As hard as business owners work to keep their brand-defining secrets private, those who want a piece of their success work equally hard to gain access to those secrets. Most states have similar versions of the Uniform Trade Secrets Act which defines what trade secrets are and the charges that can be brought against someone accused of misappropriating a trade secret.
What Is Considered a Trade Secret?
The entirety of a trade secret claim hinges on the definition of “trade secret.” If a business owner cannot prove that the information in question is a trade secret or if the opposing side can prove that the business owner did not protect the information, a case falls apart. Under the Uniform Trade Secrets Act, several factors are used to determine whether or not something is a trade secret:
- Whether or not (and how much) the information is known outside and inside the business
- Money and effort used to develop the information
- How much time and money others would need to duplicate the information
- How the business owner tried to maintain the secrecy of the information
- If the information has value to the holder
Note that there is no need to register trade secrets like there is for patents and trademarks; the protection of a trade secret lies solely in the efforts used to maintain its secrecy.
The next element of a trade secret claim is whether or not the information was misappropriated. Uniform Trade Secrets Act generally defines misappropriation in two different ways. First, someone may misappropriate a trade secret by acquiring the information when they knew or should have known that the information was obtained illegally. Misappropriate also occurs when someone discloses or uses a trade secret and meets the following requirements:
- Secured the information illegally or improperly
- Should have reasonably known at the time of use that the information was obtained by illegal means, obtained in a situation where its secrecy was expected, or taken from someone who had a duty to protect the trade secret
- Knew that the information was a trade secret and that their knowledge of it was improper
Seeking Damages and Preventing Further Disclosure
Once it has been established that information is a trade secret and that it was misappropriated, the holder of the trade secret can seek damages. Under the UTSA, a plaintiff can sue the responsible party or parties for compensatory damages and any profits earned by the defendant while using the trade secret. Additionally, the court may take steps to prevent further usage or dissemination of the trade secret. They may grant protective orders during discovery, seal court records, and order the defendant to avoid disclosure of the trade secret without court approval.
Have your trade secrets been misappropriated by a partner, employee, or another party? Work quickly to protect your business and hold the responsible party accountable. Call EmergeCounsel at 888-EMERGE-0 (888-863-7430) to discuss your options.