Trade Secrets: What They Are and How to Protect Yours

According to California Civil Code § 3426, the Uniform Trade Secrets Act, a “trade secret” is information that maintains independent economic value from non-disclosure and is a result of efforts that justify non-disclosure under the circumstances. The knowingly wrongful taking or disclosure of trade secrets is defined as “misappropriation” within the Code, and is considered unfair competition, a civil offense.

In order to initiate a claim for the misappropriation of a trade secret, the following elements must be met:

– The subject of the claim must fall within the protection of the Code,
– The owner of the trade secret must meet the burden of showing that “reasonable precautions” were taken against disclosure of the secrets, and
– The owner of the trade secret must show that the secrets were acquired by unauthorized means.

Trade secret owners have a duty to adequately protect the confidential information contained in trade secrets. Otherwise, individuals may obtain trade secrets lawfully through, for example, independent discovery. Trade secrets are different from patents in that patents only last for a specified period of time whereas trade secrets provide endless protection unless such time as the information is publicly disclosed. However, patents and trade secrets cannot be used in conjunction – owners must choose one or the other form of protection.

Under the Economic Espionage Act of 1996, Congress has deemed certain forms of misappropriation of trade secrets a federal crime in order to protect against economic espionage. Under the Act, violators may be fined $500,000 – $10,000,000, imprisoned for over 15 years, or both.

Employers face the potential threat that past employees may misappropriate trade secrets. Employers should consider the following precautions to protect against misappropriation of trade secrets by employees:

– Review employment agreements to ensure there are provisions in place to protect confidential information and trade secrets;
– Make sure all employees are familiar with company policies regarding Internet and compute use;
– During hiring and exit interviews, emphasize employee obligations to protect trade secrets; and
– In order to save valuable time, formulate a legal plan regarding how to proceed in the event that there is a misappropriation of trade secrets.
At the Law Offices of Salar Atrizadeh, we guide California consumers and businesses in matters related to intellectual property by using legal knowledge and skills to create solutions for our clients. Please contact us today online or at (310) 694-3034 to set up a confidential consultation.