Patents and Trade secrets can theoretically coexist. This is because the former can protect patentable inventions while the latter can protect the wealth of crucial ancillary knowledge that goes along with such inventions. As a result, there is a synergistic combination that ensures nearly impervious exclusivity. The same innovation cannot, according to established jurisprudence, be protected by both types of rights. A patentee cannot use a know-how agreement to try and protect the information already revealed in the patent, as a trade secret.
In order to address the issue of dual protection, the Delhi High Court recently explored this interaction between patents and trade secrets in Prof. Dr. Claudio de Simone v. Acital Farmaceuatica Srl.
Facts of the Case
A patent licencing agreement was awarded to the American division of the plaintiff, the CD Group, for a duration lasting until the patent rights expired. However, in order to guarantee continuing use of the patent after its term had expired, they agreed into a know-how licensing agreement. This arrangement went into effect one year after the patent license agreement did.
In the end, the Delhi High Court decided that, regardless of the actual disclosure made in a patent, the dual protection model was not feasible and that an inventor could not obtain property rights in his invention by signing know-how agreements and claiming confidentiality when the information has already entered the public domain after a foreign patent had expired.
Why Did the Delhi High Court Do This?
The Indian Court dismissed the trade secret protection claim and ruled that the defendants cannot be stopped from producing the goods notwithstanding the Know-How Agreement because, in their opinion, doing so would amount to the courts granting the innovation an extra-statutory rights. According to the court, providing trade secret protection after a patent expires is contrary to both judicial and public interest because the Patent Act of 1970 aims to release an invention into the public domain following the end of the patent term.
No Objective Either-Or Situation
A product’s intellectual property (IP) rights should be protected. Those who learned the skills through reverse engineering can be considered exceptions because they did so intellectually. Nonetheless, the preservation of rights against the individuals to whom the know-how was revealed under a contract is justified to prevent any circumstance in which such disclosure and confidentiality might be used unfairly.
Both types of protection may be pursued concurrently in other jurisdictions, as demonstrated by cases like Wyeth v. Natural Biologics Inc. and Altavion, Inc. v. Konica Minolta. So, if kept secret, a patentable concept could also constitute information that is covered by trade secret law.
A Missed Opportunity?
According to Section 10 of the Patents Act, the invention must be properly defined in order for all information pertaining to its operation and functioning to be released into the public domain. This section in paper stands against the dual protection and therefore should be amended.
However the present case was an opportunity for the court to bring the Indian law in par with its foreign counterparts. The Court has, however, effectively rejected the use of the layered approach to innovation protection that has been firmly upheld in the foreign jurisdictions by this interpretation. As a result, there are now opposing viewpoints about the protection and monetization of IPR.
The court neglected to recognise that there are additional know-how requirements for the successful implementation of the innovation, which are frequently provided by the inventor to its licensees through licensing agreements. Since the most commercially viable method of operation is not the best operation method as provided in patent application. This common commercial practice clearly depicts that such situations are overlooked by Indian legislature thus could have benefitted from Judicial interpretation and hence would not constitute an extra statutory monopoly. The court has muddled such fundamental aspects which has a negative impact on the overall IPR protection.
So, there is unquestionably still room for discussion over the actual application of patents as well as the entirety of the trade secret protection regime in the Indian Intellectual Property Rights domain.
Author: Mahima Agarwal, Legal Intern at PA Legal.
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