Intellectual Property RightsDocuments Corroborating the Proprietary Rights of the Disclosing Party Necessary to Ascertain Breach of Confidential Information

The Hon’ble High Court of Bombay in the case of Rochem Separation Systems (India) Pvt. Ltd. v. Nirtech Private Limited, [Interim Application Number 29924 of 2022] decided on 30.03.23 held that if the Plaintiff claims to have his confidential information misused by another person, it must furnish necessary documents before the Court to infer whether the information allegedly misused is confidential in nature.

FACTS

Rochem Separation Systems (India) Pvt. Ltd (hereinafter referred to as the “Plaintiff”) pleaded that there was breach of confidentiality on the part of the Nirtech Private Limited (hereinafter referred to as “Defendant”), who were ex-employees of the Plaintiff and were allegedly using the acquired knowledge, expertise and skill gained in confidence, in order to cause loss to the business of the Plaintiff.

The primary issue for consideration was whether the Defendant, who are ex-employees of the Plaintiff, could be in a trade which is in direct competition with the Plaintiff and, during the course of such trade, utilize confidential information acquired during the Defendant’s course of previous employment.

While the suit was still going on, the High Court of Bombay (hereinafter referred to as “the Court”) issued an interim injunction on 12.10.2022. On the basis of the argument of the Defendants that the Plaintiff was involved in concealing material facts from the Court, the Defendant took recourse of the first proviso of Order XXXIX Rule 4 of the Code of Civil Procedure, 1908 (hereafter referred to as “CPC“) for dissolving the interim orders.

ISSUES BEFORE THE HIGH COURT

1. Whether the interim order placed in the proceedings be vacated on the grounds of defiance from furnishing necessary information?
2. Whether the Court can infer the nature of the information being confidential without complete documents?
3. Whether seizing mobile phones, laptops, and other technical belongs during an interim order amount to a violation of privacy?

CONTENTIONS OF BOTH THE PARTIES:

The Plaintiff initially asserted that the Defendant did not submit any grounds for vacating or dissolving the interim order. The Plaintiff pleaded that there had been a breach of confidentiality that had occurred at the end of the Defendant  as they were both, ex-employees of the Plaintiff. The Plaintiff further pleaded for a pre-emptive action as in order to to seize the misuse of the  confidential information by the Defendant.

The Plaintiff submitted that the use  of the information and expertise garnered by the Defendant in their old job and using it for their current profits is a clear violation and breach of confidentiality.

Furthermore, the Plaintiff contented that the pleadings are for a quia timet action, in which the Plaintiff suspects the Defendants of misusing confidential information. It was also argued that in the context of such an action initiated by the Plaintiff, it is not required that every detail of the sensitive information be presented to the Hon’ble Court as the confidentiality of the same would be compromised.

In response to the contentions made by the Plaintiff, the  Defendant submitted that the Plaintiff has allegedly concealed their facts while submitting it to the Court in order to obtain the interim order from the Court.

Further the Defendants argued that the aforementioned patent awarded in the United States of America, which was subsequently expired, had not been brought to the attention of this Court, despite the fact that it was the basis for machinery and equipment manufactured in the framework of water purification technology.

The drawing on which the Plaintiff claimed copyright has been in the public domain for many years, according to the submission. Minor changes in dimensions would not grant the Plaintiff any proprietary rights. On this basis, it was urged that the ad-interim order be vacated under CPC Order XXXIX Rule 4 and the application for ad-interim relief be dismissed..

JUDGEMENT AND FINDINGS

The Court while placing reliance on the Narendra Mohan Singh and Ors. Vs. Ketan Mehta and Ors. [SUIT (L) NO. 778 OF 2015]  observed that, the Plaintiff, in the case of breach of confidentiality situation must address the following :

• to identify clearly the information relied on;
• to show that it was handed over in circumstances of confidence;
• to show that it was information that could be treated as confidential; and
• to show that it was used, or threatened to be used, without his licence.

Furthermore, the Court placed reliance on the case of Tarun Wadhwa Vs. Saregama India Ltd. and Ors., [COMMERCIAL IP SUIT (L) NO.4366 OF 2021] , wherein it was held that confidential information must be accurately and explicitly identified in the Court. Protection must be claimed for that  particular part of the information only.

Therefore, in order to ascertain whether there is a case involving a nature of confidentiality, the necessary documents and information must be handed over to the Court by the concerned party in their originality, completeness and precision. Thus, it becomes clear that compliance on the part of the Plaintiff with reference to the submission of the concerned documents must be strictly adhered to.

The reason for such stringent compliance for the submission of the documents is clear. There must be a way to verify whether the information on which the Plaintiff is claiming of confidentiality is actually of confidential nature or not. The Court must have clear and specific data from the Plaintiff’s submissions so that it can facilitate in the ascertaining of the information’s nature of confidentiality.

The Plaintiff in the present case has claimed protection of a series of information, knowledge, skills as extensively detailed in their plaint, without providing further details regarding these “confidential information.” The Court opined that the Defendants, in the instant case are therefore merely claiming grievance for the same. Thus, the Court was of the opinion that the Defendant was reasonable in asserting that such wide interim orders should not have been passed as the Plaintiff on the other hand has made no effort whatsoever to furnish before the  Court  any supporting documents in reliance of its contentions, instead have obtained interim order in guise of submitting documents in a sealed envelope.

Regarding the drawings in reference to the connection flanges that the Plaintiff claims to have been copied, the Court bases his findings on the basis of the contentions put forth by the Defendant that the drawings were in fact a patent that were used way back in 1983 in the US and they are also a part of the public domain regarding which they submitted necessary record material for verification.

The Court opined that the Plaintiff did indulge in withholding certain information while obtaining interim reliefs and the interim relief itself was not deserved.

Additionally, the contentions pertaining to the copyright issues as made in the arguments of the Plaintiff didn’t take the proceedings any further and thus didn’t hold any substance in the instant matter.

However, the issue regarding whether the Plaintiff can claim infringement of copyright in the drawings used by the Defendants can still be contested in the Court. It was finally held that the Plaintiff failed to submit its documents and make a clear case before the Court and the on the other hand the Defendant’s privacy issues with regards to seizing their belongings is justified.

The Hon’ble Court vacated the interim order and dismissed the application of the interim order by the Plaintiff.

AMLEGALS REMARKS

While there are orders stating that confidential information can be protected under copyright law, it is still unclear whether a case for misappropriation of confidential data, particularly industrial espionage, can be established due to the fact that the Defendant’s employees were previously employed by the Plaintiff as subject matter experts to conduct research on their behalf.

As case laws and empirical evidence on the theft of confidential information in the Indian setting are scarce, there is no clarity on the same. The absence of a statute or legislation in India to govern the protection of confidential information implies that the common parlance for protecting confidential information and enforcing rights in relation to it is through the Indian Contract Act, 1872, the Copyright Act, 1957, or through remedies recognised in common law and equity.

While India has the essential legal structure to protect confidential information, the legislation must be modified to ensure that the codification process of preserving confidential information occurs efficiently.