Customer database does not qualify as a trade secret

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Delhi High Court recently examined whether a list of customers/clients together with information about their contact persons/numbers maintained by a service provider has copyright.

In Navigator Logistics Ltd v Kashif Qureshi & Ors, the plaintiff, an employer, filed an application for a permanent injunction against eight of its ex-employees and four of its competitors to restrain them from violating and disclosing copyrighted confidential information and trade secrets contained in electronic devices given by the plaintiff to the former employees during the course of their employment. The application further asked that the former employees be restrained from carrying on a similar business and pay damages of ₹15 million (US$210,000) for violation of their employment contracts.

After examining documents, the high court observed that the confidential information was created from client information, which primarily included names, addresses, contact numbers of the clients, customer database, account information, airway drawings, airway bills templates, etc. The court held that such information was purely a mechanical exercise and easily available in the public domain, and thus could not qualify as being a confidential list. Anyone in employment for a period of time would know certain facts and would get to know some information without any special effort, and all such persons cannot be said to know trade secrets or confidential information, and every opinion or general knowledge of facts cannot be labelled as trade secrets or confidential information.

On another application sought by the plaintiff, seeking a restraining order against its former employees from working in a competitive industry for a period of one year after resignation, the court held that such a clause in an employment agreement was a clear violation of section 27 of the Indian Contract Act, 1872, which states that any contract restraining trade is void ab initio.

The case was dismissed with the court holding that the plaintiff had no cause of action.

The high court, in dismissing the appeal, held that since it was mandatory for a supplier to have its own stone crusher and due to the prohibition on all stone crushing activity as directed by the Supreme Court, the contract for supply of stone grit and stone dust stood frustrated as per section 56 of the Indian Contract Act, 1872, i.e. agreement to do an impossible act. The breach of contract was analysed by the high court in two parts – firstly, whether there was a breach in the period leading up to 15 August 1992, and secondly, whether there was any breach after 15 August 1992. In answer to the first part, it was held that in the absence of any specified contracted quantity, which the respondent was obligated to supply before 15 August 1992 according to the contract, there was no breach of contract. In the second part, the contract between the parties stood frustrated. The appeal was dismissed, being devoid of merit.

The dispute digest is compiled by Bhasin & Co, Advocates, a corporate law firm based in New Delhi. The authors can be contacted at lbhasin@bhasinco.in or lbhasin@gmail.com. Readers should not act on the basis of this information without seeking professional legal advice.