Protecting Trade Secrets in Cyberspace

A business’s trade secrets are an essential component of its foundation, growth, and development. A trade secret is any sort of confidential and proprietary information that a company seeks to protect from unauthorized access.  For example, a trade secret, includes a formula, pattern, compilation, program, device, method, technique, or process (e.g., computer algorithm).  By definition, a trade secret is only valuable so long as it remains a secret.   In recent years, as businesses conduct more transactions over cyberspace, there is a higher probability of trade secret theft or loss. However, the constantly changing nature of cyberspace, and the anonymity users enjoy over the Internet, make protecting trade secrets a complex issue.

What is the Threat to Trade Secrets in Cyberspace?

Trade secrets in cyberspace, which involve software and digital information, can be misappropriated or wrongfully taken and used without detection.  It is also known as “cybertheft.”  For example, an online user has the capacity to view and distribute trade secrets without detection within minutes.   Online message boards allow users to post trade secrets over the web anonymously.  By concealing their identity, it is possible to steal a trade secret without detection.  Indeed, the courts continue to issue decisions that recognize individual privacy rights in digital trade secret misappropriation cases, preventing the trade secret owner from seeking legal remedies. Furthermore, in the past, trade secret theft was intended to secure an economic advantage between competing companies. However, recent cases, such as Ford Motor Co. v. Lane, illustrate that trade secrets are vulnerable to dissatisfied employees who distribute trade secrets only to harm an employer.  On a side note, hackers may even steal and distribute trade secrets simply to show off their technical skills.

How Can an Owner Protect Trade Secrets Over Cyberspace?

Trade secret owners must act quickly to protect confidential information and prevent infringement.  To secure legal protection in the event of an unauthorized use of a trade secret, the owner must initiate litigation immediately. This is necessary because once a trade secret enters the public domain it loses its value and is thereby immune from legal protection.  However, an owner who diligently monitors trade secrets can seek a court order that prohibits future use or any distribution of the secrets at the first sign of unauthorized use.  Both civil and criminal litigation may be necessary forms of legal relief.  Also, the most common cases of trade secret misappropriation involve corporate spies or employees. Therefore, it is important for a company to implement effective data-use policies, network monitoring and intrusion detection systems to prevent access without authority.  Additionally, well-drafted employee agreements can help employers avoid trade secret theft. Depending on the circumstances of employment, an employer may be able to utilize non-disclosure or confidentiality agreements to protect trade secrets.

At the Law Offices of Salar Atrizadeh, we guide our clients in legal matters regarding all aspects of trade secrets and cyberspace privacy by using extensive knowledge and skills to create innovative solutions. Please contact us today to set up a confidential consultation.