It is recognized that each business has unique mechanisms, procedures, and knowledge which sets it apart from their competitors. This information is protected, and you can sue if someone takes that information and uses it to compete against you. Most often, that someone is a former employee or business partner who has had access to this knowledge in the past.
Although it may seem easy to point out that someone has taken your business’s knowledge and intellectual property, there are certain barriers of proof that must be met. First, the information has to be secret – in other words, it is not generally known or easily discoverable by others. The knowledge also has to offer a competitive advantage. Courts will take into account factors such as the amount of resources spent in developing the knowledge and how difficult it would be for others to get the same information independently. Also, the owner of the information has to make a reasonable amount of effort to protect their information. These measures don’t have to be extreme, but in accordance with the situation at hand, one has to be able to show that there was care put into making sure information wouldn’t pass into the wrong hands.
Next, if information has been lost, it has to be misappropriated. They have to either acquire your trade secrets through an improper means, such as theft, or receive the information through someone who broke their contractual duty to keep information confidential. Although publishing, sharing, or using this confidential information is obviously a violation of the law, simply acquiring the information in such a manner can also lead to liability.
All but two states – New York and North Carolina – have adopted a version of the Uniform Trade Secret Act (UTSA). The Act seeks to provide uniformity among states in providing protection for trade secrets. More recently, the federal government has adopted the Defendant Trade Secret Act (DTSA), which is a federal version of the UTSA. DTSA operates similarly with UTSA. DTSA provides an independent federal subject matter jurisdiction, however. Both statutes provide a powerful tool in fighting against trade secret misappropriation.
If you believe your business’s trade secrets have been wrongfully acquired and wrongfully used, contact us at KHF. Our attorneys can help you recover the trade secret as quickly as possible. Please take note that there is a statute of limitations for you to take action – three years, federally, and up to six years, depending on the state. It is in your best interest to take action quickly after realizing the misappropriation of valuable company information. We at KHF can advise you throughout this process.
For more information on how our attorneys can prevent the loss of trade secrets and associated damages, please see our Restrictive Covenants and Noncompete page.