How are Trade Secrets Protected?

Any business information which gives the enterprise a competitive edge can be considered a “trade secret.” If a developer of such useful information keeps the information secret, then they have a tort remedy against anyone who wrongfully obtains the information and uses it.

A trade secret is information used by a business that is secret, and that provides an economic advantage to the individual with knowledge of it.

Once the elements of the tort of “ misappropriation of trade secrets” is established, the owner of the trade secret is entitled to recover damages and injunctive relief.

Unlike patent, copyright, and trademark law, trade secret regulation is a governed by state common law, and increasingly regulated by the Uniform Trade Secret Act. Contrary to patents, a trade secret is protected without any procedural formalities or registration. In effect, trade secrets are protected indefinitely.

TRIPS Agreement

The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) is an international agreement that is administered by the World Trade Organization (WTO). Under Art. 39, general standards exist in regards to the misappropriation of trade secrets:

  • The information in question must be secret.
  • The trade secret must have commercial value.
  • The rightful holder must have taken reasonable steps to keep the information secret (e.g. confidentiality agreements).

In order for a plaintiff to have a valid case, they must be able to prove that the information was not public, and that the owner of the secret took reasonable precautions to preserve the secrecy.

The information is not considered a trade secret unless it affords the owner a competitive advantage. Often, a competitive advantage exists when an individual has discovered or created a novel product or a manufacturing process, however, novelty is not required.

When an enterprise has a trade secret, it doesn’t want its competitors to know about it; therefore, it will ensure that only a limited number of people know about it, and those who do know are made well-aware of its confidentiality.

In such cases, the enterprise usually has all people who are “in the know” sign confidentiality agreements. The misappropriation of information by an employee, a competitor, or by any third party is a violation of a company’s trade secrets, and gives rise to a lawsuit.

To learn more about trade secret violations, call The Mirkhan Law Firm to discuss your case with an Orange County business litigation attorney.