Employment or Confidentiality Agreement :

Employees should sign Employment Agreements to generally detail the terms of their employment. These should also include appropriate clauses which restrain the employee from making any unauthorised use or disclosure to third parties of confidential information during their employment and after their employment has ceased. Agreements should be signed before the employee commences employment. Existing employees should be encouraged to sign confidentiality agreements. However, usually they cannot be forced to do so.

When employees cease employment, the employer should give them a letter confirming this, any monies being paid to them and reminding them of their confidentiality obligations. The employee should also be requested to return all property belonging to the employer and to sign an appropriate acknowledgement confirming that he has done so and will keep information confidential.

If confidential information is to be divulged, a confidentiality agreement should be signed before the disclosure is made. The type of agreement will vary depending upon the nature and context of the disclosure. A simple exchange of letters may be sufficient or a formal confidentiality agreement may be required. In some cases, a confidentiality agreement must be made as a Deed in order to be legally enforceable. This is where there is no consideration expressed for the agreement to keep information confidential.

A confidentiality agreement should include the following acknowledgements:

− the information is secret;

− the disclosure is made to the recipient in confidence;

− the recipient will not disclose the information to others or use the information for their own advantage, without the prior authority of the owner of the information; and

− the unauthorised disclosure of the information could cause loss and damage to the owner of the information and the recipient will be liable for this.

There is no specific legislation in India to protect trade secrets and confidential information. Nevertheless, Indian courts have upheld trade secret protection on basis of principles of equity, and at times, upon a common law action of breach of confidence, which in effect amounts a breach of contractual obligation. The remedies available to the owner of trade secrets is to obtain an injunction preventing the licensee from disclosing the trade secret, return of all confidential and proprietary information and compensation for any losses suffered due to disclosure of trade secrets.

Further, a person can be contractually bound not to disclose any information that is revealed to him/her in confidence. The Indian courts have upheld a restrictive clause in a technology transfer agreement, which imposes negative covenants on licensee not to disclose or use the information received under the agreement for any purpose other than that agreed in the said agreement.