Misappropriation of Trade Secrets Quiz

PDF page 187: The enforcement provisions of the UTSA allow companies and individuals to protect information that qualifies as a trade secret. The protections allowed for by the UTSA are triggered by the actual or threatened “misappropriation” of trade secrets. “Misappropriation” is defined in two ways: (1) acquisition of a trade secret through improper means, or (2) disclosure or use of a trade secret without consent.

PDF page 187: The enforcement provisions of the UTSA allow companies and individuals to protect information that qualifies as a trade secret. The protections allowed for by the UTSA are triggered by the actual or threatened “misappropriation” of trade secrets. “Misappropriation” is defined in two ways: (1) acquisition of a trade secret through improper means, or (2) disclosure or use of a trade secret without consent.

PDF page 187: The enforcement provisions of the UTSA allow companies and individuals to protect information that qualifies as a trade secret. The protections allowed for by the UTSA are triggered by the actual or threatened “misappropriation” of trade secrets. “Misappropriation” is defined in two ways: (1) acquisition of a trade secret through improper means, or (2) disclosure or use of a trade secret without consent.

PDF page 187: The first type of misappropriation under the UTSA is acquisition of a trade secret through improper means. Specifically, the UTSA prohibits the “acquisition of a trade secret of another, by a person who knows or has

PDF page 187: reason to know the trade secret was acquired by improper means.” “Improper means” includes theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage

PDF page 188: The second type of misappropriation under the UTSA is the disclosure or use of someone else’s trade secret without their express or implied consent. Although the statutory definition is somewhat complicated, the UTSA essentially prohibits the disclosure or use of a trade secret that is possessed as a result of theft, breach of a

PDF page 188: The UTSA’s definition of misappropriation is rather broad. The protection granted to trade secret owners under the UTSA is further expanded by prohibiting not only the actual, but also the threatened, misappropriation of trade secrets. The distinction between these two types of misappropriation is basically one of timing. The UTSA prohibits the actual disclosure of trade secrets and provides remedies for those whose trade secrets have already been misappropriated. A more difficult question arises, however, with respect to a trade secret owner’s rights prior to the actual misappropriation of trade secrets. To address a trade secret owner’s legitimate concerns that misappropriation may occur in the future, the UTSA prohibits “threatened” misappropriation.

PDF page 188: The UTSA’s definition of misappropriation is rather broad. The protection granted to trade secret owners under the UTSA is further expanded by prohibiting not only the actual, but also the threatened, misappropriation of trade secrets. The distinction between these two types of misappropriation is basically one of timing. The UTSA prohibits the actual disclosure of trade secrets and provides remedies for those whose trade secrets have already been misappropriated. A more difficult question arises, however, with respect to a trade secret owner’s rights prior to the actual misappropriation of trade secrets. To address a trade secret owner’s legitimate concerns that misappropriation may occur in the future, the UTSA prohibits “threatened” misappropriation.

PDF page 188: The burden of proof in an actual misappropriation case is still squarely on the shoulders of the trade secret owner who is alleging that trade secrets have been misappropriated. This burden of proof requires the trade secret owner to demonstrate that he or she was in possession of knowledge or information that was not generally known and was valuable precisely because it was not generally known, and that the knowledge or information was subject to efforts that were reasonable under the circumstances to maintain its secrecy. Depending on the facts and circumstances of a given case, together with the nature of the intellectual property to be protected, proving the elements necessary to make out a trade secret case can be a challenging undertaking. The best way to establish a foundation for successful prosecution of trade secret misappropriation is to follow closely the provisions of a written trade secret protection plan, and take measures to ensure the security of the information as discussed above. Perhaps the most interesting trade secret cases involve the alleged threatened misappropriation of trade secrets. In these cases, the trade secret owner does not contend that their trade secrets have already been compromised, but rather that unless some action is taken to halt the current progress of events, their trade secrets will be misappropriated at some time in the future. Threatened misappropriation cases often arise when a highly skilled or trained employee who has been exposed to a company’s trade secrets leaves the company’s employ and goes to work for a competitor. On the one hand, the former employer may well have legitimate concerns about possible disclosure of its trade secrets to a competitor; on the other hand, the employee has a right to choose an employer. Consequently, courts are required to balance these competing interests. The result often depends on the legitimacy of the trade secret owner’s concerns of misappropriation and the nature of the evidence that is available to substantiate those concerns.

PDF page 188: The burden of proof in an actual misappropriation case is still squarely on the shoulders of the trade secret owner who is alleging that trade secrets have been misappropriated. This burden of proof requires the trade secret owner to demonstrate that he or she was in possession of knowledge or information that was not generally known and was valuable precisely because it was not generally known, and that the knowledge or information was subject to efforts that were reasonable under the circumstances to maintain its secrecy. Depending on the facts and circumstances of a given case, together with the nature of the intellectual property to be protected, proving the elements necessary to make out a trade secret case can be a challenging undertaking. The best way to establish a foundation for successful prosecution of trade secret misappropriation is to follow closely the provisions of a written trade secret protection plan, and take measures to ensure the security of the information as discussed above. Perhaps the most interesting trade secret cases involve the alleged threatened misappropriation of trade secrets. In these cases, the trade secret owner does not contend that their trade secrets have already been compromised, but rather that unless some action is taken to halt the current progress of events, their trade secrets will be misappropriated at some time in the future. Threatened misappropriation cases often arise when a highly skilled or trained employee who has been exposed to a company’s trade secrets leaves the company’s employ and goes to work for a competitor. On the one hand, the former employer may well have legitimate concerns about possible disclosure of its trade secrets to a competitor; on the other hand, the employee has a right to choose an employer. Consequently, courts are required to balance these competing interests. The result often depends on the legitimacy of the trade secret owner’s concerns of misappropriation and the nature of the evidence that is available to substantiate those concerns.

PDF page 189: When faced with a situation where an employee who has been exposed to trade secrets leaves to work for a new employer, courts typically consider three factors: (1) whether the former employer and the new employer are competitors, (2) whether the employee’s new position is comparable to the former position, and (3) the

PDF page 189: When faced with a situation where an employee who has been exposed to trade secrets leaves to work for a new employer, courts typically consider three factors: (1) whether the former employer and the new employer are competitors, (2) whether the employee’s new position is comparable to the former position, and (3) the

PDF page 189: Mere suspicion that another party may have wrongfully disclosed or used one’s trade secrets, in and of itself, does not enable the trade secret owner to assert these rights successfully. Courts will not prohibit the wrongful use or disclosure of trade secrets based upon the mere uneasiness or suspicions of the trade secret owner that some misappropriation may occur. Rather, the trade secret owner is required to demonstrate that the concerns of misappropriation are legitimate. In most situations, this means that the trade secret owner will be required to present evidence, either direct or circumstantial, that misappropriation is likely to occur.