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Businesses Have a Right to Protect Their Trade Secrets

Business and Commercial Disputes By Harvey Binnall PLLC - 2018/08/17 at 09:47am

Depending on the nature of the business and the information being protected, trade secrets may form a substantial portion of an intellectual property portfolio, and thus a substantial portion of the total value of a given business.  As such, potential trade secret infringement may have enormous consequences for the continued health of a business.  Fortunately, those whose trade secrets have been infringed (through misappropriation) may bring an action against the liable defendant.

Legitimate trade secrets are protected by law against unlawful infringement.  Infringement — in the trade secret context, known as misappropriation — can be rather complicated to understand.

Let’s simplify with a quick look at the basics.

Trade Secret Misappropriation

A trade secret is any information (that provides a competitive economic advantage to a business) that has been kept confidential, or for which the plaintiff has made reasonable attempts to protect from disclosure.  The “secretiveness” of a trade secret is fundamental to its validity and enforceability.  If a trade secret is public knowledge, then it is not protectable.  On the other hand, if the trade secret at-issue is confidential, but some third-party commits fraud and obtains the information unlawfully, that would qualify as misappropriation and therefore entitle you to bring an action against the defendant for damages and potentially obtain an injunction.

So, what is misappropriation?

Misappropriation of a trade secret occurs when a person or entity acquires a trade secret improperly.  Improper means of acquisition may involve wrongful conduct such as fraud, breach of contract, and corporate espionage, among other acts.  It’s also worth noting that misappropriation may result from unintentional and negligent conduct.  For example, if the defendant acquires a trade secret by unintentionally downloading the files of an individual who is under NDA with another business, then that would likely constitute misappropriation.

Liability Issues in Trade Secret Misappropriation Lawsuits

There are several common liability issues that you’re likely to encounter in the trade secret context.

Reasonable Efforts to Maintain Secrecy

Trade secret misappropriation claims only stand if the plaintiff actually engaged in reasonable efforts to maintain secrecy — failure to do so will shield the defendant from liability for such misappropriation.  What qualifies as “reasonable” effort depends on the circumstances.  For example, if the plaintiff does not adequately protect their confidential trade secret information and regularly presents such information to third-parties without an NDA in place, then that would likely represent a failure to maintain secrecy.

Independent Discovery

Defendants may avoid liability in trade secret misappropriation lawsuits if they show that they independently discovered or developed the trade secret at-issue (and thus, that there was no misappropriation).  For example, if the defendant reverse engineered a chemical formula, then they would not be liable for trade secret misappropriation, even if the original formula was a valid and enforceable trade secret.

Contact a Skilled Alexandria Business Attorney for Guidance

Harvey & Binnall, PLLC is a boutique litigation firm representing businesses in a variety of disputes, including those that include business torts such as the misappropriation of trade secrets.  We are committed to industry-leading advocacy, and are willing and able to take a case to trial if negotiations break down.  This aggressive approach to litigation gives us a substantial edge during early settlement negotiations, and helps us to stay one step ahead of our opponents throughout the litigation process.

Call (703) 888-1943 or submit an online claim form through our website to speak to an experienced Alexandria business attorney at Harvey & Binnall, PLLC.