A company’s trade secrets help it maintain a competitive edge, differentiate itself, and drive revenue and growth. The financial, reputational, and competitive risks are substantial when these assets are compromised.
This blog discusses how businesses can prevent trade secret misappropriation in California and what can be done when trade secrets are improperly disclosed or acquired.
The Basics of California Trade Secret Misappropriation
A trade secret is generally defined under state and federal laws as information that is valuable because it is not known by others and is subject to reasonable efforts to maintain secrecy. This can apply to a variety of business assets, like proprietary programs, processes, devices, methods and more.
Misappropriation of trade secrets occurs when someone knowingly and improperly discloses or acquires protected information or materials. In California, companies can file claims of trade secret misappropriation under the California Uniform Trade Secrets Act (CUTSA) and, in some cases, the federal Defend Trade Secrets Act (DTSA).
Preventing Trade Secret Misappropriation in California
Businesses should take certain steps to prevent trade secret misappropriation. Preventive actions can also support legal claims when trade secrets are unlawfully shared or acquired.
Most risks to trade secrets originate from three primary sources:
- Employees;
- Third-party vendors, contractors, or partners; and
- Technical vulnerabilities.
Therefore, protecting trade secrets requires actions that address potential weaknesses in each of these areas, including the following:
- Identifying and labeling confidential documentation;
- Creating well-crafted employment policies and employee training programs;
- Using nondisclosure agreements (NDAs) and other contracts or agreements that offer legal protections;
- Carefully structuring and reviewing access permissions for employees and third parties with access privileges; and
- Implementing strong information technology and cybersecurity protocols, including breach prevention and monitoring.
Claims under the California Uniform Trade Secrets Act
The California Uniform Trade Secrets Act sets forth the civil remedies available when trade secret misappropriation occurs. CUTSA actions must be filed within three years of the discovery of misappropriation or the date when it reasonably should have been discovered.
Remedies for trade secret misappropriation under CUTSA include the following:
- Injunctions to stop the use of protected information;
- Damages for actual losses and unjust enrichment;
- Royalties, when damages or unjust enrichment can’t be proven;
- Exemplary damages in cases of willful or malicious appropriation; and
- Attorney’s fees and costs in cases involving bad faith or willful/malicious misappropriation.
Plaintiffs are entitled to protection of their trade secrets during the legal process. This can be achieved by requesting protective orders, in camera hearings, sealing of records and nondisclosure orders. Even with these protections, the complaint should balance the need to clearly identify the trade secrets misappropriated with maintaining secrecy.
An experienced attorney is your best ally for maintaining confidentiality when filing trade secret complaints and motions — and throughout the legal process.
Federal Remedies for Trade Secret Misappropriation
The Defend Trade Secrets Act of 2016 permits the filing of a trade secret misappropriation claim in federal district court when the case involves “a product or service in interstate or foreign commerce.”
In addition to the remedies available to the claimant in a state-level case, a federal claim may allow for the seizure of property before the case is resolved to prevent further damages.
Some misappropriation cases will benefit from action at the federal level while others may be better suited to filing under CUTSA. A trade secret attorney knowledgeable in federal and state intellectual property laws can help determine the best course of action for your case.
Contact Los Angeles Trade Secret Attorney Susan Rodriguez
Susan Rodriguez is a Los Angeles attorney with more than 30 years of experience. She provides general counsel and services to help California businesses protect their trade secrets and other intellectual property. When trade secret misappropriation occurs, Susan offers the strong legal representation needed to prevent further misuse, hold the responsible parties accountable and recover damages.
Contact Susan at the Law Offices of Susan A. Rodriguez, APC by calling (323) 272-3954 or completing this online contact form.
Posted by Susan A. Rodriguez, Esq.
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For legal advice, contact an attorney at Law Offices of Susan A. Rodriguez, APC or an attorney actively practicing in your jurisdiction.
