Topic 106 — IP and Labour / Employment Law

Employment relationships generate vast IP — inventions, copyrighted works, trade secrets, designs. Disputes arise: who owns the IP, employee vs. employer; what restrictions on employee mobility are enforceable; how to balance employer competitive interests with employee livelihood; what protection exists for employee inventions; what trade secret protections govern employer-employee relationship. The Indian framework operates through: Indian Contract Act 1872 (Section 27 restraint of trade); Patents Act Section 6 (inventor identification); Copyright Act Section 17 (employer ownership presumption); Designs Act Section 2(j) (proprietor); statutory employment law (Industrial Disputes Act 1947, Industrial Employment (Standing Orders) Act 1946); and contractual frameworks (employment agreements, NDAs, non-compete, non-solicitation). Section 27 ICA 1872 generally invalidates restrictions on trade unless during employment — strong policy against post-employment non-competes. Foundational cases: Niranjan Shankar Golikari v. Century Spinning (SC 1967) — restrictive covenants during employment valid; Superintendence Co. v. Krishna Murgai (SC 1981) — post-employment non-compete generally void; American Express Bank v. Priya Puri (Del HC 2006) — confidentiality survives employment; Diljeet Titus v. Alfred Adebare (Del HC 2006) — employee mobility restrictions; Wipro v. Beckman Coulter (Del HC 2006) — solicitation. Recent: Arjan Dugal v. Shubham Gandhi (Del HC 2025) — ex parte trade secret + design + copyright protection for employee mobility case. The Industrial Relations Code 2020 (effective stages) and Code on Wages 2019 reshape labour framework affecting IP. This topic walks through every aspect of IP-Labour intersection — employee inventions, copyright works for hire, trade secret protection, restrictive covenants, and strategic considerations.

1. Employee Inventions — Patents Framework

A. Section 6 Patents Act — First Inventor Concept

Section 6 Patents Act 1970 — Persons entitled to apply

"6. Persons entitled to apply for patents.— (1) Subject to the provisions contained in section 134, an application for a patent for an invention may be made by any of the following persons, that is to say,— (a) by any person claiming to be the true and first inventor of the invention; (b) by any person being the assignee of the person claiming to be the true and first inventor in respect of the right to make such an application; (c) by the legal representative of any deceased person who immediately before his death was entitled to make such an application."

B. Employee Invention Allocation

✅ Indian framework for employee inventions

1. STATUTORY DEFAULT · Section 6 Patents Act — application by inventor. · Inventor is original right-holder. · No automatic assignment to employer. · Different from US/UK frameworks. 2. CONTRACTUAL ALLOCATION · Employment agreement assignment clauses. · Specific invention assignment provisions. · Pre-employment IP exclusion. · Post-employment invention assignments. 3. WORKS-FOR-HIRE · No statutory works-for-hire for patents. · Employer interests through: - Employment agreement assignment clauses. - Implied assignment (dependent on employment scope). - Section 6(1)(b) assignee rights. - Specific invention assignment. 4. DISPUTE RESOLUTION · Patent applicant disputes. · Employer-employee invention agreements. · Court determination of true and first inventor. · Royalty obligations to employee inventors.

C. Best Practices for Employer

Comprehensive employment agreement IP clauses.
Specific assignment of inventions during employment.
Pre-employment IP exclusion identification.
Confidentiality obligations.
Compensation framework for inventors (often discretionary).
Patent prosecution cooperation obligations.
Post-employment cooperation obligations.

2. Copyright Works — Section 17 Framework

A. Section 17 Copyright Act

Section 17 Copyright Act 1957 — First owner of copyright

"17. First owner of copyright.—Subject to the provisions of this Act, the author of a work shall be the first owner of the copyright therein: Provided that— (a) in the case of a literary, dramatic or artistic work made by the author in the course of his employment by the proprietor of a newspaper, magazine or similar periodical under a contract of service or apprenticeship, for the purpose of publication in a newspaper, magazine or similar periodical, the said proprietor shall, in the absence of any agreement to the contrary, be the first owner of the copyright in the work in so far as the copyright relates to the publication of the work in any newspaper, magazine or similar periodical, or to the reproduction of the work for the purpose of its being so published, but in all other respects the author shall be the first owner of the copyright in the work; ... (c) in the case of a work made in the course of the author's employment under a contract of service or apprenticeship, to which clause (a) or clause (b) does not apply, the employer shall, in the absence of any agreement to the contrary, be the first owner of the copyright therein; ..."

B. The Section 17(c) Default

EMP

EMPLOYER

default ownership

CTR

CONTRACT

agreement to contrary

AUT

AUTHOR

with contrary agreement

C. Practical Implications

Employer is default first owner of copyright in works created during employment.
Subject to "agreement to contrary" — i.e., contractual override possible.
Specific provisions for newspaper/journal contributions.
Software developed by employees — typically employer owns.
Authorship and ownership separately addressed.

3. Trade Secrets and Employment

A. The Foundational Framework

No specific Indian Trade Secrets Act.
Common law breach of confidence.
ICA 1872 contractual framework.
Foreign legal influences (UK Saltman v. Campbell test).
Specific trade secret identification required (Rochem v. Rolex).

B. Employee Confidentiality Obligations

Implied duty of confidentiality during employment.
Express NDAs strengthen position.
Specific identification of confidential information.
Reasonable scope of confidentiality.
Survival of confidentiality post-employment.

C. Recent Trade Secret Employment Cases

📖 Arjan Dugal & Anr. v. Shubham Gandhi & Anr., 2025 (Del HC)

Facts — Plaintiffs alleged former employee misappropriated proprietary design techniques, methodologies, and database of nearly 6,000 clients.

Combined Claims — Trade secret + copyright + design infringement.

Holding — Delhi HC granted EX PARTE AD INTERIM INJUNCTION restraining defendants from manufacturing, selling, or marketing garments alleged to infringe plaintiffs' works.

Significance — Demonstrates: · Combined IP protection during employment mobility. · Court protects against employee mobility creating immediate competitive harm. · Trade secret + design + copyright integration. · DPDP considerations for client database. · Recent (2025) operational vigour.

4. Restraint of Trade — Section 27 ICA 1872

A. Section 27 ICA Provision

Section 27 Indian Contract Act 1872 — Agreement in restraint of trade, void

"Every agreement by which any one is restrained from exercising a lawful profession, trade or business of any kind, is to that extent void. Exception 1.—One who sells the goodwill of a business may agree with the buyer to refrain from carrying on a similar business, within specified local limits, so long as the buyer, or any person deriving title to the goodwill from him, carries on a like business therein, provided that such limits appear to the Court reasonable, regard being had to the nature of the business."

B. The Strong Indian Policy

✅ Indian Section 27 ICA Approach

Indian courts have STRONGLY DISFAVOURED post-employment non-competes: · Strict interpretation of Section 27. · Restrictions invalid except in goodwill sale context. · Even brief non-competes generally void. · Reasonable confidentiality obligations valid. · Reasonable solicitation restrictions sometimes valid. · Trade secret protection valid. During employment: · Reasonable restrictive covenants generally valid. · Confidentiality obligations. · Solicitation restrictions. · Specific protections for trade secrets. Post-employment: · Non-compete generally INVALID. · Confidentiality obligations VALID. · Solicitation restrictions case-specific. · Trade secret protection VALID. · Reasonable protective restrictions VALID.

C. Foundational Cases

📖 Niranjan Shankar Golikari v. Century Spinning, AIR 1967 SC 1098

Facts — Restrictive covenants during employment in textile industry.

Holding — Supreme Court: Restrictions DURING employment generally valid; reasonable scope.

Significance — Foundational case for in-employment restrictions.

📖 Superintendence Co. of India v. Krishna Murgai, AIR 1981 SC 1717

Facts — Post-employment non-compete clause challenged.

Holding — Supreme Court: Post-employment non-compete generally INVALID under Section 27.

Significance — Strict Indian approach to post-employment restrictions.

📖 Diljeet Titus v. Alfred A. Adebare, 2006 (32) PTC 609 (Del)

Facts — Lawyer's departure from law firm; client list and goodwill.

Holding — Delhi HC: Reasonable confidentiality obligations valid; specific restrictions on solicitation valid.

Significance — Refined approach to employment mobility restrictions.

📖 American Express Bank v. Priya Puri, 2006 SCC OnLine Del 638

Facts — Senior banker's departure; client information.

Holding — Delhi HC: Confidentiality obligations survive employment.

Significance — Confidentiality + IP framework integration.

5. Designs and Industrial Designs

A. Designs Act 2000 Framework

Section 2(j) — proprietor.
Employee designer rights subject to contractual provisions.
Comparable to Patents Act framework.
Industrial design typically employer-owned through assignment.

B. Practical Considerations

Specific design assignment in employment agreements.
Industrial design vs. graphic design distinction.
Designer mobility considerations.
Cross-industry design transfers.

6. Trade Marks and Employment

A. Trade Mark Ownership

Generally tied to business ownership.
Employee branding contributions integrated into employer rights.
Specific employee branding contracts in some industries.
Goodwill associated with brand.

B. Brand Protection during Employment

Confidentiality of branding strategies.
Trademark use within scope of employment.
Goodwill protection during employment mobility.

7. Modern Labour Codes and IP

A. The Four New Labour Codes

Code	Year	Status
Code on Wages	2019	Effective stages.
Industrial Relations Code	2020	Effective stages.
Code on Social Security	2020	Effective stages.
Occupational Safety, Health and Working Conditions Code	2020	Effective stages.

B. IP Implications

Industrial Relations Code 2020 — modernizes industrial dispute framework.
Affects employee mobility procedures.
Modernizes recognition of trade unions.
Affects IP-related employment terminations.
Cross-cutting compliance obligations.

8. Contractual Best Practices

✅ Comprehensive Employment Agreement Framework

1. INVENTION ASSIGNMENT · Specific assignment of inventions during employment. · Pre-employment IP exclusion. · Patent prosecution cooperation. · Compensation framework. 2. COPYRIGHT WORKS · Section 17(c) employer ownership confirmation. · Specific work assignment. · Moral rights provisions. 3. TRADE SECRET PROTECTION · Detailed NDAs. · Specific identification of confidential information. · Reasonable scope of confidentiality. · Reasonable duration. · Survival post-employment. 4. EMPLOYEE MOBILITY RESTRICTIONS · Reasonable solicitation restrictions. · Reasonable confidentiality obligations. · No post-employment non-compete. · Trade secret protection. 5. DISPUTE RESOLUTION · Mediation framework. · Arbitration where appropriate. · Choice of forum. 6. COMPLIANCE · DPDP Act 2023 alignment. · Modern labour codes alignment. · Industry-specific requirements.

9. Strategic Considerations

✅ For employers — eight points

For inventions, secure comprehensive assignment through employment agreements.

For copyright works, leverage Section 17(c) framework.

For trade secrets, document specific identification and reasonable protections.

For employee mobility, use reasonable confidentiality + specific solicitation restrictions.

For DPDP compliance, integrate with employment data processing.

For litigation, document Rochem-style trade secret identification.

For arbitration, ensure validity of clauses.

For international operations, coordinate cross-jurisdictional frameworks.

✅ For employees — six points

For pre-employment IP, document and exclude.

For invention assignments, understand scope.

For confidentiality, maintain reasonable obligations.

For mobility, recognize Section 27 ICA protections.

For salary disputes, navigate code framework.

For DPDP, exercise data principal rights.

🎯 EXAM POINTERS — TOPIC 106

Section 6 Patents Act — application by inventor; assignee rights.
No Indian works-for-hire for patents — contractual assignment required.
Section 17(c) Copyright Act — employer DEFAULT first owner of work in employment.
Section 17 proviso — agreement to contrary possible.
Section 27 ICA 1872 — agreement in restraint of trade, void (with goodwill exception).
Niranjan Shankar Golikari v. Century Spinning (AIR 1967 SC 1098) — restrictions DURING employment valid.
Superintendence Co. v. Krishna Murgai (AIR 1981 SC 1717) — post-employment non-compete generally INVALID.
Diljeet Titus v. Alfred Adebare (Del HC 2006) — refined employment mobility framework.
American Express Bank v. Priya Puri (Del HC 2006) — confidentiality survives employment.
Wipro v. Beckman Coulter (Del HC 2006) — solicitation restrictions framework.
Arjan Dugal v. Shubham Gandhi (Del HC 2025) — combined trade secret + copyright + design ex parte injunction.
Rochem v. Rolex — specific trade secret identification requirement.
Industrial Relations Code 2020; Code on Wages 2019; Code on Social Security 2020; OSH Code 2020.
DPDP Act 2023 — affects employment data processing.
Designs Act 2000 — proprietor framework.
Generally during employment: reasonable restrictions valid; post-employment: limited (confidentiality + solicitation + trade secrets).