Trade Secret Litigation

Trade Secret Litigation

Trade secret litigation is something every employer and every individual whether individually or in a company needs to be aware of. It is a specialized area of the law, reflecting the importance that employers and employees place on protecting proprietary trade secrets. Trade secrets can be difficult to define, but they are generally considered confidential information that should be kept within certain parties in such a manner that allows those parties to profit from it without disclosure or use by others.

The actual remedies available in trade secrets litigation depend upon the type of company involved and what kind of documents have been disclosed. Depending upon these factors, companies may be able to recover damages for both lost profits and punitive damages if there was specific intent or recklessness behind the disclosure of the trade secrets.

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Trade Secret Litigation: An Overview

Any individual and/or employer who has worked with regard to protecting trade secrets knows it’s challenging. For this reason it’s important to at least understand the basics.

It is essential to understand the basic components of a trade secret and how it differs from other information that can be protected by law. Typically, a trade secret will be defined as any proprietary information that provides value to the company holding it and thus allows the company to maintain a competitive advantage or edge over others in their business or field. Merely having a competitive edge however does not necessarily mean that a company’s information is a trade secret, nor does it mean any proprietary rights are associated with it.

Trade secrets can be extremely valuable business assets and all states have statutes governing the protection of trade secrets.  The Federal government recognized the importance of trade secrets to U.S. companies by enacting the DTSA (Defend Trade Secrets Act of 2016) which allows a Federal civil cause of action against a party accused of trade secret theft.

Trade secret litigation most commonly occurs when an employee is sued by their former employer for stealing confidential information and using it for their benefit in a competing business venture. This occurs because the trade secret information was used by the ex employee or disclosed to a competitor or it was given in exchange for compensation.

There are many different types of trade secret violations that companies can be exposed to, including:

Theft of Trade Secrets

This occurs when a company's confidential information is disclosed to a business or person who does not have the rights or legal authorization to obtain or use it. The violations can include misappropriation, trespass, theft, and conversion. Misappropriation is the unauthorized use of your trade secrets without your permission, resulting in harm to you or your company.

Use of Information

There have been many cases in which plaintiffs sued because the defendant misused their trade secrets in their business endeavors. This can take many forms, including misappropriation, breach of contract, theft, and civil conspiracy.

Breach of Contract

If you as an individual or company have signed a non-disclosure agreement stating that you will not disclose confidential business information, and it is disclosed, the non-breaching party can sue for breach of contract.

The primary issue when dealing with trade secrets litigation is defining if it is in fact a trade secret, what the damages might be, and finding evidence of such.

You should find yourself or your company in a trade secret dispute, contact us to see if we can assist you.  Please do this BEFORE sending any threatening communications.

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