You’ve probably worked long and hard to develop your business to the point where it is today. Along the way, you may have developed customer lists, business knowledge, business methods, technology or other processes which help you to be competitive. These items may be “trade secrets.” If you fail to take proper steps to make sure your competitors do not have access to your trade secrets, you may find that your years of hard work will benefit rival businesses at your expense.
In order for something you developed to be a “trade secret,” you must take reasonable measures to prevent the secret from becoming available to persons other than those selected by you. What constitutes a trade secret in any given business is determined on a case-by-case basis by applying certain criteria, such as the extent to which the information is known outside the business, the extent to which it is known to the employees, the precautions taken by the holder of the trade secret to guard the secrecy of the information, the amount of money and effort expended in obtaining and developing the information, and the time and expense it would take for others to acquire and duplicate the information.
Extreme and unduly expensive procedures do not have to be taken to protect a trade secret. In the past, courts have said that reasonable efforts include things such as advising employees of the existence of a trade secret, limiting access to a trade secret on a “need to know basis,” and controlling access to your work place. Trade secret protection can sometimes be accomplished by having your employees sign non-disclosure agreements and agreements not to compete with your business.
Misappropriation of a trade secret may entitle you to recover damages and obtain an injunction against the person who misappropriated the trade secret. Damages may include both the actual loss caused by misappropriation and the unjust enrichment caused by misappropriation, or, in the alternative, damages can be measured by imposition of liability for a reasonable royalty. A lawsuit for misappropriation of a trade secret must be brought within three years after the misappropriation is discovered or should have reasonably been discovered.
Preventive action now can help avoid the loss of valuable information in the future.