Violation Of Trade Secret Rights: Unfair Acquisition

This Blog is inscribed by Palak Sahai Gupta.

A violation of exchange secrets occurs once each other obtains or exploits the secret data the use of unfair methods. Breaking into a competitor’s plant or bribing personnel would be apparent violations. Likewise, breaching a confidentiality agreement or inducing a former employee to breach a confidentiality agreement ought to be violations. Reverse engineering a product that used to be purchased commercially is not a change secret violation.

Trade secret violations are enforced by using means of a legal action within the state courts. Claims of alternate secret violation may in addition additionally be made in federal courts once coupled with completely different claims.

At present, India’s “Secret and Alternative Practices Regulations” is a law formulated by the judiciary based solely on the principle of fairness and frequent legal actions against abuse of trust. Case law usually revolves around accountability. And employees’ responsibilities in management. Organizations related to extraordinary facts discovered at a specific recruitment time. India’s case law on secrets and exchange methods is still unclear on many important issues, including: the amount of damage caused by breaching the confidentiality of private information; the use of commercial competitors to steal other secrets; and procedural guarantees during trials in court. In the absence of specific amendments to the “Secrets and Methods Act”, the court also ruled in favor of the owner of the information as literary works, as described in the “Copyright Law”.

Introduction

Companies usually collect and use ideas and innovative ideas that competitors do not understand to gain advantages and maintain the uniqueness of their products/services. Information that is generally unknown to competitors and protected by confidentiality agreements is classified as quasi-intellectual property, that is, “trade secrets,” and is entitled to protection under civil or contractual liabilities to prevent unauthorized disclosure or use of trade secrets. The size of a company is not the standard for company trade secrets.

The protection of trade secrets is very important for the survival of the organization, and it is also very important for the survival of the organization. For companies, where there is a risk of disclosure, especially when hiring new employees for strategic development or introducing new products and services, it is very important to ensure that their trade secrets are fully protected from competition from competitors. The policy of the “Trade Secrets Law” is to protect, maintain and promote ethical standards and promote fair treatment of innovation. Unauthorized use of this agreement by non-trade secret holders is considered a violation of business practices.

Defining Trade Secret

Any data or information related to the company that is not known to the public, and reasonable efforts made to maintain the confidentiality of such information are regarded as trade secrets. “Trade secrets refer to any commercial value information that has no commercial value, and reasonable measures have been taken to maintain its confidentiality”. In Burlington Family Shopping Pvt. v. Rajnish Chibber [1] The court ruled that trade secrets are information that, if disclosed to competitors, may cause actual or significant harm to everyone. If needed, you can provide not only the formula used to manufacture the product, but also the customer’s name and the formula for the product they purchased. According to Article 39.2 of the Trade Aspects of Intellectual Property (TRIPS), three criteria must be considered.

Generally, people who process such information usually do not understand or cannot easily obtain the overall or precise configuration and assembly of the information.

The information has actual or potential commercial impact. It is worth it because it is a secret.

(c) In this case, the person who has legal control over the information has taken reasonable steps to keep it confidential.

The United States’ Uniform Trade Secrets Act of 1979 defines trade secrets as information containing the following formulas, templates, compilations, procedures, equipment, and methods:

If it is not publicly available or unknown, or independent economic value that cannot be easily determined by other people through appropriate means, these people can infer economic value from its disclosure.

In this case, financial statements, customer lists, customer data, and company policies and guidelines can also be regarded as trade secrets and therefore require reasonable efforts. However, in India, customer data is not considered a trade secret or proprietary data. The purpose of confidentiality is utility, so trade secrets should be useful in nature.

India’s Current Trade Secret Protection System

In this era of globalization as companies move to different countries to expand and obtain cheap labor, it becomes more difficult to protect trade secrets and strategies. Companies treat technology as confidential, not as patented information. This is mainly because market competition has reached a level, if there is information, competitors will innovate. While this can promote healthy competition, it has become increasingly difficult for startups to maintain this information or make it flourish when it is available to large companies. Today, they are aware of the necessity of such confidentiality and therefore try to incorporate its protection into their legal framework. In the international community, the development of trade secret protection can be traced back to all aspects of property and trade-related intellectual property rights (TRIPS). General Agreement on Tariffs and Trade (GATT) and North American Free Trade Agreement (NAFTA). In India, the only protection of trade secrets is provided by traditional court decisions and regulations, as well as fairness and contract laws. This has been trying to develop and protect trade secrets and solve data leakage problems. The court ordered the protection of trade secrets.

India does not have specific laws to protect trade secrets and confidential information. However, Indian courts maintain the protection of trade secrets, confidential information, and business knowledge. Common law misappropriation can usually protect trade secrets. How a third party who has unauthorized access to confidential information abuses trade secrets. Such misappropriation can be achieved by obtaining confidential information, or by deception or theft.

(a) The employee possesses confidential or confidential information in the course of his normal work or due to negligence, or deliberately discloses such information to an unauthorized person.

(b) If requested by an unauthorized person (perhaps a new employer) Designate employees to provide the above information.

(c) If the licensee violates the conditions expressed or implied in the agreement under the permission of the use of technical knowledge, the technical knowledge shall be kept confidential and the requirements of the court shall be complied with; satisfactory Indian courts have clarified Said that in the absence of laws, they will protect trade secrets through common law to improve business in India.

In John Richard Brady and Ors v Chemical Process Equipment P Ltd and Anr[2] , the Delhi Supreme Court found in cases of unauthorized use of trade secrets that it is in the interest of justice to prevent the defendant from misusing technical data. Under strict confidentiality conditions, the knowledge, specifications, and technical information of the feed production site entrusted to the applicant.

In Alfred A Adebare and Ors’ v. Daljeet Titus[3] , it was discovered that the Duchess of Argyll and Ors believed that the court should take measures to prevent abuse of trust without involving the other party. In a restraining order, he finally ruled that the defendant was not allowed to use the plaintiff’s material that they had access to in violation of confidentiality. Defendants who worked with the plaintiff were unable to use the agreements, due diligence reports, customer contact lists, or similar materials that they noted. Regarding the bank’s commercial secrets, the Delhi Supreme Court on the bank’s confidentiality of its customers found that when someone steals such information, the bank is required to keep the customers secret due to their currency relationship. This is based on the confidentiality between banks. Fixed. For customers and customers, any violation of this confidentiality provision should be held responsible.

Under Contract Law

According to the Contract Law, Indian courts ensure that trade secrets are protected in accordance with the principles of fairness and contractual obligations. Due to the trade restriction clause, section 27 of the Indian Contract Law clearly stipulates this. This part is general in nature and therefore invalidates all trade restriction agreements. The section tried to lift restrictions at first but passed it when trade had not yet developed, and the purpose of the section was to protect or restrict trade. Later, the Indian Legislative Council stepped in in 1958 and proposed reasonable restrictions.

Copyright Law 

In some cases, the court found that user data stored in the database was copyrighted material. While conducting business, the company regularly collects systematically or methodically processed information, which can be accessed electronically, for example, to analyze the company’s profitability or customer behavior or to count assets. Therefore, the database is an important tool for the company to ensure smooth operation and record its future development. The database is protected by copyright. The Copyright Act of 1957 defines a compilation of databases of portable computers as “literary works.” In Govindan v Gopalakrishna [4](AIR 1955 Mad 391), compilation is mentioned. Someone once said that the originality of compilation is not high, but it is still protected by law. Therefore, even in this case, neither party can steal or intimidate others’ intelligence, skills, or work results.

The current legal situation requires every effort, and each branch or qualification has an impact on copyrighted works. However, only works of extremely unusual nature can be protected. Some intellectual effort is required; and they contain only minimal creativity. The relationship between trade secrets and copyright.

In Burlington Home Shopping Pvt Ltd v. Rajnish Chibber* (61 (1995) DLT6), the Delhi Supreme Court ruled that despite the secrets and alternative methods, security extends to extensive business data, consumer lists and other business data aggregations. Protected by copyright. However, copyright security and alternative secrets used to edit business statistics are usually merged in reality: copyright security of business catalogs usually extends to basic data, secrets, and technology. In return, security can be extended to include clear expression mechanisms. At Burlington Family Mall, the court handled the swimsuit appeal by mail and ordered a court ruling on the supplier organization’s employees to restrict “copyright infringement and data protection.” The court ruled that a series of remedies developed through the dedication of time, money, labor, and talent constitute a literary work for which the author owns the copyright, although the source can often be found. When it was discovered that the defendant’s database was an important copy of the plaintiff’s database, an injunction order was issued in court records.

Remedies For Violations Of Trade Secrets

Remedies for violations can be court orders or compensation for losses. According to the Indian Judicial Act, the Special Compensation Act of 1877 can be applied to victims. However, there needs to be a strong argument and a balance between convenience and irreparable loss. In many cases, the verdict was rejected due to insufficient prima facie evidence. The court held that to obtain an injunction, the material needs to be concealed. According to Article 41(e) of the Law on Compensation for Certain Damages, the court cannot enforce the judgment.

Trade Secrets In Consonance To IPR

India’s IPR law stipulates that trade secrets are territorial, and the protection provided by trade secrets may vary from region to region. It is impossible to make a complete list of what Indian cuisine considers to be confidential or trade secrets. However, the court’s decision contains a lot of information, which has traditionally been treated as a trade secret by the court for many years. The most important part of a trade secret is its confidentiality, not its novelty. In Re Providian credit Card held that unless the information is confidential or confidential, it is not regarded as a trade secret. In addition, relatively speaking The Lucas Country board of Commissioner v. Ohio Environmental Protection Agency ruled that once leaked or disclosed, trade secrets lose their substance as trade secrets. As the benefits of trade secrets become the focus, more and more people are attracted. However, in India, based on the interpretation and understanding of intellectual property rights, there are certain issues related to the development of trade secret laws. Intellectual property rights include copyrights, trademarks, patents, and today’s increasingly popular trade secrets. However, except for trade secrets, all titles in this document are subject to legal restrictions. Patents are since inventions are novel, unique, not obvious, but still useful. Copyright protects the form of expression, not the content or ideas, but once an idea is formed, it is protected. This information will protect you after it is disclosed. Disclosure of trade secrets will harm the holders of trade secrets. And the idea and content of destroying trade secrets makes it difficult to obtain protection in the same way as patents, trademarks/copyrights. When trade secrets are made public, they will not be remembered. This also applies if the product itself causes information leakage. As a result, if the process of using trade secrets is disclosed, trade secrets will not be protected.

Employees As A Threat To Company

Employees may harm the company’s intellectual property protection. Although security solutions and mechanisms can be implemented to protect intellectual property rights, the employee retention rate will not be affected, which is still the biggest challenge facing the company. So far, Coca-Cola has only two employees who know the proportions of ingredients in its beverages to protect the formula as a trade secret.

Secrets are disclosed independently, and companies are usually encouraged to continuously change and innovate their trade secrets, to maintain competition and protect their trade secrets from disclosure. This threat is related to the involvement of employees at the main levels and intermediaries who do not directly work for the company.  

For example, if an Indian service provider outsources the execution of offshore services to an outsourcing company, and the subcontractor abuses or discloses the outsourcing company’s commercial or trade secrets or other confidential information, the company cannot claim any violation Contracts or breaches of contract rely on subcontractors, unless under special circumstances the company directly signs contracts with subcontractors, which is unlikely to happen.

Between the contractor and the subcontractor, the supplier shall be responsible for the damage caused by the improper use of the subcontractor. However, such claims are not related to any improper use by the subcontractor in the past or in the future. Oppose to Indian subcontractors. For companies operating and hiring employees in India, hiring risks are inevitable. It is not easy to come up with ideas that require constant change and to innovate on trade secrets. Skills and knowledge about the secrets of competitor’s success. In every company, there is always a “psychological contract” between employers and employees.

Although not a formal legal contract, a psychological contract is basically a set of expectations that workers and employers expect from each other for their contributions and incentives. When working in a company, expectations for such contracts will increase. In this case, the employee will automatically create a confidentiality agreement with the employer. However, mobility is high in some environments.

As a result, these types of contracts are unreliable, thereby increasing the demand for formal contracts. The terms of such employment contracts improve the legal protection of confidential information and provide security in the event of legal disputes. As a result, companies can enter many contractual arrangements to protect confidential information.

Breach Of Confidence.

In the Diljit Titus case (130 (2006) DLT 330), the Court ruled that intervention should be intervened to limit the law’s fair violation of self-sufficiency. As far as the regulatory law firm is concerned, copyright includes a list specially drawn up by the lawyer, which includes the detailed information of the law firm’s clients, the nature of the work and the contact person of each person. However, this is only implied.

Providing Confidentiality Of Information

In the case of *Ritika Pvt Ltd v. Biba Apparels Pvt Ltd* [6](from HC DE 0784 2016), when proving the confidentiality of information, the court usually showed swimwear to violate the plaintiff’s clothing design. The court ruled that if the respected court is required the exchange of secrets should mention trade secrets and precise methods, as well as the way the plaintiff owns these secrets. Only in this way can ideas about court orders be issued in court. For the defendant, the usual decision based on admiration for an unknown secret will be insurmountable. In addition, according to the Copyright Law, no remedial measures may be taken, as Article 15(2) of the Law stipulates that drawings, drawings or diagrams used to produce more than 50 garments are not copyrighted. In *Genetics India Pvt Ltd v. Shailendra Shiv* (2011 (47)) PTC 494), the court stated: “The extraordinary characteristics and information about the best data are required. Without confidential information, there is absolutely no confidentiality. Confidential. In addition to declaring that these records are confidential, applicants must also prove that they have made real efforts to maintain their confidentiality. If the owner of the records cannot prove this, there is a risk that the information will lose credibility.

National Innovation Act

Article 10(b) of the Paris Agreement of the National Innovation Act and Article 39(2) and 39(3) of the 1995 TRIPS Agreement set global standards for trade secret law. Still in danger in India. The draft National Innovation Law implemented by the Ministry of Science and Technology is the first real attempt to protect confidential information, trade secrets and innovation. Its method is based on three main principles. In addition, he hopes to publish a national report on the treatment of trade secrets in India. Finally, he is committed to the codification and consolidation of data protection laws to protect trade secrets, information, and innovation. As follows:

“Confidential information” is defined as information in Article 2(3) of the Act, including formulas, examples, program compilation, development, methods, techniques or processes, and these information include:

It is secret to people in circles who are usually familiar with this type of information, little known or easily obtained.

It has commercial value due to its confidentiality.

Considering this situation, the person who has legal control over the information has taken reasonable steps to keep it confidential.

Section 8 of the law stipulates the obligation of confidentiality. The parties can set confidentiality conditions to maintain confidentiality and prevent the contract from being misappropriated. This section also provides the possibility of contract enforcement in case of breach of contract.

Section 9 introduces confidentiality due to non-confidential relationships. Disclosure of confidential information. Any third party that receives such information without the consent of the applicant is also obliged not to disclose it to the public.

Section 10 extends the scope of information protection to include the perception or perceived fear that such information may be misappropriated. It authorizes the court to conduct secret litigation, seal confirmation procedures, seal confidential documents or activity records, and instruct individuals or groups of people not to disclose confidential information.

The exceptions to misappropriation of confidential information are laid out section 11.

These are:

Confidential information is publicly available.

Confidential information is obtained independently of a third party from which the suspected mis appropriator or the suspected mis appropriator obtains the information; or

The public information is being reviewed by a public interest court.

Section 12 defines the injunctive authority of the court. Preventive or mandatory security measures have been established to limit the improper use of confidential information. According to the provisions of this section, the court may issue interim, interim, or final orders when necessary, to restrict the misappropriation of public funds. If a court order is not to be paid under section 11, the court order can be overturned or changed. As a result, if it is later discovered that no action has been ordered and the plaintiff is finally determined, the plaintiff may be liable for the actual losses suffered by the defendant in the preventive measures taken against him. For the use of information, a certain fee shall be paid within the time limit for prohibiting the use of the information. Government mechanisms of the police and local governments may be involved in enforcing such restrictions.

Mandatory damages when confidentiality has been breached are prescribed under sec. 13.

If the mis appropriator uses confidential information or is directly or indirectly responsible for the information belonging to a third party or public domain, the reporter has the right to:

Compulsory compensation shall never exceed Article 15(c) from time to time by the relevant government the amount will be collected as contract debt.

the damages agreed in the contract between the parties; or

the actual damage that can be proved, including indirect damage.

In addition, if the misappropriation of public funds is malicious or deliberate, the claimant may be entitled to three times the amount specified in Article 13. In addition, the defendant can be required to pay 10% of damages in advance. plaintiff. Under the condition of guaranteeing the right to protective measures, it is guaranteed to defend its rights.

Article 14 allows immunity for acts performed in good faith or alleged to be performed. It has become an important milestone in safeguarding the rights of those who possess trade secrets, thereby bringing huge benefits to Indian companies, competitiveness in the world market. However, the law has not yet become a reality.

Section 14 provides immunity for acts committed in good faith or intentionally. However, the law has not yet seen the dawn

Legislation In Different Countries And Possible Influence Of Such Legislation In India

The pressing need for a legislation with respect to trade secrets in India is undeniable. The Indian law may conveniently be based on principles that are raised off English Law and English courts or the Federal Trade Secrets Law of USA below the Uniform Trade Secrets Act, 1990, the statement (Third) Unfair and the judicial pronouncements of the same.

In statute law in India should 1st define the word ‘trade secrets and the subject material thereto. Protection should be extending to data that is in bulk and combinations of such information. Individual components of trade secrets might not be of any use notwithstanding protected. therefore, information together to different information should be protected. to make positive that the knowledge is not in public domain, trade level of knowledge and information’s ability are often taken as factors. it is essential for the codified law to require the actus reus of misappropriation into thought that is sometimes committed through improper means that or breach of confidence. With reference to the actus reus of misappropriation, the Spoliation philosophical system once says that destruction or considerably fixing proof or failing to preserve property of another is use as evidence in unfinished or moderately predictable proceedings the kind that enables the court to infer misappropriation from the defendant’s destruction of evidence should be recognized.

A body specializing in deciding cases related to trade secrets as in other cases related to IPR should be in place to conduct proceedings. Also, disclosure of the trade secret should be taken care of and disclosing such a trade secret in lieu of the proceedings should be taken care of. The Uniform Trade Secrets Acts, 1990 of USA propounds the doctrine or displacement wherein if the cause of action conflicts with the trade secrets misappropriation, then it is displaced or preempted. Third party liability also should be codified due to offshoring and outsourcing. In imposing such liability principles of agency and vicarious liability should also be brought in. Exceptions protecting trade secrets should be laid down keeping in mind the exceptions by the common law courts.

Safeguards For New Entrepreneurs To Protect Their Trade Secrets

Recently, the protection of trade secrets has become very important for entrepreneurs and small business owners. If a product or service acquires a lot of novelty due to this trade secret, which leads to the prosperity of the company, then they are always the focus of attention. This will lead to a lot of competition, especially when competing with leading companies that have entered the market. With the improvement of the research and development work of these large companies and the enrichment of resources, the use of trade secrets for operations and innovation has become easier, and these small companies and entrepreneurs are also relatively easy to be eliminated. Therefore, it is very important to find a way to protect trade. Keep it secret and encourage innovation while keeping it secret. There are steps you can take to protect the security and confidentiality of your information. You need to understand that if human resources policies and general business strategies are well integrated, employees will be involved.

Retaining employees is more important than retaining customers. Motivation and other benefits are essential to employees because satisfaction plays an important role in employee performance.

Monitoring Employees’ Activities

Monitoring employee activities is important to ensure that employers do not neglect the importance of protecting trade secrets that increase employee loyalty. Employers should supervise workers’ activities in the workplace. However, employees’ privacy should be respected, and employees should not be given a sense of distrust. In this way, employees can inform them of the importance of the problem, the nature of the confidential information provided, and the possible consequences of trust violations.

Drafting Employment /Confidentiality Agreement That Are Enforceable In India

Confidential information such as trade secrets can be reliably protected by executing contracts and agreements that are enforceable in India. These contractual terms should prohibit improper disclosure and improper use of confidential information. These agreements should focus on the types of information that can be disclosed, how to use them, and the restrictions on disclosure after termination.

Due Diligence And Compliance With Confidentiality Agreements

Due diligence is essential for reviewing confidential records and employee confidentiality.

Due diligence, in which documents and agreements are checked with special consideration of confidentiality obligations, and the possibility of errors is considered as precisely as possible.

Conducting Trade Secret Audits

Identifying trade secrets that are of significance.

Verifying the company’s title to such trade secrets.

Verifying to make sure that confidentiality procedures are up to the mark and followed.

Future Of Trade Secrets In India

Since India has signed the Paris Agreement, it is worth noting that Article 1(2) of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) stipulates that intellectual property rights include the security of undisclosed information. The 39 TRIPS countries are eager to provide reliable protection to prevent unfair opposition to * under Article 10 of the Paris Agreement, and at the same time recognize the following information: because of its confidentiality, it has commercial value; and he has taken royal measures to ensure this confidentiality.

Article 39 stipulates that member states must ensure that there are “opportunities” for artificial and serious crimes. In addition to preventing the consent of others, they can also disclose, receive, or use such information through the control of others. practice. It can be concluded that the “opportunity” mentioned here means that trade secrets and practices are protected within the legal system, and not always protected within the intellectual property legal framework of the General Agreement on Tariffs and Trade of India in 1989 Therefore, the method cannot be regarded as an intellectual.

The reason for considering the use of property rights is that disclosure, management, and registration are the basis of actual intellectual property rights, while other secrets and methods are confidentiality and confidentiality requirements. The document goes on to point out that the observance and maintenance of confidentiality and confidentiality are governed by contract objectives and fantastic civil law regulations, rather than intellectual property law. On May 12, 2016, India passed the Intellectual Property Law of Seven Target Countries. One of these goals is to create an excellent legal and regulatory framework for the protection of intellectual property rights.

The steps required to achieve this goal include identifying areas of research needed for future policymaking. At the U.S.-India Trade Policy Follow-up Forum held in New Delhi on October 20, 2016, in the dialogue document on intellectual property rights, the representative of India stated that India uses a common normative method to protect secrets and changes methods and is recognized by India.

The country is instructed to strictly protect trade secrets; the meeting agreed to develop a toolbox for industries, especially small and medium-sized enterprises, emphasizing relevant insurance laws and policies, so that companies can further protect their trade secrets in India. Training module B of the School of Law on Trade Secrets and Technology In addition, India is also conducting further research on various prison strategies for protecting trade secrets.

Practical Suggestions To Protect Alternate Secrets

Label the statistics to be blanketed as “confidential”, so employees are aware that they are dealing with sensitive enterprise information.

Restrict get right of entry to databases, servers and computer applications that keep modification secrets.

Ensure that get right of entry to servers is password blanketed which an applicable observe is displayed on laptop screens when getting access to sensitive areas.

Educate workers on why protective trade secrets and techniques is significant for business.

Sign non-disclosure agreements with any 1/3 events with that business enterprise info is shared.

Use a combination of technical and crime solutions to defend databases

Conclusion

Although the Trade Secrets Law is applicable to the existing framework of tort law, contract law and competition law, there are still some problems in the introduction of the Trade Secrets Law in the field of intellectual property. However, the separate trade secret law excludes India because it is a developing country and must have strict trade secret laws. The TRIPS agreement requires its member states to change their laws and pass new laws to fulfill their obligations under the TRIPS agreement. The law took effect in India. This law not only protects trade secrets and confidentiality, but also changes the current structure of the Competition Law to prevent the misappropriation and supervision of such confidential information. In 1860, changes were also needed to criminalize violations of confidentiality.

Disclosure of trade secrets is like that in different countries/regions. The existence of the criminal law itself cannot prevent those who engage in such acts, so it is also necessary to take active measures and measures to prevent such incidents from occurring. The “Company Law” of 1956 should also contain similar provisions to resolve due diligence on trade secrets. In this way, the company can proactively and vigilantly protect its trade secrets.

To this end, the company needs to build a strong defense system around this information. In addition, it must also establish a strong psychological loyalty among employees to make confidentiality and/or non-competition clauses more effective, thereby protecting your trade secrets.

In view of the above considerations, it is wise to accept the view that the protection of trade secrets in India is still in its infancy, and it is important to consider that India, as a developing country, needs laws and regulations, and it is constantly evolving.

Encourage the creation of a business environment, so that the country provides a lot of opportunities for offshore companies and entrepreneurs seeking competition that will benefit their businesses without worrying about their business secrets and confidential business information being abused to survive.


[1] www.mondaq.com

[2] www.latestlaws.com

[3] www.lexology.com

[4] www.latestlaws.com

[5] www.legalservicesindia.com

[6] Wikipedia.org

[7] www.indialawjournal.org


[i] www.legalservicesindia.com

[ii] www.iblogpleaders.in

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