The Intersection of Data Protection and Trade Secrets in the Changing IP Landscape in India

The pharmaceutical industry in India, currently worth more than US $50 Billion in 2025 and expected to grow to US $130 Billion by 2030, relies heavily on trade secrets to maintain competitive edge, particularly in terms of undisclosed know-how like manufacturing processes and formulas. In this regard, the regulatory regime put in place by the Draft Digital Personal Data Protection Rules, 2025, pursuant to the Digital Personal Data Protection Act, 2023, determines a regulatory environment that, though not directly focused on the subject of trade secrets, indirectly determines their licenses by focusing on the principles of data protection, its consent, and protection against unauthorized disclosures. The 2025 regulations overlap the protection of trade-secrets by categorizing some undisclosed content as personal data, and thus affect licensing contractual relationships in the pharmaceutical industry where sensitive clinical information and proprietary know-how are traded. This has been achieved as a backdrop of recent rulings of the Delhi High court on the issue of interim protection that have brought to light judicial discrepancies in the application of confidentiality. Through these aspects, the current article analyzes the effects of the bill on pharmaceutical partnerships, the imbalance of equity between Indian small and medium enterprises (SMEs) and multinational corporations (MNCs) in joint ventures and criticizes its inconsistency with international standards, which can enlighten future redress to growing litigation and ongoing inconsistencies in the enforcement. 

Summary of the 2025 Rules Proposed and of the 2025 Judicial Shakeup

The operationalisation of the DPDPA is the Draft Digital Personal Data Protection Rules, 2025, imposing heavy consent structures, requirements to minimise data and provide notice of a breach, which has an implication on trade-secret licensing applied in the field where such products are often provided as anonymity of a clinical trial. The regulations require data fiduciaries (pharmaceutical companies, in particular) to provide reasonable security measures against misappropriation, a clause that might apply to trade secrets (as such measures might be given protections against misappropriation of data subsets). To supplement this, the independent Trade Secrets Bill, 2024, is of a civil remedy which may be in form of injunction and damages due to misappropriation, but how the two tools relate to each other is unclear thus giving rise to a hybrid regulatory framework of licensing undisclosed information. 

Venture into the recent rulings of the Delhi high court and the importance of a coherent framework is highlighted. The court awarded an interim injunction on misappropriation of trade-secrets in a case in 2024, but was criticised as lacking specificity in specifying what information was protectable, which has been identified by scholarly commentaries. Similarly, in a biosimilars case, an interim protection lasting until July 2025 was granted in a case and it was noted that it was important to balance both disclosure and secrecy but the court refused to reveal the processes to avoid unnecessary publicity. These rulings, indicative of a judicial demeanor of interim relief, help shed light on uncertainties in the evidentiary standards, and precondition the 2025 rules providing better licensing guidance in the pharmaceutical partnerships. 

Theoretical Implications to Licensing, Inequality of Equity and Global Alignment Obligations

The 2025 proposals have a significant impact on licensing of trade-secret in pharmaceuticals since it requires express permission in data usage, which extends to undisclosed know-how in partnerships involving clinical trials or formulation information. This impact has been operationalised in the requirement of the rules, (a) that granular consent notices and data-protection impact assessments be provided; and, (b) that privacy-by-design clauses be introduced into agreements by licensors, so that insider trading is minimised, but compliance costs are also increased. The reason of such provisions is the vulnerability of the industry: trade secrets in pharmaceuticals including bioequivalence data are often intertwined with personal information, and the violation can undermine competitive advantage like in cases of test data under TRIPS Article 39.3. Even though such a framework has the potential to harmonize licensing by complying with the global privacy standards and simplifying the process of transferring technology in joint ventures, it also has the downside of classifying non-personal know-how as information that requires protection, thus making it harder to conduct transactions across borders. 

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A breakdown of equity issues shows that there are sharp divergences between the Indian SMEs and MNCs in pharmaceutical joint ventures based on the differences in resources and bargaining power. Indian SMEs, many of which are over 80% of pharmaceutical firms in India, and which focus on generics, are often forced to enter into non-equity alliances or joint ventures with MNCs to access technology, but they frequently can be exploited with unfair intellectual-property terms that give the MNCs control over the joint secrets. This inequity is reflected in the form of dynamic of negotiation: by exploiting global skills, MNCs can enforce restrictive non-disclosure agreement (NDAs), which fringe upon the ability of SMEs to utilise know-how once a joint-venture is established but SMEs do not have the legal means to enforce a reciprocal transaction. The root cause is structural inequity - Due to SMEs having lower budgets on R&D (5-7 per cent on average compared to 15-20 per cent by MNCs), they are vulnerable to joint ventures but are vulnerable to misuse, with the number of joint-venture break-ups on the rise in 2024 as trust deficits spawned lawsuits. Empirical trends (i.e. 20 per cent of the pharmaceutical joint-venture dissolutions), confirm the conclusion that, without the bill provisions of equitable dispute resolution, SMEs are left at the disadvantages, and a cycle of innovation gains in the hands of MNCs continues. 

The comparison of the global standards with the bill (including the Trade Secrets Directive of the EU as well as the Defend Trade Secrets Act of the US) suggests that the bill may reduce the spate of litigation witnessed in 2024 and create cross-border enforcement loopholes. The litigation has grown by 25 per cent in 2024 due to the failure of the statutory protections, and the use of common law and contractual remedies causing inconsistent results. The mitigation plan proposed in the bill is that civil remedies and compulsory licensing should be introduced in case of emergency, which is consistent with TRIPS because it allows injunctions to be done without full disclosure, which may lead to fewer cases of dispute because it clarifies the limits of misappropriation. The position of the bill is based on international standards that make it reasonable to maintain secrecy and therefore make investors secure in an environment where pharmaceutical foreign-direct investment reached US 17 billion in 2024. However, cross-border enforcement still has gaps since India does not have bilateral assistance on extraterritorial judgments, which complicates action against foreign entities, and this criticism is supported by the challenge of jurisdiction on expert analyses, with only 30 per cent. cases cross-border being resolved. The resounding conclusion is that congruence will contain local litigation booms and increase international sensitivities and hence the necessity of multilateral agreements to close such gaps. 

Walking the Fine Line 

The Data Protection Bill 2025 provides a prospective framework to trade-secret licensing in the pharmaceutical industry, which could allow achieving a fair deal as well as the prevention of lawsuits due to the adherence to international standards. However, it is crucial to consider equity imbalances, enforcement gaps that will help to ensure the pharmaceutical ecosystem in India flourishes inclusively in the globalised setting.

Author: Amrita Pradhan, in case of any queries please contact/write back to us via email to chhavi@khuranaandkhurana.com or at  Khurana & Khurana, Advocates and IP Attorney.

References

1.     The Digital Personal Data Protection Act, 2023, No. 22 of 2023, India Code (2023), https://www.meity.gov.in/writereaddata/files/Digital%20Personal%20Data%20Protection%20Act%202023.pdf.

2.     Draft Digital Personal Data Protection Rules, 2025, Ministry of Elecs. & Info. Tech., Gov’t of India (Jan. 3, 2025), https://static.pib.gov.in/WriteReadData/specificdocs/documents/2025/jan/doc202515481101.pdf.

3.     Law Comm’n of India, Report No. 289, Trade Secrets and Economic Espionage (Mar. 2024), https://cdnbbsr.s3waas.gov.in/s3ca0daec69b5adc880fb464895726dbdf/uploads/2024/03/202403061982318841.pdf.

4.     Protection of Trade Secrets Bill, 2024 (proposed), annexed to Law Comm’n of India, Report No. 289 (Mar. 2024).

5.     Directive 2016/943, of the European Parliament and of the Council of 8 June 2016 on the Protection of Undisclosed Know-How and Business Information (Trade Secrets) Against Their Unlawful Acquisition, Use and Disclosure, 2016 O.J. (L 157) 1 (EU).

6.     Defend Trade Secrets Act of 2016, Pub. L. No. 114-153, 130 Stat. 376 (codified at 18 U.S.C. §§ 1836–1839).

7.     Agreement on Trade-Related Aspects of Intellectual Property Rights art. 39, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1C, 1869 U.N.T.S. 299.

8.     Ministry of Elecs. & Info. Tech., Gov’t of India, National IPR Policy 2016 (May 12, 2016), https://ipindia.gov.in/writereaddata/Portal/IPOGuidelinesManuals/1_77_1_national-ipr-policy-2016.pdf.

9.     Anand Sharma & Aditya Kumar, The 22nd Law Commission Report on Trade Secrets: Call for a Balancing Act?, India Corp. L. Blog (May 9, 2024), https://corporate.cyrilamarchandblogs.com/2024/05/the-22nd-law-commission-report-on-trade-secrets-call-for-a-balancing-act/.