Protecting Confidential Information as Copyrightable Material with Confidential Reasons?

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The Delhi High Court recently passed an ex parte interim injunction in Markets and Markets Research Pvt. Ltd. v. Meticulous Market Research Pvt. Ltd. and Ors., finding a prima facie case of copyright infringement. However, alongside the questions of copyright, the present case also had elements of protecting confidential data. Therefore, in passing the interim injunction order on the basis of rights granted under the Copyright Act, 1957, the court not only restrained the defendant from violating the copyright of the plaintiff but also prevented the infringement of its confidential data. Coincidentally, a few days after this order, the Bombay High Court came up with another order in Rochem Separation Systems (India) Pvt. Ltd. v. Nirtech Private Limited & Ors, on the protection of confidential information wherein the court expressly stated its reasons for vacating the earlier interim injunction. Thus looking at this order from the lens of the Bombay High Court order, the main issue that pops up here is that the Delhi High Court’s order lacks any mentioned reasoning on its protection of confidential information.

Brief Facts of the Case – 

The plaintiff, Markets and Markets Research Pvt. Ltd., is a company engaged in the business of providing quantified research and market intelligence to various corporate and institutional clients using confidential and proprietary research methodologies to generate market-specific reports, which are then purchased by its various high-profile clients. The defendant, Meticulous Market Research Pvt. Ltd., is also engaged in the same business and is a direct competitor of the plaintiff. They alleged that the defendants were copying the format and content of the plaintiff’s market research reports to create their own reports. The Plaintiff learnt about this after the Vice President of the defendant, who was also an ex-employee of the plaintiff, offered to sell a report titled “Continuous Manufacturing Market” that was identical to the one published by the plaintiff in April 2017. A criminal complaint was also initiated against them for suspected theft of confidential data, including client information and data. 

Prima Facie Findings on Copyright Infringement

The Court, upon comparing the various reports of the two companies, noted that the defendant’s reports were very similar to the plaintiff’s reports, including having identical titles, a similar table of contents, and a substantial portion of the contents of the reports as well. Additionally, although the full reports of the defendants were not accessible to the plaintiff, as per the information available on their website, it appears that the defendants, at the very least, have copied the title of 91 reports of the plaintiffs. Having observed this, the Delhi High Court noted that the copyright of the reports of the plaintiff belonged to them, and these contain their confidential information too.  The Court, however, found a prima facie case of copyright infringement and noted that the balance of convenience was in the plaintiff’s favour. Accordingly, an ex parte ad interim injunction was passed by the Court restraining the defendant from advertising and selling the impugned market research reports.

Findings on violation of Confidential Information (with confidential reasons?)

While copyright safeguards the expression contained in the plaintiff’s reports, the underlying data of reports can be protected since it is commercially viable secret information. Accordingly, copyright and confidential data safeguard different aspects of the reports. In this case, in addition to the claim of infringement of copyright, the plaintiff has also alleged that their confidential information was disclosed without their consent by initiating a criminal complaint for suspicious activity of theft of confidential data, including client information and data. While the Court passed the order noting that the defendant had violated the plaintiff’s original work, an analysis of whether there is a theft of confidential data was not provided. The Court merely noted that the reports of the plaintiff contain their “trade secrets and confidential information”, thereby alluding that there was a violation of the plaintiff’s confidential information as well but has not provided adequate reasoning as to why it has classified the plaintiff’s reports as confidential information. One can question what basis the court has used to consider this as confidential information. Was it merely because the plaintiff said so? This leads to other queries, including whether the Court has tried to safeguard the ‘confidential information’ through remedies as recognised in equity and common law or through the Contract Act, 1872 or within the ambit of the Copyright law? Additionally, since there is not much clarity as to what exactly can be considered as confidential information, what has the Court considered the legal criteria in this case for classifying the plaintiff’s reports as confidential information? Can information be considered confidential if, for e.g., it is shared with everyone within the company? If so, what are the measures taken to prevent it from being disseminated? Assuming it is ‘commercially viable secret information’, what is the legal evidentiary burden for it to be classified as such? On the whole, there seems to be very little reasoning, or at the least, very little transparency with regard to the reasoning provided, which in turn affects jurisprudence and the precedential value that this case sets.

Protecting Confidential Information under the Copyright Act?

In the present case, the Court had the option to analyse whether the plaintiff’s confidential information could be protected as per the Indian Contracts Act, 1872 or whether their client information kept in databases can be construed as copyrightable material under the Copyright Act, 1957. In  Richard Brady v. Chemical Process Equipment Pvt. Ltd., the Delhi High Court has implicitly noted that the protection of confidential information from being infringed can be done so by considering the client data as copyrightable material under the Copyright Act, 1957. The statement given below implies the same.

“It is claimed that the reports of the plaintiff and each element thereof are original work of the copyright and contain plaintiff’s trade secrets and confidential information. The actions of the defendants have resulted in infringement of plaintiff’s copyright.” (¶31)

This stance was also maintained in Indian Explosives Pvt. Ltd. v. Ideal Detonators Pvt. Ltd. and Ors., where the Calcutta High Court protected the confidential information of the plaintiff within the purview of the Copyright law itself and passed an order restraining the respondents from disclosing that information. 

Therefore, it may not come off as surprising that the court, in the present case, too, followed suit. However, what should be kept in mind is that while there are orders which state that confidential information can be protected within the Copyright law, it is still unclear whether a case for misappropriation of confidential data, particularly industrial espionage, can be established owing to the fact that the defendant’s employees were previously employed by the plaintiff as subject matter experts to conduct research on their behalf. Since case laws and empirical data regarding the theft of confidential information in the Indian context are very rare, there is not much clarity regarding the same. Therefore, it would have been prudent if the Court had passed an order discussing these aspects of disclosing confidential data.

The lack of a statute or legislation to govern the protection of confidential information in India implicitly shows that the common parlance of protecting confidential information and enforcing the rights with respect to the same is through the Indian Contract Act, 1872, the Copyright Act, 1957 or by remedies which are recognised in common law and equity. As analysed by Prashant Reddy in his paper, while India does have the basic legal framework to safeguard confidential information, it is crucial that the law is reformed to ensure that the codification process of protecting confidential information occurs effectively.

Rochem Separation Systems (India) Pvt. Ltd. v. Nirtech Private Limited & Ors.

While working on this post, I came across the order pronounced by the Bombay High Court on 30 March 2023 in the Rochem Separation Systems (India) Pvt. Ltd., wherein the court held that  “There has to be clear-cut, specific description and data with the Court pertaining to the information in which the plaintiff claims confidentiality. In the absence of such clear-cut information and material, furnished by the plaintiff before the Court, there would be no basis for examining the allegations leveled against the defendants” owing to the fact that the plaintiff had not placed on record the specifics of the confidentiality before the Court. In this case, the Bombay High Court also referred to Zee Telefilms Ltd. and Ors. v. Sundial Communications Pvt. Ltd. and Ors., and Narendra Mohan Singh and Ors. v. Ketan Mehta and Ors., and laid down that the procedure adopted by the Courts of providing the “information in sealed covers with material particulars” is mandatory and would not amount to the diluting of the information since it would check the veracity of the claims made by the plaintiff thereby adding an interesting twist to the enforcement of the breach of confidentiality claims.

In the Markets case, it is not established that the reports of the plaintiffs have been copied by the defendant, and the Court seems to have merely relied on the claims made by the Plaintiff. Additionally, since there was an alleged breach of confidential information, the Court could have asked the plaintiff to place on record the confidential information before it in order to determine the veracity of the claims made by the plaintiff as was done in the Rochem case and others including Forbes Marshall Pvt. Ltd. v. Steam Equipments Private Ltd. and Ors. and Credit Suisse Services (India) Pvt. Ltd. v. Nisheet Singh. Without this, the Court may not be able to provide a well-reasoned analysis of the breach of confidentiality claims.

If any readers know about more cases that could provide some guidance in this discussion, please let us know in the comments below!

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