Executive Summary

Trade secret protection in India rests on contract and on conduct, because no dedicated statute exists. An Ernakulam engineering manufacturer learned this after a design engineer left for a competitor and its jigs began appearing elsewhere. TGC Legal was instructed to build a protection regime that a court could actually recognise.

The company makes precision components and the tooling that produces them. Its value sits in process know how, jig geometry and a supplier list refined over many years.

The existing position was thin. Employment letters carried a single confidentiality sentence. Drawings circulated by email. Vendors received full assemblies with no obligation attached. Nobody could say which information the company treated as secret.

That last point is the one that decides cases. An action for breach of confidence asks whether the information had the necessary quality of confidence and whether it was imparted in circumstances importing an obligation. Loose handling undermines both limbs.

The work produced a classified information register, tiered access, revised employment and vendor terms, an exit protocol and a preservation plan for evidence. A restraint that would not have survived Section 27 was replaced with obligations that stand a far better prospect.

Not sure which of your drawings a court would treat as confidential? Explore our advisory work, or contact the firm about a confidentiality review.

Client Overview

The company is a precision engineering manufacturer in the Ernakulam industrial belt, supplying components to automotive, pump and marine customers across South India. It runs a machine shop, a tool room and a small design office.

Headcount sits in the low hundreds, weighted towards production. The design office is small, around a dozen people, and it holds most of what the business is actually worth.

Value is concentrated in three places. Process parameters developed by trial over many years. The geometry of in house jigs and fixtures. And a vendor list for heat treatment and specialist finishing that took a decade to assemble.

None of that is patented. Some of it could not be patented at all, since process settings arrived at empirically are difficult to claim and easy to design around once published.

The company had assumed its know how was safe because it was complicated. Complexity is not a legal protection, and it stops being a practical one the moment somebody who understands it walks out of the gate.

Business Challenges

The departure of one design engineer exposed four weaknesses at once. None of them was unusual, and none had ever been tested until somebody left.

The company wanted to sue immediately. The first advice was that the file would not support it yet, and why.

Why does India not have a trade secrets law?

India has no dedicated trade secrets statute. Protection is assembled from contract, from the equitable action for breach of confidence, and from provisions in other Acts that catch particular conduct. The obligation to protect undisclosed information comes from Article 39 of the TRIPS Agreement, and the World Intellectual Property Organization keeps a plain summary of how other systems handle it.

The Copyright Act 1957 protects engineering drawings as artistic works and software as literary works, with the employer generally owning works made in the course of employment under a contract of service. Registered rights are a separate question, covered in our intellectual property protection work.

The Information Technology Act 2000 addresses unauthorised access to a computer resource and certain breaches of confidentiality, which can matter where files were copied rather than memorised.

That patchwork is workable, but it puts far more weight on how a company behaves internally than a dedicated statute would. Conduct becomes the evidence.

Why was the non compete clause unlikely to help?

The employment letter contained a clause restraining the engineer from joining any competing business for two years anywhere in India. That kind of clause is common and rarely useful.

Section 27 of the Indian Contract Act 1872 renders agreements in restraint of trade void, subject to a narrow exception concerning the sale of goodwill.

Indian courts have consistently distinguished between covenants operating during the term of employment, which are generally enforceable, and restraints operating after it ends, which generally are not.

Confidentiality obligations sit in a different category. An obligation not to disclose or use information is not a restraint on trade in the same sense, and it can survive the end of employment.

How does loose internal handling weaken a confidentiality claim?

An action for breach of confidence asks whether the information had the necessary quality of confidence about it. Information the company itself circulated freely is difficult to describe that way afterwards.

Here drawings went out by personal email. Vendors received full assembly files rather than the single part they were making. Visitors walked the tool room without signing anything.

There was no classification. Nobody could point to a document and say this was marked confidential and access was restricted to named people.

So the first task was not litigation. It was building the internal evidence that would allow the company to describe its information as confidential the next time somebody left.

What could the vendor arrangements have exposed?

Heat treatment and finishing vendors received complete drawing sets, including tolerances and process notes they did not need to do their part of the work.

None of those vendors had signed a confidentiality agreement. Several worked for competitors, which is normal in a small industrial cluster and entirely lawful.

The vendor list itself was arguably the most valuable single asset, and it sat unmarked in a spreadsheet accessible to most of the office.

A supplier who is not bound owes nothing. That is a contractual gap rather than a betrayal, and it is fixed by paperwork rather than by suspicion.

Sharing full drawing sets with vendors who never signed anything? Read more about our confidentiality and other commercial contracts.

Business Objectives

The brief was not to win a case. It was to reach a position where the company could act quickly and credibly if this happened again, and to reduce the chance that it would.

What did the company actually need?

A defensible account of what it treats as confidential. That account had to exist on paper before any dispute, not be assembled after one.

Agreements that would hold. The company had been relying on a restraint that was almost certainly void, which gave a false sense of protection.

Practical control over who sees what. The design office is small, and full openness had been treated as a virtue rather than a risk.

And a way to leave the door open commercially. Vendors and customers still need drawings. The objective was control, not secrecy for its own sake.

Why not simply pursue the departed engineer?

Because the file did not support it. The company had suspicion and coincidence, not evidence of copying or use of identified confidential information.

The restraint it wanted to rely on was vulnerable under Section 27, which meant the strongest looking clause was the weakest part of the case.

Proceedings that fail do more harm than none at all. They confirm to a workforce and a market that the company cannot protect its position.

The decision taken was to preserve what evidence existed, put the regime in place, and revisit the question if identified information surfaced later.

What defined success for this engagement?

A classified register that a court could be shown, listing categories of information, their tier and the people with access.

Employment, vendor and visitor documents that match that register, with confidentiality obligations that survive the relationship ending.

An exit protocol applied to every leaver rather than only to those the company happens to worry about.

And a preservation plan, so that if something does surface, the underlying records are intact and their handling can be explained.

Success also meant a regime the company would still be running in three years, without anyone from outside reminding it to.

Want a confidentiality position you could actually show a court? Explore our approach, or speak to TGC Legal.

Solution Strategy

The regime was built in the order a court would examine it. What is the information. How was it treated. Who was bound. What happened when they left.

Classification came first, because every other control depends on knowing what is being protected.

How do you decide what actually needs trade secret protection?

The design office and production leads listed everything they believed carried value, then tested each item against three questions. Is it known outside the company. Could a competent competitor derive it independently. What would its loss cost.

That exercise cut the list sharply. General machining practice came off it. Catalogue dimensions came off it. Process parameter sets, jig geometry and the approved vendor list stayed.

A shorter list is stronger. A company claiming that everything is confidential is usually understood to mean that nothing is.

Each surviving item was assigned a tier, an owner and a retention position. The register itself was kept brief enough that people would maintain it.

How is access tiering applied in a working machine shop?

Tier one covers information available to anyone in the business. Tier two is restricted to a function. Tier three is restricted to named individuals and logged.

Production received the drawings needed for the operation being performed, not the full assembly. That single change removed most of the casual exposure.

Vendors received extracts. A finishing vendor needs the surface specification and the part outline, not the tolerance stack for the whole assembly.

The tool room drawing store moved to controlled issue, with a register recording who took what and when it came back. Physical control mattered as much as digital control here.

What should an employee confidentiality agreement contain?

A definition of confidential information that refers to the classification register rather than reciting a list that will date within a year.

An obligation not to use or disclose that survives the end of employment, expressed as a confidentiality obligation rather than as a restraint on working.

Assignment of intellectual property created in the course of employment, and an acknowledgement of the position on works made under a contract of service.

A return of property clause covering devices, files, drawings and any copies held personally, together with a duty to confirm compliance in writing on leaving.

Are non solicitation and garden leave useful in India?

Garden leave operates during employment, which places it on the stronger side of the Section 27 line. It was introduced for senior design roles with a defined notice period.

Non solicitation of customers and employees was drafted narrowly, limited in duration and confined to those the employee actually dealt with.

Courts take a varied view of non solicitation, so the clause was written to be severable. A clause that falls should not take the rest of the agreement with it.

The broad national non compete was removed entirely. Keeping an unenforceable clause creates false comfort and can colour how the whole document is read.

How were vendor and visitor obligations put in place?

A short confidentiality agreement was issued to every vendor receiving drawings, with obligations flowing down to their own subcontractors.

Tooling ownership was stated expressly. Where the company pays for a jig, the jig and its drawings belong to the company, and this was often unclear before.

Visitors sign a brief acknowledgement at reception, and photography in the tool room is prohibited by a posted notice rather than by informal glaring.

Existing vendors were brought into the new terms at renewal rather than by a mass demand, which avoided a commercial fight the company did not need.

Need vendor terms that actually bind the people handling your drawings? Read more about services contracts and vendor agreements.

Controls and Tools Used

The controls chosen were deliberately ordinary. A regime that depends on software nobody maintains will lapse within a year, and a lapsed regime is evidence against the company rather than for it.

How was the classification register maintained?

The register is a single sheet listing each category of information, its tier, its owner and where it is stored. It runs to two pages and is reviewed twice a year.

Each entry carries the date it was classified. That date matters, because a claim about confidentiality is stronger when the classification predates the dispute.

Adding to the register requires the design head to approve. Removing from it requires the same, and removals are recorded rather than deleted.

The register itself is treated as tier three information, since it maps exactly where the value sits in the business.

What technical controls were applied to drawings and files?

Design files moved off personal drives to a controlled store with access by role. Local copies were discouraged and the reasons explained rather than merely announced.

Issued drawings carry a confidentiality legend, the tier, and the name of the party they were issued to. That legend is what a court sees on the document itself.

Extracts for vendors are generated as flattened files rather than native models, so a supplier receives what it needs and not the parametric history behind it.

Access logs are retained for a defined period. Logs are useless if they are overwritten before anybody thinks to look at them.

How was the exit protocol structured?

Every leaver, at every level, goes through the same steps. Access is withdrawn on the last working day rather than whenever someone remembers.

Company devices are collected and imaged before reissue. Imaging costs little and preserves the position if a question arises months later.

The leaver signs an acknowledgement confirming return of materials and reminding them of the surviving confidentiality obligation.

A short exit conversation covers where they are going and what they will be doing. The answers are recorded factually, without comment.

Implementation Process

The programme ran across roughly three months, with classification taking longer than any drafting. Production was not interrupted, which was a stated condition from the outset.

The first two weeks were spent walking the shop and the design office rather than reading documents.

How was the current position assessed?

The assessment traced how a drawing actually moves through the business, from the design office to production to a vendor and back. Following the document tells you more than reading the policy.

Interviews covered the design head, two production leads, the stores in charge and the purchase manager. Each described a different understanding of what was confidential.

Existing employment letters, vendor purchase orders and the single non disclosure agreement on file were reviewed against that reality.

The gap between the documents and the practice was the finding. Everything that followed was an attempt to close it in a way people would sustain.

How was the classification exercise run without stopping work?

It ran as four short workshops rather than one long one, each scheduled around production planning meetings that already existed.

Participants were asked what they would not want a competitor to have. That question draws sharper answers than asking what is confidential.

Draft entries were circulated and challenged. Several items thought precious turned out to be published in supplier catalogues.

The register was signed off by the managing partner, which mattered. Classification without authority does not survive its first commercial inconvenience.

How were the new employment terms introduced?

New terms were issued to all staff with an explanation of what was changing and why, in Malayalam and English.

Consideration was addressed properly for existing employees rather than assumed, and the timing was aligned with the annual review cycle.

The removal of the old non compete was explained openly. Staff had believed they were restrained from working elsewhere, which had been quietly affecting morale.

Senior design staff received the garden leave and notice provisions separately, with the commercial reasoning explained face to face.

How was evidence preserved in relation to the earlier departure?

The departed engineer machine had already been reissued, which is the most common way evidence disappears in these matters. It could not be recovered.

Email and file access logs still existed for part of the period and were preserved before the retention window closed.

A factual chronology was prepared while recollections were fresh, recording dates, access and what was observed in the market.

No proceedings were commenced. The chronology sits on file, and it would materially shorten the work if identified information ever surfaces.

Has a key engineer just resigned? Explore how we can help.

Business Results

Results are described here in direction of change rather than in figures. Outcomes in confidentiality matters depend on evidence and on judicial discretion, and numbers would suggest a certainty that does not exist.

What follows is what the company reported after the programme settled in.

What changed about the company legal position?

The company can now identify, in writing and with dates, what it treats as confidential and who was permitted to see it.

Its agreements carry confidentiality obligations that survive employment, rather than a restraint that was unlikely to be enforced.

Vendors handling drawings are contractually bound, with obligations flowing down to their subcontractors. Our non disclosure agreement case study for a SaaS startup covers the same flow down in a software setting.

If a matter arises, the first weeks of work are already done. That difference decides whether interim relief is realistic.

The classification register also gives counsel something concrete to plead, rather than a general assertion that the work was hard won.

What changed on the shop floor?

Production works from operation drawings rather than full assemblies. Nobody has complained, because nobody was using the extra information anyway.

The drawing store operates on controlled issue, and the register has already located two sets that had been missing for months.

Photography in the tool room stopped, which had been happening casually and constantly.

Staff understand the tiers. The vocabulary is now shared, which was the largest single change in behaviour.

Operators now ask which tier a document sits in before forwarding it, which nobody had thought to ask before the register existed.

What changed with vendors and customers?

Vendors accepted the confidentiality terms without difficulty. Several had similar obligations to their other customers already.

Tooling ownership disputes, which had simmered for years with two suppliers, were settled by stating the position in the new terms.

Customers running their own supplier audits responded well to the classification register, which answered questions they had previously raised informally.

One customer in the automotive sector treated the regime as a factor in approving the company for a further programme.

Purchase conversations became easier too, since the terms on confidentiality and tooling now sit in the standard order rather than being negotiated each time.

What changed about leavers?

Every leaver now follows the same protocol, which removes the awkwardness of applying scrutiny only to people the company distrusts.

Devices are imaged before reissue as a matter of routine, so the evidence problem from the earlier departure cannot repeat.

Exit acknowledgements are signed without friction, because the obligation is explained at joining rather than sprung at leaving.

Two design staff have since left. Both departures were unremarkable, and in both the position was documented within a day.

Managers stopped treating the protocol as an accusation, because it applies to a retirement and a resignation in exactly the same way.

Want a leaver protocol that works the same for everyone? Read more about employment contracts and workplace terms.

Lessons Learned

The most valuable work was not legal drafting. It was persuading a business that had always operated openly to decide what it actually needed to keep.

What surprised the company most?

That its strongest looking clause was its weakest. The two year national non compete had given real comfort and would very likely have failed.

That the vendor list, held in an ordinary spreadsheet, was probably the single most valuable item in the register.

That classification cut the list of secrets by more than half. Much of what people guarded was already in supplier catalogues.

That imaging a departing engineer laptop, which costs very little, is the step most likely to decide a future case.

What worked better than expected?

Asking people what they would not want a competitor to have. It produced a usable register in four short sessions.

Issuing extracts to vendors rather than full sets. It reduced exposure and, incidentally, reduced vendor queries about irrelevant tolerances.

Explaining the removal of the non compete openly. It improved trust in the wider changes and cost the company nothing it actually had.

The two page register. Anything longer would have been written once and never opened again.

Moving design files off personal drives caused far less resistance than predicted, once the reasons were explained rather than announced.

What would be done earlier next time?

Classification, long before any departure. The register is only persuasive if it predates the dispute it is used in.

Vendor confidentiality terms at the point of first engagement, rather than retrofitted at renewal across an existing supply base.

Device imaging as a standing rule from the day the design office was formed.

Access tiering while the team was small. Retrofitting restrictions to people who once saw everything is harder than starting that way.

A confidentiality legend on every issued drawing would also have been trivial to apply from the start and difficult to retrofit later.

What should other Kerala manufacturers check first?

Check whether any document in the business is marked confidential and whether anyone can explain the basis on which it was marked. Our protecting software source code case study works through the same question for code rather than drawings.

Check whether vendors receiving drawings have signed anything at all, and whether tooling ownership is stated anywhere.

Check whether employment agreements rely on a post employment non compete that would not survive Section 27.

Finally, look at what happens to a laptop when somebody leaves, and how long access logs are retained before they are overwritten.

Look also at whether anyone outside the design office can currently download a full assembly file without leaving a trace.

Frequently Asked Questions

Does India have a trade secrets law?

There is no dedicated trade secrets statute in India. Protection is assembled from contract, from the equitable action for breach of confidence, and from provisions of other laws including the Copyright Act 1957 and the Information Technology Act 2000. India also carries obligations concerning undisclosed information under the agreement on trade related aspects of intellectual property rights.

Are non compete clauses enforceable against employees in India?

Generally not after employment ends. Section 27 of the Indian Contract Act 1872 makes agreements in restraint of trade void, subject to a narrow exception concerning the sale of goodwill. Covenants operating during the term of employment are treated differently and are generally enforceable. Confidentiality obligations are not restraints on trade in the same sense and can survive the relationship.

What is the difference between a confidentiality clause and a non compete?

A confidentiality clause restricts the use or disclosure of specified information. A non compete restricts where and for whom a person may work. Indian courts treat the second far more strictly, because it affects the right to earn a livelihood. Drafting protection as a confidentiality obligation rather than as a restraint gives it a materially better prospect of being enforced.

How does a court decide whether information was confidential?

An action for breach of confidence asks whether the information had the necessary quality of confidence, whether it was communicated in circumstances importing an obligation of confidence, and whether it was used or disclosed without authority. Internal handling matters greatly. Information the company circulated openly is difficult to describe as confidential once a dispute begins.

Are engineering drawings protected by copyright in India?

Engineering drawings are generally protected as artistic works under the Copyright Act 1957, and software as literary works. Where a work is made in the course of employment under a contract of service, the employer is generally the first owner in the absence of an agreement to the contrary. Copyright protects the expression rather than the underlying process or idea.

Should vendors sign a confidentiality agreement?

Yes, wherever they receive drawings, specifications or process information. Obligations should flow down to their own subcontractors, and tooling ownership should be stated expressly where the customer has paid for a jig or fixture. Sending a full drawing set to a supplier who has signed nothing leaves the recipient owing no obligation at all.

What should happen when a key technical employee resigns?

Withdraw access on the last working day, collect devices and image them before reissue, and take a signed acknowledgement covering the return of materials and the surviving confidentiality obligation. Record a short factual chronology while recollections are fresh. Reissuing a laptop before imaging it is the most common way evidence is lost in these matters.

Is garden leave enforceable in India?

Garden leave operates during the employment relationship, with the employee paid but kept away from work and information. Because it operates during the term rather than after it, it sits on the stronger side of the Section 27 line. It works most reliably with a defined notice period, and it is usually reserved for senior technical and commercial roles.

What remedies are available if a trade secret is misused?

Civil remedies include an injunction restraining further use or disclosure, delivery up or destruction of materials, and damages or an account of profits. Interim relief is often the practical objective, and courts can make orders directed at preserving evidence. Where files were copied from a computer resource, provisions of the Information Technology Act 2000 may also be relevant.

How short should a classification register be?

Short enough that people maintain it. A register running to two pages, reviewed twice a year, is more useful than an exhaustive schedule nobody updates. A shorter list is also more persuasive, because a company claiming that everything in the business is confidential is generally understood to mean that nothing in particular is.

Conclusion

Trade secret protection in India is built rather than granted. No statute hands it over, so a company earns it through contract, through classification and through the way it handles its own information every day. This Ernakulam engineering firm believed complexity was protection until an engineer left and its jigs appeared elsewhere. What it found was a two year national non compete that would very likely have failed, drawings sent freely to vendors who had signed nothing, and no way to say which information it treated as secret. Fixing that took about three months, and most of it went on deciding what genuinely needed protecting rather than on drafting clauses. The register runs to two pages. Vendors receive extracts rather than full sets. Every leaver follows the same protocol and every device is imaged. None of it is complicated, and all of it would have to exist before a dispute rather than after one. If your own protection rests on a non compete clause and a general sense that the work is hard to copy, those are the two assumptions worth testing. TGC Legal advises manufacturers and technology businesses on confidentiality and commercial contracts, and you can read more or start a conversation.