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Wednesday / March 29.

Intellectual property for start-ups and entrepreneurs Part IV: Trade secrets and confidential information

By Dr. Kalyan C. Kankanala

Confidential Information is any information that has business or economic value because it is not known to others.

Confidential Information is any information that has business or economic value because it is not known to others, and appropriate measures are taken to protect its secrecy. Business information, financial information, technical information, scientific information, plans, methods, client lists, designs, and any other such information that has economic value is granted protection as confidential information, or trade secret.

Protecting Trade Secrets

Protection of trade secrets and confidential information is very important for a start-up, but is generally neglected. More often than not, entrepreneurs take decisions or make disclosures based on good faith and trust without any legal measures, which may result in loss of trade secrets and the business advantage offered by them.

The following measures should be taken by a start-up to protect trade secrets and confidential information, and thus gain business advantages: 

  • Agreements with stringent confidentiality clauses must be signed with co-founders and employees;
  • Disclosure of any confidential information to any person must be made only under non-disclosure agreements;
  • Appropriate physical restrictions and security measures, such as restricted access and encryption, must be taken to protect secrecy; and
  • Confidentiality notices must be included in all confidential documents and materials. The notice must indicate the confidential nature of information, the purpose of disclosure and the limitations of use.

These measures jointly and independently protect a start-up’s confidential information and trade secrets. They can and will ensure that an entrepreneur’s business ideas and plans are not misappropriated or misused by third parties.

Furthermore, though intellectual property does not accord strong protection to generic business ideas, proper documentation of business interactions, meetings and transactions can go a long way in helping a start-up prove breach of confidence and trust, and thereby protect business ideas and plans.



This is a sample of a confidentiality notice:

All information in this document is confidential and cannot be used for any purpose without prior written authorisation of BananaIP.

This is a sample of an email disclaimer:

The information in this e-mail is confidential, and is intended solely for the addressee or addressees. If you are not the intended recipient, please delete the mail and kindly notify the sender of misdelivery. Any unauthorised use or disclosure of the contents of the mail is not permitted and may be unlawful.

Dr. Kalyan C. Kankanala is the Managing Partner of BananaIP. He is visiting faculty at the National Law School of India University (NLSIU), Bangalore, and a guest lecturer at IIM, Bangalore.

This was article was originally published on Sinapse

Read part 5 : Intellectual Property for Start-Ups and Entrepreneurs Part V: Copyrights