Good morning. I am Michael Masri. I am a litigation partner at the law firm of Melcher, Lippe, Goldstein and Breitstone. I’m here to present a continuing legal education discussion concerning the theft of trade secrets. Now, in this electronic day and age, the rules of the game have changed in the most extreme way possible. For instance, before everyone was widely using computers, it was very common for an employee to maybe make a copy of some files, maybe tell some other colleagues that he’s leaving, some customers that he was going to go, but the advent of computers, the increased use to cellular telephones, the increased use of social media and other real substantial changes in the way people have done business have completely changed the playing field. Continue reading Technology Impacts on Trade Secret Litigation – YouTube Video »
Archive for the ‘Trade Secrets’ Category
Trade secrets are often accompanies most important intellectual property assets. Too often, companies fail to protect their trade secrets in a way which will give them legal status. If you don’t treat your proprietary information, process, devices or formulas as secret, then the law will not recognize them as trade secrets.
Matt: Thank you for being here. Now Mark, say an employer files a lawsuit claiming that an employee or any other individual has stolen a trade secret. What constitutes, Mark, a trade secret?
- What is a Trade Secret? – WIPO: Broadly speaking, any confidential business information which provides an enterprise a competitive edge may be considered a trade secret. Trade secrets …
Trade secret – Wikipedia, the free encyclopedia: A trade secret is a formula, practice, process, design, instrument, pattern, or compilation of information which is not generally known or reasonably ascertainable, …
Matt: Hello, and thanks for tuning in to Trade Secret Law Radio. This is Matt Plessner, and for todays show, we are once again targeting business owners. Getting to the point where you expand your business and start hiring new people can be very exciting. But what if you train someone, and they split off and start to business to rival yours? Can anything be done about it? We’ll answer this and much more as we speak again today with attorney Mark Clark of the Traverse Legal office of Traverse City Michigan….Mark, how are you? Continue reading How To Not Train Your Cometitor »
A Michigan court of appeals case, Actuator Specialties Inc v Chinavare, demonstrated the scope and breadth of the Michigan Uniform and Trade Secret Act remedies when it issued an injunction against an employee prohibiting that employee from working at a competitor after verifying a theft of important trade secret information. It is the first case known in Michigan where a court has issued an injunction against an employee without a non-compete agreement that prohibited the employee for working for a competitor. In the Chinavare case, the employee had copied sensitive trade secret information and brought the information to his new employer. A forensic analysis of the employee’s computer confirmed the downloading of the sensitive information on a USB drive, which was found at the employee’s home. The court of appeals issued an injunction prohibiting the employee from working for the competitor for a three year period in spite of the fact that in this case there was no non-compete agreement. The plaintiff relied solely on the Michigan Uniform and Trade Secret Act in obtaining the injunction relief prohibiting the employee from working for its competitor.
Although we would never recommend forgoing a non-compete agreement for employees who have access to trade secret information, it is good news for employers that when they find themselves without an appropriate non-compete agreement, that in appropriate cases, there is precedent in Michigan for the issuance for an injunction when an employee is found to have taken sensitive trade secret information from the former employer.
If you have a trade secret issue, contact the experienced trade secret at Traverse Legal for a consultation.
Employers will want to carefully consider the use of trade secret prohibitions and restrictions in their employment agreements. Often times trade secret restrictions are incorporated into provisions in an employment agreement or a non-compete agreement with non-compete restrictions. Inartful drafting of a trade secret agreement can oftentimes work against an employer who is also attempting to enforce non-compete restrictions. In many instances, we have found that judges are tempted to minimize or even disregard non-compete restrictions if an employment agreement also contains trade secret restrictions where the employer is attempting to enforce non-compete restrictions primarily because of trade secret concerns. The courts often analyze the circumstances with the question of why do we need to enforce a non-compete when we have trade secret restrictions in place that would prevent the employee from otherwise disclosing trade secrets. We know the obvious answer is that the enforcement of trade secret agreements is difficult after an employee moves to a competitor and so it is crucial that careful language is employed so that your non-compete restrictions are not negating your trade secret restrictions within your employment agreement.
The attorneys at Traverse Legal can assist you in navigating the minefield of terminology that will be most useful in enforcing trade secret restrictions within your non-compete provisions of your employee agrements.
What is a trade secret? A trade secret is anything within your business that is not generally known to the public, that’s not readily ascertainable, and that give you, your company, or your business an economic advantage or other advantage over your competitors. And so a trade secret definition typically incorporates these various concepts. That, number one, it has to be this process, design, pattern, information or formula which is unique to you, that only you know about, and that your company has available to it, other competitors do not.
The next concept is that it has to provide you an economic advantage over competitors. So, trade secrets, by definition, can’t just be something that no one else knows. They have to be something that no one else knows, and that gives you an advantage over your competitors. And these are very important concepts. Trade secrets are, by definition, confidential information for your company. And trade secret law will provide you protection in order to keep those trade secrets out of the hands of your competitors if you take the appropriate actions to make sure that you keep the information confidential; that you treat the trade secret information as a confidential piece of information.
Well, a non-compete agreement, Matt, protects businesses. Most states in the country have indicated that in order for a non-compete agreement between an employer and an employee to be valid and enforceable, it must protect that business’s legitimate business interests.
Legally, it has a definition in the law. Most states in the United States have adopted some form of the Uniform Trade Secret Act. Under the Uniform Trade Secret Act a trade secret has three basic characteristics. Number one, it is a secret. Secondly, it confers a competitive advantage on its owner. And thirdly, it is the subject of reasonable efforts, to maintain its secrecy. So three things, it’s secret. It contains an advantage to your business and it is subject to the maintenance of secrecy. And that is essentially the lay persons and the legal definition of a trade secret.
Welcome to Trade Secret Law Radio, we bring you the best in trade secret news, legal advice and information. From trade secret misappropriation to trade secret agreement drafting and negotiation, we cover the issues here.
This is Brian Hall, an attorney with Traverse Legal, PLC. A law firm that deals with the misappropriation of trade secrets throughout the United States. Today, I will be talking about misappropriation of trade secrets. Continue reading Misappropriation of Trade Secrets »
The Uniform Trade Secrets Act (UTSA) defines misappropriation as follows:
Section 1.2: “Misappropriation” means:
(i) acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or
(ii) disclosure or use of a trade secret of another without express or implied consent by a person who
(A) used improper means to acquire knowledge of the trade secret; or
(B) at the time of disclosure or use, knew or had reason to know that his knowledge of the trade secret was
(I) derived from or through a person who had utilized improper means to acquire it;
(II) acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; or
(III) derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use; or
(C) before a material change of his [or her] position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake.
Most states have adopted the Uniform Trade Secrets Act in total or with minor changes. As such, in order to sustain a cause of action for trade secret misappropriation, you meet the statutory elements required. This requires an understanding of what constitutes “improper means,” which is defined as theft, bribery, misrepresentation, breach or inducement of breach of a duty to maintain secrecy, or espionage through electronic or other means. Therefore, an employer seeking a trade secret misappropriation lawsuit against an ex-employee can show, for example, that the ex-employee stole its trade secret on the way out the door. Likewise, a third party who acquires or uses the trade secret information may also be liable if it knew or had reason to know of the theft. Each matter has facts specific to the misappropriation, but a plain reading of the statute will help determine if you have a valid trade secret misappropriation lawsuit.