STOLEN TRADE SECRETS – Here’s why companies are losing in court

Over the past decade, companies are increasingly losing trade secret theft cases. Even when corporate secrets are stolen, courts are dismissing claims of disputed trade secret cases because plaintiffs have not taken “reasonable measures” to protect their intellectual property. A proactive approach to trade secret protection is always the best approach.

You need these 3 things

Trade secrets are protected under a variety of federal and state laws. While there is some discrepancy between laws, there are typically three components that constitute a trade secret.

(1) the information must have economic value;

(2) the information is not generally known; and

(3) the owner has taken “reasonable measures” to keep the information secret.

While the first two elements are relatively straight forward, there is no clear standard for what are “reasonable measures.” Companies are not losing these battles in court because they fail to plead or prove theft; they are losing because they fail to show that the stolen information meets the legal definition of a trade secret.

Determining reasonable measures will necessarily be determined on a case by case basis. Companies that take little or no specific steps to protect their trade secrets are incredibly vulnerable. Companies need to be able to specifically demonstrate proactive measures they take to protect this type of intellectual property.

What are reasonable measures

Marking documents as “trade secrets” or “confidential” is often considered when courts are determining trade secret status. A lack of marking may be used as evidence that a defendant did not have sufficient notice of an obligation to keep the information secret. Additionally, protective measures, such as marking, are typically reserved for only the information that a company considers a trade secret. Differentiating information from normal business practices can be helpful in assessing “reasonable measures.”

Departing employees create a dangerous time for potential trade secret theft. Examples of good evidence that a company has taken reasonable measures to protect their trade secrets include policies that cut off access to data, delete information from personal devices, and return any and all company data. Proactively setting these policies can also discourage theft. Also, confidentiality or nondisclosure agreements are notable protective measures and can provide contractual remedies if well drafted.

While what is considered “reasonable measures” is always based on the individual facts of each case, companies should be able to point to specific steps they take to protect their trade secrets. Programs and policies should be geared toward their company’s capabilities and circumstances. A trade secret protection program should be continuously monitored and evaluated for improvement. Taking protective measures before any issues occur is always the best defense.

 

Buckingham attorney Paul C. Filon is a registered patent attorney. His clients range from domestic and international companies to individual inventors and authors. He helps clients from idea formation through product development, commercialization and beyond. Paul can be reached at 330.258.6559 or [email protected].

About Buckingham, Doolittle & Burroughs:

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