Misappropriation of Trade Secrets


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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.

When we’re talking about trade secrets, we need to first define what is a trade secret. And that becomes really important when we’re looking at the cause of action for misappropriation of trade secrets because in order to state a claim for misappropriation of trade secrets, one must show that the actual information, indeed, qualifies as a trade secret, and, must also show that the person that took or used the trade secret, did so with an improper means or in breach of some kind of confidential relationship. Finally, the owner of the trade secret must have used reasonable steps to preserve the secrecy of the trade secret.  So, those three elements generally constitute misappropriation of trade secrets.

Now, while each state has different laws pertaining to trade secret misappropriation, the Uniform Trade Secrets Act essentially tried to make the laws as similar as possible throughout the United States.  Therefore, those elements are consistent to a certain extent and can be followed in a general sense.

So getting back to what is a trade secret.  A trade secret can consist of any formula, pattern, device or compilation of information that is used in the business and gives that business the opportunity to obtain an advantage over others, such as competitors who do not know what the actual trade secret is or actually use it.

So, when we’re further talking about a trade secret, it can be many different kinds of things.  It can be a customer list, software or other information that meats that definition of a trade secret.  Namely, that it’s secret information that provides a competitive advantage.  Now like I said before, since each state law has different cases and interprets law regarding misappropriation of trade secrets differently, reviewing what the different courts have held constitutes a trade secret and what may not constitute a trade secret, is always beneficial in determining whether or not you as a business may actually own a trade secret.

Assuming that you do have a trade secret, the next thing that you have to show is that you’ve taken reasonable steps to preserve the secrecy of that trade secret. This can be many things.  The most common is that you’ve used contractual agreements to identify and preclude the specific use, dissemination or other improper usage of that particular information as identified as a trade secret.  This is typically in employment agreements, in independent contractor agreements and even in other agreements with third parties that would be given access to some of that information under a confidential manner.

The other types of reasonable steps to preserve secrecy might depend on what the actual trade secret is.  If it’s a customer list, should that customer list be under lock and key?  If it’s a recipe for something, should that be under lock and key?  If it’s software, should there be restricted access via passwords and other things along those lines?  Those are all questions that are important to answer and a trade secret attorney or trade secret lawyer can usually give the necessary  advice in order to give you the best opportunity of establishing that you’ve taken reasonable steps to preserve the secrecy of your trade secret.

So, assuming you have a trade secret, and assuming you’ve taken those steps to preserve the secrecy of it, the last element you must establish to have a valid cause of action for misappropriation of trade secrets is that the defendant – the person that you’re looking to enforce your trade secret ownership against – actually misappropriated the secret.  And what that means is that they used improper means to acquire it, to use it, or to disclose it.  And those improper means can be in violation of one of the types of confidential contractual agreements that I mentioned before, or it could be simply them exceeding their authorization and downloading certain information and then using it for their own use, providing it to a competitor or something else.

Each case is obviously specific to its facts, but generally those are the elements that are necessary in order to establish a misappropriation of trade secrets cause of action.

Once again, this has been Brian Hall, a trade secret attorney located here in Michigan.  I hope this has been helpful.

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This page has been written, edited, and reviewed by a team of legal writers following our comprehensive editorial guidelines. This page was approved by attorney Enrico Schaefer, who has more than 20 years of legal experience as a practicing Business, IP, and Technology Law litigation attorney.