Recently, a former employee of Homag India Ltd. the Indian subsidiary of a German company was injuncted by the Hon’ble Karnataka High Court Bench at Bangalore from taking up employment with IMA AG Asia Pacific PTE Ltd., a German subsidiary company based in Singapore, for having passed on Homag India’s trade secrets to the latter through his official email. This was done despite there being a strong confidentiality clause in the employment agreement between Homag and its former employee. The temporary injunction also seeks to prevent IMA AG Asia Pacific PTE Ltd from exploiting the trade secrets of Homag India.
The Hon’ble Court passed the temporary injunction based on prima facie evidence of inducement on the part of IMA AG Asia Pacific PTE Ltd whereby the German subsidiary promised the employee a lucrative job in exchange of Homag’s trade secrets.
The question of enforceability of negative covenants in employment agreement by courts came up once again in this matter when the Hon’ble High Court, relying upon the judgment of Best Sellers Retail India (Private) Limited V/s Aditya Birla Nuvo Limited & Others, (2012) 6 SCC 792 held that negative covenants can be enforced by a court in proceedings for interim injunction conducted under the CPC. The Court also referred to the judgement of Niranjan Shankar Golikari V/s Century Spinning and Manufacturing Co. Ltd. to strengthen its decision.
How, is this article relevant to Intellectual Property, you would ask? Have we not heard enough of these already? Why does this decision deserve space on this blog?
Although data theft and leakage of trade secrets (often of Intellectual Property in the form of drawings, designs, blueprints, plans, samples etc.) have been around for a while, the frequency of their commission has increased insidiously of late. Further, data theft via computers and the internet comprise a large slice of the world’s cyber-crime pie. As per statistics available with the National Crime Records Bureau, between 2010 and 2011 there has been a 46.9% rise in cases involving ‘Tampering of computer source documents’ and a 66.7% rise in ‘Unauthorised access to computer systems’.
Although this judgment is relevant, it is sadly, a single shot fired against a charging army of trade secret thieves. The threat remains real.