often resulting in value enhancement or economic significance which may be a trade secret or a confidential information if vital to competitive strategy. Trade secrets such as technologies, proprietary knowledge (know-how), ideas and business methods acquire paramount importance in the present scenario of aggressive competition, industrialization and liberalization, but a statute meant to give a boost to research and innovation may not treat the subject-matter of protection and preservation of trade secret and confidential information adequately as a separate statute would accomplish.

The present statute may very well maintain and improve India's innovation through its 'Innovation Park Scheme', 'Special Innovation Zones' and 'National Flagship Programmes'. The intersection of innovation, trade secret and confidential information may best be addressed by a specific legislation addressing precise concerns of enterprises on protection and preservation of trade secrets and confidential information.