Summary: India’s Draft Protection of Trade Secrets Bill, 2024, represents an important step towards establishing a standalone statutory framework for protecting confidential business information. However, it leaves two significant gaps concerning the misappropriation of trade secrets by departing directors and senior management. First, although the draft provides for civil remedies, it does not expressly recognise the springboard injunction developed by English courts, which allows relief proportionate to the unfair competitive advantage obtained through misuse of confidential information, even after that information becomes publicly available. Without a statutory mechanism for measuring and restricting the duration of such an advantage, Indian businesses may remain dependent on uncertain judicial discretion. Secondly, the draft does not distinguish directors from ordinary employees, despite directors’ additional fiduciary obligations under company law, including duties of good faith, avoidance of conflicts of interest and independent judgment. The article examines the development of springboard relief, the distinction between civil and criminal enforcement, the contested American inevitable disclosure doctrine, and the fiduciary implications of directors preparing competing ventures before resignation. It proposes two targeted amendments: expressly authorising proportionate, time-limited springboard injunctions based on proven competitive advantage, and incorporating directors’ and key managerial personnel’s pre-resignation misconduct into the trade secrets proceedings. These changes could provide Indian companies with a more effective and coherent statutory remedy against commercial appropriation by departing fiduciaries.
Introduction
Most trade secret disputes do not involve a hack. They involve a director who resigns, and who surfaces, often within weeks, at or behind a new venture that looks like it skipped several years of work. India now has a draft of its first standalone statute to deal with this, and the draft gets most of it right. But it misses the one mechanism that solves the hardest version of the problem. The draft Protection of Trade Secrets Bill, 2024, annexed to the Law Commission’s recent report, creates a civil cause of action for misappropriation but does not codify a calibrated, time-limited form of interim relief of the kind English courts have spent over fifty years developing as the springboard injunction. Nor does it treat a departing director’s heightened fiduciary exposure any differently from an ordinary employee’s confidentiality obligation.
Where the Law Stands, and What England Built
India has never had a standalone trade secrets statute. The courts built the entire field out of equity, and the foundational case is, improbably, about a machine for growing fodder. A Delhi High Court decision from the late 1980s restrained a defendant from using technical drawings for a fodder production unit that had been shared under a collaboration agreement that later collapsed. Following earlier English authority, the court held that this area of law does not depend on any implied contract but rests on the broad equitable principle that a person who receives information in confidence must not take unfair advantage of it, and it found that the defendants had used the plaintiff’s drawings as a springboard to jump into the business field. Yet all of this rests on judicial discretion, not statutory entitlement. India has no equivalent of the American statutory framework that expressly authorises injunctions against actual or threatened misappropriation. A claimant must persuade a court, case by case, that an injunction is appropriate, with no settled framework for its breadth or duration.
The springboard doctrine began in an English dispute over prefabricated buildings. The judge held that a defendant who had used the plaintiff’s confidential design information could not keep selling a modified version even after the underlying information became public. The formulation is now the standard definition across Commonwealth jurisdictions: a person who has obtained information in confidence may not use it as a springboard for activities detrimental to the person who made the confidential communication, and it remains a springboard even when all the features have since been published. The wrong is not the secrecy of the information as such. It is the unearned head start the defendant gets from having had it early, and that head start does not evaporate because the facts later become public. The doctrine’s application to a departing fiduciary, rather than an ordinary employee, was worked out in a case involving a marine insurance business. Three senior employees had, while still employed, covertly recruited colleagues, misused confidential information, solicited clients, and concealed their competing plans from their employer. Following an expedited trial, the court granted springboard relief as final relief rather than a mere interim holding measure, grounding it expressly in breach of fiduciary duty and the duty of fidelity, not solely breach of confidence.
What keeps the doctrine from becoming a blank cheque is a proportionality rule: injunctive relief must be no greater in scope or duration than is reasonable to remove the unfair competitive advantage the defendant secured. The Court of Appeal reaffirmed this in 2019, upholding an interim springboard injunction against former directors and employees of a cybersecurity firm accused of conspiring to set up a rival business, while insisting that relief be calibrated to the actual advantage gained rather than used to punish. The cost of miscalibration appears in an earlier case concerning a frequency converter manufacturer. By trial, the court found that the interlocutory injunction had, in hindsight, gone further than necessary: enough time had passed that the information could have been independently compiled, so the injunction placed the claimant in a better position than if no breach had occurred. Courts want evidence of precisely how many months of head start the misconduct bought, and they will cut the relief back if that evidence is absent. This is the mechanism missing from India’s draft Bill. Its remedies chapter contemplates injunctions and damages in the ordinary sense, but nowhere imports relief calibrated to a proven, time-limited head start. Left uncodified, Indian courts will have to build this calibration through decades of litigation; a statute can compress that into its first few cases.
The Criminal Track and Inevitable Disclosure
A case often cited loosely in this context deserves precision: the dispute between a self-driving car technology company and a ride-hailing company, arising after an engineer allegedly downloaded more than fourteen thousand confidential files before leaving to found a company that the ride-hailing giant then acquired. The civil case settled five days into trial for an equity stake reported at roughly two hundred and forty-five million dollars, along with an undertaking not to use the proprietary information. The engineer pleaded guilty to a single count of trade secret theft under a negotiated plea agreement, and the sentencing judge imposed an eighteen-month prison term with restitution and a fine. The sentence was never served, as a presidential pardon arrived before he reported to custody. The structural point is that civil and criminal proceedings run on separate evidentiary standards, timelines, and institutional incentives, and a system offering only one leaves real deterrent value unused. India’s draft Bill deliberately creates no criminal offence for misappropriation, leaving that ground to general criminal breach of trust provisions never drafted with trade secrets in mind.
A second comparative doctrine, flagged without being recommended wholesale, is the American inevitable disclosure rule, under which a claimant can establish misappropriation by showing that a defendant’s new role will inevitably force reliance on the claimant’s trade secrets, even without proof that disclosure has occurred. It remains contested because it can function as a court-imposed non-compete where none was signed, and only a minority of American states have adopted it. Indian courts, once handed a broader statutory injunction power, may be invited to develop something similar by analogy. The Bill’s final text should say whether that reasoning is meant to be available, rather than leaving the question to accrete through litigation as it did in the United States.
Directors Are Not Employees
The draft Bill’s definition of misappropriation treats everyone who owes a duty of confidentiality the same way, whether a junior employee or a sitting director. This erases a distinction company law has long insisted on. A director’s obligations do not start and stop at confidentiality. Directors owe duties of good faith, must avoid conflicts of interest, and must exercise independent judgment in the company’s best interests, obligations that apply throughout the directorship and, critically, during the notice period before resignation. A director quietly negotiating with clients or lining up financing for a competing venture while still drawing a salary and sitting in board meetings is not preparing for a lawful future career. On the reasoning courts have applied in fiduciary defection cases, that conduct is itself a breach of fiduciary duty, independent of whatever later happens to any confidential information. A statute built only around the confidentiality relationship forces Indian courts to keep litigating this fact pattern as two separate claims under two regimes, a fiduciary duty claim under company law and a trade secrets claim under the new Bill, even though in the overwhelming majority of reported cases the two are factually inseparable.
Two Amendments Before Enactment
Two amendments, both narrow enough to drop into the existing structure rather than rewrite it, would close these gaps. First, the remedies chapter should expressly authorise commercial courts to grant interim relief calibrated to the proven duration of unfair advantage, building in the proportionality rule and the evidentiary standard that keeps it honest. Second, the Bill should include a specific provision for misappropriation by directors and key managerial personnel as defined under company law, recognising that pre-resignation conduct, namely solicitation, recruitment, and preparation of a competing venture, is part of the same cause of action as any later misuse of trade secrets, rather than a separate fiduciary suit in a different forum on a different timeline. This creates no new substantive duty. It puts the existing one in the same courtroom as the trade secrets claim, where the evidence already is.
Conclusion
The director-defection pattern is not a marginal fact pattern the statute happens to miss; on the comparative record, it is the paradigm case. A law that does not calibrate interim relief to a proven head start, and that does not fold a director’s heightened fiduciary exposure into the same proceeding as the trade secrets claim, leaves Indian companies dependent on a judge’s individual sense of equity rather than a clear statutory entitlement. That is fixable now, before the Bill becomes the only tool in the drawer.
References
1. Law Commission of India: Report on Protection of Trade Secrets (Draft Protection of Trade Secrets Bill, 2024).
2. Companies Act, 2013: Section 166 (Duties of Directors) and provisions governing Key Managerial Personnel (KMP).
3. Delhi High Court Precedent: John Richard Brady and Ors. v. Chemical Process Equipments P. Ltd. and Anr. (AIR 1987 Delhi 372).
4. English Common Law (Equity Baseline): Saltman Engineering Co. Ltd. v. Campbell Engineering Co. Ltd. (1948).
5. English Common Law (Springboard Origin): Terrapin Ltd. v. Builders’ Supply Co. (Hayes) Ltd. (1960).
6. English Common Law (Fiduciary Defection): British Sky Broadcasting Group Plc v. Boreham (1999).
7. UK Court of Appeal (Proportionality Rule): Trailfinders Ltd. v. Travel Counsellors Ltd. (2019/2020).
8. United States Federal Law: Defend Trade Secrets Act (DTSA), 18 U.S.C. § 1836.
9. United States Corporate Litigation: Waymo LLC v. Uber Technologies, Inc. (No. 3:17-cv-00939, W.D. Cal.).
10. US Legal Doctrine (Inevitable Disclosure): PepsiCo, Inc. v. Redmond (54 F.3d 1262, 7th Cir. 1995).
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Author: Khushbu Menghani, Student of Institute of Law, Nirma University
