Do You Have Any Trade Secrets?

Do You Have Any Trade Secrets?

Client Resources | April 2, 2018

You may.  Do you have valuable information that you have created and that you do not share publicly?  If so, you have something that you can probably protect as a trade secret.

Here are answers to some questions you might have.

What is a trade secret?

Generally, a trade secret can be nearly anything that (1) is valuable to you and would be to others; and (2) you have taken reasonable steps to keep confidential.  These basic requirements are the same whether the Georgia Trade Secrets Act (“GTSA”) or the nationwide Defend Trade Secrets Act (“DTSA”) applies.

What are reasonable steps?

Reasonable steps are not a list of requirements.  That said, reasonable steps usually include the following:

  • sharing the potential trade secret only under a confidentiality agreement;
  • giving explicit warnings, both on a document and orally, that something is a trade secret;
  • conducting exit interviews with departing employees; and
  • limiting access to people who need to know—through both digital and physical security.

In short, reasonable steps are about ensuring that someone who has access to information should have enough warning to know that the information is a trade secret.

Who generally takes trade secrets?

The computer hacker might get the headlines, but the majority—perhaps 90%—of trade secret misappropriation is by people who once were allowed to access the trade secret.  These people include current and former employees, customers, and third parties.[1]

 What are the most important types of trade secrets?

Companies often consider the following to be their most important trade secrets: technical information and know-how; information about customers, including customer lists; internal business information, including marketing, finance, or sales information; and software and computer programs.[2]

What if someone takes the trade secret?

Trade secret theft is a civil claim called misappropriation.  Generally, misappropriation of a trade secret occurs when someone acquires, discloses, or uses a trade secret through improper means.  For example, Georgia cases have shown that the following acts are misappropriation:

  • unauthorized copying of the design of certain key elements of a proprietary software program;
  • providing access to a software system to unlicensed third parties;
  • transferring a copy of a software system to third parties;
  • faxing a vendor list to a competitor;
  • knowing a specialized logistics system and going to work for a direct competitor;
  • emailing profit and loss statements, spreadsheets of accounts receivable, and vendor lists to a competitor; and
  • disclosing a manufacturing process in a patent application.

A former employee or competitor took my information.  How can I increase my chances of having a strong misappropriation claim?

Having a strong misappropriation claim often depends on proactive measures in place before the information is taken.

For example, ensure that the person or business you want to sue was under a specific confidentiality agreement, or was an employee, when the person or business took your information.  Know what parts of that information are trade secrets.  Be very specific.  If you try to get specific about what information is a trade secret only when litigation is imminent or during litigation, it’s likely too late and likely that the lawsuit will show how the trade secret was not always protected consistently.

Getting specific early is important because a general list of “confidential” information does not mean “trade secret” to a court.  For example, these were not trade secrets to one court:[3]

  • Company’s set of initiatives launched to improve communication among disparate segments of the health ecosystem;
  • Company’s clinical methods relating to executing projects and related protocols and information;
  • Company’s data configuration protocols and methods;
  • Company’s interpretation of data;
  • Company’s process to assess the quality of evidence and how to execute it;
  • Company’s assessments of the risk of bias of the evidence based on the funding source;
  • Company’s analytics, analytics tools, and analytics programming;
  • Company’s ontology process and tools, including the company’s unique and proprietary process for “binding” collecting original terms in a publication and then binding the like terms and synonyms to that original term; and
  • The database field names, parameters and database schema information embedded within the summaries company delivered to the opposing party.[4]

The court did suggest an example of what would have been a trade secret: “a specific, proprietary algorithm developed at a certain time and which no one else owns.”[5]  In short, getting specific about what the trade secret consists of—perhaps even narrowing the trade secret to a specific document—creates the best chance of winning a misappropriation claim.

What types of damages and relief can I get from a court for trade secret misappropriation?

You can potentially get injunctive relief, damages, double damages, and attorneys’ fees.

Perhaps the most common type of relief is injunctive relief.  In practice, a court injunction may ban a defendant from using your information or require that the defendant return all information taken from you.

Even if you primarily seek an injunction, you can also seek damages.  Damages can include both what you lost because of the defendant’s actions and what the defendant gained because of your trade secrets.  Alternatively, the court may require that the defendant pay you a reasonable royalty for the use of your trade secret.

If the defendant acted willfully and maliciously, you may get double damages and your attorney fees paid.  But if your claim has no basis, you may have to pay the defendant’s fees.

GTSA and DTSA allow for similar types of damages.  Unsurprisingly, figuring out how much you spent or how much a defendant made can be tough.  Also tough is connecting specific trade secrets to specific damages.

[1] See David S. Almeling, Darin W. Snyder and Carolyn Appel, A Survey Of In-House Attorney Views On Trade Secrets, Law360 (Jan. 12, 2018), available at https://www.law360.com/articles/999664/a-survey-of-in-house-attorney-views-on-trade-secrets (restricted access and last accessed on January 21, 2018).

[2] Id.

[3] Elsevier Inc. v. Doctor Evidence, LLC, No. 17-CV-5540 (KBF), 2018 WL 557906, at *6 (S.D.N.Y. Jan. 23, 2018).

[4] Elsevier Inc., 2018 WL 557906, at *2, *6.

[5] Id. at *6.

 

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