PROTECTING AI TRADE SECRET

"RAMSEY-AI" a leading Indian AI research firm, has developed a ground-breaking large language model called "Deva." Its core architecture and proprietary algorithms are a closely guarded secret, the result of years of research and a significant financial investment.

A key engineer, Rohit Sharma, who was privy to these confidential details, resigns from his position. Shortly after, a rival, internationally-backed firm, "BHARAT-AI," emerges in the Indian market with a model that bears a striking resemblance to Deva. RAMSEY-AI's internal forensic audit reveals that Rohit Sharma copied critical source code, model weights, and confidential documentation before his departure and subsequently joined BHARAT-AI. This theft poses an existential threat to RAMSEY-AI's market position and core business model.

The company's legal counsel (The SALT Legal) is immediately alerted to initiate a swift and decisive legal battle.

When dealing with trade secret exfiltration, procedural speed and absolute element of surprise are critical. In trade secret actions involving former employees, notifying the opposing side before execution often leads to remote cloud wiping, destruction of physical devices, or obfuscation of proprietary code.

In HT Process Controls Pvt. Ltd. v. Ankur Gupta & Ors. [CS(COMM) 560/2024], the Delhi High Court laid down the standard procedural pathway for employers to institute commercial suits while safeguarding proprietary evidence and securing immediate ex-parte interim relief:

1. Exemption from Pre-Litigation Mediation (Section 12A, Commercial Courts Act, 2015).

While Section 12A of the Commercial Courts Act mandates pre-litigation mediation prior to instituting a commercial suit, the court grants an exemption under Section 12A when an employer demonstrates an urgent need for ad-interim injunctions and search-and-seizure orders (relying on landmark principles in Yamini Manohar v. T.K.D. Krithi[1] and Chandra Kishore Chaurasia v. R.A. Perfumery Works[2]).

2. Exemption from Advance Service upon Defendants.

To prevent the defendants from removing or destroying digital evidence upon receiving a suit copy, the plaintiff files an application seeking exemption from serving the suit paper book in advance upon the ex-employee and the competitor. Granting this exemption enables the High Court to consider the suit ex-parte and issue surprise search orders before the defendants are alerted.

3. Submission of Sensitive Technical Assets under Sealed Cover.

To establish a prima facie case without exposing core proprietary algorithms, source code, or internal architecture diagrams in public court records, the employer files an application seeking permission to submit sensitive proprietary assets, forensic audit reports, and technical comparisons in a Sealed Cover directly with the Registry.

4. Registration, Ex-Parte Summons, and Procedural Timelines.

Upon satisfaction of the prima facie urgency, the Court formally registers the suit, issues summons to the defendants, grants ex-parte ad-interim injunctive restraints, appoints Local Commissioners for surprise site inspections, and sets strict statutory timelines for the filing of written statements and mandatory admission/denial of documents.

Available Civil & Criminal Remedies

In the absence of a standalone Trade Secrets Act in India, The Salt Legal utilizes a multi-pronged approach drawing upon equity, commercial law, cybercrime statutes, and criminal jurisprudence:

       

CIVIL REMEDIES & INJUNCTIVE RELIEFS

Ex-Parte Ad-Interim & Permanent Injunctions:

1. Restraining Rohit Sharma and BHARAT-AI from using, disclosing, commercializing, or deploying Deva's proprietary assets. Supported by landmark rulings such as Cubastion Consulting Pvt Ltd vs Shubham Saxena on 28 March, 2023[3], which affirmed that confidential technical data and software architecture are protected trade secrets actionable via injunction.

2. Appointment of Local Commissioners (Civil Search & Seizure): Obtaining ex-parte orders appointing Local Commissioners (under Order XXVI Rules 9 & 10 CPC) to conduct surprise inspections at BHARAT-AI's facilities, seize laptops, copy hard drives, and capture cloud server logs/mirror images to preserve electronic evidence.

3. Damages & Rendition of Accounts: Claiming compensatory damages for financial losses, punitive damages to deter corporate espionage, and a full rendition of accounts for all revenue derived from the stolen IP. As established in Navigators Logistics Ltd. v. Kashif Qureshi & Ors. (2018)[4], the plaintiff must explicitly define and prove the precise boundaries of the confidential information alleged to have been exfiltrated.

CRIMINAL REMEDIES

Cybercrime Reporting & FIR:

  1. Registering a formal police complaint/FIR with the Cyber Crime Cell under statutory provisions governing data theft.

  1. IT Act Enforcement: Invoking Sections 43 and 66 of the Information Technology Act, 2000 for unauthorized access, downloading, copying, and extraction of source code and training data from computer systems.

  1. Criminal Breach of Trust & Theft: Invoking Section 316 of the Bharatiya Nyaya Sanhita, 2023 (BNS) / Section 406 IPC (Criminal Breach of Trust), Section 303 BNS / Section 378 IPC (Theft), and Section 318 BNS / Section 420 IPC (Cheating) against key technical personnel who misappropriate domain data entrusted to them during employment. 

STEP-BY-STEP ACTION PLAN FOR COUNSEL

STEP 1: Forensic Audit & Chain of Custody

Collaborating with RAMSEY-AI's IT and security teams to execute a digital forensic audit of server logs, USB access records, and email gateways to establish a clear chain of custody showing data exfiltration.

STEP 2: Drafting and Filing under Exemption Mechanics

Filing the commercial suit in the High Court incorporating the HT Process Controls procedural applications:

  1. Application under Section 12A of the Commercial Courts Act seeking exemption from pre-litigation mediation due to urgency.

  2. Application seeking exemption from serving advance notice upon the defendants.

  3. Application seeking leave to submit core trade secret algorithms and forensic reports under Sealed Cover.

STEP 3: Executing the Local Commission

Securing the ex-parte order and deploying Court-appointed Local Commissioners alongside technical experts to search BHARAT-AI's premises, impound primary hardware, create bit-stream forensic images of servers, and secure digital evidence before alteration.

STEP 4: Criminal Proceedings

Accompanying RAMSEY-AI representatives to file an FIR with the Cyber Crime Cell, handing over the digital forensic trail to assist law enforcement in formal seizures under criminal procedure.

STEP 5: Formation of a Confidentiality Club

During the discovery and trial phase, requesting the Court to constitute a Confidentiality Club (comprising designated legal counsel and independent technical experts). This ensures that source code, model weights, and AI technical documents can be evaluated and compared without exposing RAMSEY-AI's trade secrets to the public or competitors during court proceedings.

In the absence of a codified trade secrets statute, Indian jurisprudence relies on equitable duties, procedural speed, and criminal sanctions. By deploying procedural mechanisms, such as pre-litigation mediation exemptions, non-advance service, sealed-cover filings, and Local Commission search orders as modeled in HT Process Controls, enterprises can secure ex-parte injunctions, impound stolen code, and safeguard their proprietary AI IP.