Trade Secrets Attorneys

Companies invest time and resources developing processes, strategies, and relationships. Building your business is a learning experience, and your unique collection of information pays off. Your firm’s private knowledge is a trade secret, and those secrets become your key advantages in your market.

Trade secrets are a form of intellectual property. They include any confidential piece of information on which your business depends to a competitive advantage that is not otherwise known in the industry. Trade secrets can include an inventory database, customer list, list of vendors, operating procedures, a formula, or even a recipe. Your business-related knowledge is a trade secret if it meets certain criteria:

• The information is not published or known by the public
• You actively conceal the information from others
• The information provides you with a competitive benefit

Misappropriation is an illegal act in which someone else uses your trade secret without your permission. State and federal laws exist to protect businesses from this abuse. If you have been accused of trade secret misappropriation, or you believe someone has misappropriated your company’s trade secrets, the law firm of Roth Fioretti can help. We represent clients in trade secret misappropriation litigation, and we have decades of experience in intellectual property law.

Illinois and Federal Trade Secret Laws

Unlike with patents or copyrights, the U.S. federal government historically left trade secret laws up to the individual states, but this approach was problematic. Subtle differences in state courts and legislation made consistent enforcement difficult.

Uniform Trade Secret Act

To help manage the situation, The Uniform Law Commission created the Uniform Trade Secret Act (UTSA) in 1979 and amended the act in 1985. The UTSA creates a single framework to help state legislators write similar laws to protect trade secrets against misappropriation.

Illinois, along with 48 other states, adopted this Act. Of note, Illinois grants a much longer statute of limitations for trade secret disputes than other states. Plaintiffs may file up to five years after discovering an instance of misappropriation.

Economic Espionage Act

In 1996, the U.S. Congress enacted the Economic Espionage Act. This federal law makes selling trade secrets a criminal offense. Anyone convicted of willful or malicious misappropriation could go to prison.

Defend Trade Secrets Act

Congress also enacted the Defend Trade Secrets Act (DTSA) in 2016. This bill created the first-ever federal trade secrets laws.

The DTSA guides litigators and has four essential elements:

• Defines trade secrets and a business’s responsibility to protect information
• Clarifies two different types of trade secret misappropriation
• Enables trade secret holders to seek an ex parte motion to seize an offender’s assets
• Protects whistleblowers from retaliation when reporting crimes to government employees

The DTSA does not replace existing state laws, but it does give businesses the right to sue in federal courts. This new option is essential for companies with operations in multiple state jurisdictions. The federal law simplifies the legal strategies businesses needed to protect their trade secrets.

Under state and federal laws, plaintiffs may petition for an injunction to stop a competitor from using protected information. They can also sue for damages. Courts may award actual loses and trial expenses. A court may also impose royalties on defendants in situations where it is impossible to recover misappropriated information.

Preventing Trade Secret Misappropriation

Safeguard Your Trade Secrets

Some companies prefer to conceal important designs and data rather than file for patents or copyright protection. The concealment strategy limits risks by simply keeping the intellectual property hidden. To prevent misappropriation of your trade secrets, use standard business practices to control sensitive information:

• Only disclose information to trusted employees or partners
• Restrict access to sensitive documents by locking them in a secured filing system
• Remind employees of confidentiality agreements before sharing new information
• Clearly label information you want employees to keep confidential
• Train your staff how to handle sensitive data and advise them of their rights and responsibilities

Your computer systems are also vulnerable to hackers. Consult with information and computer security professionals to prevent unauthorized access to your data.

Protect Trade Secrets with Contracts

Contracts define the legal protection for your trade secrets and often prevent misappropriation by holding parties accountable. These contracts may be signed by you and your employees, contractors, consultants, partners, and other business associates:

• Non-Disclosure Agreements (NDA) – Defines and prohibits disclosure of specific information
• Non-Compete Clause – Agreement not to compete in a market for a specific time
• Work-For-Hire Contracts – The company owns the rights to works created while employed

When entered into willingly, these contracts become binding and enforceable under the DTSA, but the terms must be clear. Information omitted from a non-disclosure agreement does not receive legal protection, and some state courts won’t enforce a non-compete clause if it interferes with an individual’s right to seek work. To ensure your contracts provide adequate protection for your trade secrets, it’s prudent to seek the counsel of a qualified intellectual property attorney. Our trade secret attorneys specialize in drafting contracts to best protect your company’s valuable IP.

Trade Secret Misappropriation

The DTSA distinguishes between two types of trade secret misappropriation. One is illegal, but the other is not.

In a lawsuit, a plaintiff must show a breach of contract or prove theft of information. If someone betrayed your trust or if your business was the victim of espionage, you may choose to litigate. For example, if:

• An employee violates an NDA and discloses information to a competitor
• A former consultant advises a competing firm how to gain an unfair advantage
• Computer hackers steal secrets after illegally accessing your data
• Another company knowingly makes use of your stolen information

It is possible for a former associate to disclose a trade secret without incurring a penalty. Non-disclosure agreements must include every piece of information you want to keep secure. Unless you make it clear the information is sensitive, a judge may rule against you.

Some forms of misappropriation are not crimes. Another business might learn your secrets through legitimate hard work, accident, or by chance. For instance, if:

• A competitor takes the time and pays the expense to reverse engineer your products
• Your information is already published or made publicly available
• Concurrent discovery of your information by another through independent research

Without some form of wrongdoing, you may not have the option to seek damages in court. Hiring a knowledgeable trade secret lawyer helps you understand your options for pursuing legal recourse if you are a victim of trade secret misappropriation.

Offensive and Defensive Litigation Strategies

Offensive Trade Secret Litigation

Offensive strategies for protecting your trade secrets consist of shielding your information from others and seeking damages when a competitor misappropriates your trade secrets. Your contracts with employees, vendors, and clients help to reduce the risk of information leaking, but it is up to you to enforce those contracts in court.

Defensive Trade Secret Litigation

Without a defensive strategy, your business is vulnerable to a suit from a competitor. Even an honest mistake might cost you. Reduce your risk by using information your business develops independently, and always identify the source of external information.

Your hiring practices might also leave you vulnerable. If you’ve recently hired a competitor’s former employee, you could be sued if the employee discloses a trade secret to your company. Careful applicant screening and additional contractual agreements shield your business from harm.

Contact an experienced intellectual property attorney to develop a strategy that protects your trade secrets and prevents lawsuits from your competitors. To schedule a consultation with one of the trade secret attorneys of Roth Fioretti, please call our office today.