Tricks of the trade(secrets) Part 2

Under what circumstances can the business owner pursue a wrongdoer for misappropriated trade secrets? Can the owner prevent disclosure or receive money for disclosure, irreversible loss and/or improper use? In the United States the answers depend upon state law, or the law designated in an enforceable contract. In most states litigation of trade secret misappropriation can result in a financial award and/or court orders prohibiting use or disclosure of the information. They are also criminal penalties under certain circumstances.

Illinois is an excellent example of a state with its own version of a law known as the Uniform Trade Secret Act. Illinois adopted its current act in 1988 and it contains extremely supportive provisions for the business owner. First, improper trade secret disclosure and/or use by another can be prevented by court order before it occurs. This is a valuable remedy because the trade secret may be worth a great deal more money if it remains confidential. Without this remedy the information would be dissipated and the trade secret owner may receive inadequate compensation for its loss over time. Because trade secret duration is potentially indefinite, it may be worth the investment to send your attorney to court on an emergency basis to pre-empt irreversible disclosure and dissipation.

Second, the Illinois statute significantly expands the scope of information eligible for trade secret protection. Trade secret status is possible for technical as well as business information, undisclosed machinery, and any information that otherwise meets the statute’s requirements. For example, marketing strategies, future customers, customer and vendor lists, potential market areas, price books and group characteristics of anonymous customers are eligible for trade secret status in Illinois. In sum, the business owner should remember that although there are limitations on the subject matter of copyright and patent protection, there are none for trade secret protection.

Third, the persons held responsible for misappropriation are not exclusively those who actually take possession of the trade secret. Persons who receive the information, and have reason to know that it was improperly obtained by another, are as culpable as persons who actually “pinched” the information. Unfortunately, this is a very common scenario in employment situations. Typically the employee improperly takes trade secrets from a previous employer and offers them to the next employer who willing receives the information for his own enterprise.

Most business owners are aware that protection of sensitive information is an ongoing problem. Nevertheless, the computer age has “upped the ante” with laptops and “blackberries” that employees routinely use outside the office. These devices invariably house trade secrets belonging to the employing business entity, and they are much more difficult to oversee than paper records. In fact many of the most recent trade secret misappropriation court cases involve employees who abscond with valuable un- authorized information on pen drives and other electronic devices. In these situations, the best financial investment is pursuit of the subsequent employer if it knew or had reason to know that information was improperly acquired.

© 2010 Adrienne B. Naumann

Ms. Naumann does not endorse or sponsor the advertisements at adriennebnaumann.wordpress.com

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