How Do You Enforce A Trade Secret?

Law Blog

Intellectual property protection attorneys are often asked about how companies can enforce trade secrets. There are several layers to the process so let's take a look at what they are and how they might apply to your circumstances.

Applicable Laws

Oddly enough, most trade secrets are not enforced at the federal level. This is different from how many other forms of IP, such as patents and trademarks, are protected. Most states use a variant of the Uniform Trade Secrets Act. This is a model law that serves to show how a state might implement trade secrets rules.

Under the USTA and similar state laws, the normal cause of action is some form of infringement or misappropriation. This means someone is misusing property that is rightly yours without an agreement in place. Such issues are usually civil offenses, and they must be tried in the states where the offenses occurred. In states that comply with the USTA, the statute of limitations is three years from the time of the specific offense.

What Is a Trade Secret?

A trade secret is a piece of information that allows you to achieve a competitive advantage. Your information also has to be secret, meaning it can't be disclosed willingly in publications or reviews. Also, a limited number of people are allowed to know it. Likewise, your company has to invest effort in maintaining the secret.

The classic version of a trade secret is the formula for making Coca-Cola. Trade secrets may include processes, materials mixtures, algorithms, client lists, and fabrication methods. Anything can be a trade secret if it is properly withheld from others for the purpose of gaining a commercial advantage.

How Do You Protect a Secret?

For legal purposes, the important thing is to actively implement measures to contain a secret. Companies frequently have their employees sign nondisclosure agreements, for example. In these cases, breach of contract is the most common cause of action in court if someone violated the NDA.

Additional measures may include physically securing premises and setting up secure computer servers. What the law wants to see is a good-faith effort to not only claim the secret but actually keep it.

Criminal Actions

If an outside party actively engaged in spying to obtain a secret, that is a federal offense under the Economic Espionage Act. You can report violators. If they are found guilty, they will be punished with up to 15 years of prison time and $500,000 in fines. Corporations face fines as high as $10 million. Also, all profits from the offense are forfeited.


11 August 2020