Skip to content

Trade Secrets

Trade secrets – developed over months and years at significant costs – can be stolen by employees or competitors in an instant.  Trade secrets are especially vulnerable when they are available on a company intranet.

It is important to have a corporate policy protecting trade secrets.  Centre can help with that.  In addition, if litigation occurs or is necessary, we can represent companies involved with trade secret thefts and alleged thefts.

While there is no federal statutory system defining and protecting trade secrets, most states have adopted what is known as the Uniform Trade Secrets Act (UTSA).  While the UTSA is not identical from state to state, it is similar in its most important features.

The UTSA defines a trade secret as: “information, including a formula, pattern, compilation, program, device, method, technique, or process that;

(i)         derives independent economic value, actual or potential, from not being generally known to, and not readily ascertainable by proper means by, other persons who can gain economic value from its disclosure and its use, and

(ii)        is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.”

Trade secrets take all sorts of forms.  For instance, trade secrets can be:

  • Ideas or concepts
  • Discoveries or inventions
  • Software
  • Designs, drawings & models
  • Internal manufacturing and test procedures
  • Marketing data and plans
  • Customer lists
  • Bidding policies and procedures

Centre’s Capabilities and Experience

Centre’s attorneys have extensive experience in the trade secrets arena.  Our attorneys are admitted in numerous states and have litigated trade secret cases in state and federal courts around the country.  For instance Centre’s attorneys represented the distributor of Ready-to-Eat Meals in federal court against a former salesman who stole a customer list from his former employer.  Many other matters (as they often do) also included trade secret elements as part of the litigation.

Have a trade secret issue?  Please contact Eric S. Crusius, Esq. via e-mail at ecrusius@centreconsult.com or by phone at (703) 288-2800 should you have any questions.

Information Centre – Trade Secrets

What are the requirements to make something a “trade secret?”     

The first requirement is that it must be secret and not available to everyone at your business or to the general public.  Your trade secrets can be shown to third-parties while maintaining their trade secret status if the disclosure is accompanied by a confidentiality agreement.

Second, the trade secret must have some sort of business value that gives a competitive advantage over competitors that do not have it.

Third, the trade secret must not be generally known in your industry or trade.  However, the information must not be unique or novel.

What are remedies for trade secret violations?

Remedies are far-ranging and involve civil and federal criminal penalties.  On the civil side, a victim of a trade secret theft can (i) obtain injunctive relief to enjoin actual or threatened misappropriation of the trade secret; (ii) obtain actual damages; and (iii) obtain punitive damages and attorneys’ fees.

On the criminal law side, depending on whether the trade secret was misappropriated to a domestic or foreign entity or government, penalties for stealing trade secrets can land a Defendant in federal prison for up to 15 years and be the subject of fines of $10,000,000 for each violation.  See U.S.C. §§1831 and 1832.

What are the limitations of trade secret protection?

Trade secrets are not protected if they were developed independently by a third-party (as to the third-party) or if they are discovered through reverse engineering.  For instance, if a third-party lawfully obtains information and reverse engineers and learns of a trade secret, it is not protectable as to that third-party.

In addition, if a trade secret is disclosed to the public (even inadvertently), it will no longer be protectable as a trade secret.  Thus, it is important to have a policy in place to properly protect your trade secrets from public disclosure.

Advertisements
No comments yet

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: