Is your company being accused of stealing trade secrets?

Let us say that one of your chief competitors has reported a theft of trade secrets in the form of their customer and supplier lists.

Since you are in the same line of business, they are leveling their accusations at your company, specifically, at your domestic sales department.

A little legal history

In all, 48 states and the District of Columbia utilize trade secret laws taken from the Uniform Trade Secrets Act. As of 2016, through the Defend Trade Secrets Act, owners of trade secrets can take their civil lawsuits to federal court. Industrial espionage is also addressed and prohibited under the Economic Espionage Act, which is a federal law.

Protections

The DTSA features certain protections for companies accused of stealing trade secrets. For example, there are limits on injunctions against former employees who may be in possession of a trade secret. Additionally, nondisclosure contracts or agreements between a company and its employees must now include a “notice of immunity” (from liability) that sets forth the use of trade secret information in dealing with governments or attorneys when a lawsuit concerning the theft of this kind of information is underway.

Common types of trade secrets

One of the most closely guarded trade secrets in the world is the formula for Coca-Cola. Another is the recipe for Kentucky Fried Chicken. Other types of trade secrets might be a particular kind of device, a pattern, a method, a technique or a process. The customer and supplier lists the company accused yours of stealing may not be quite as valuable as the formula for WD-40, but to the company which claims you stole them, they represent highly important information.

Possible penalties

Both state and federal penalties for the theft of trade secrets can be significant. There could be millions in fines and a lengthy prison sentence. However, a successful defense begins with a precise, well-thought-out strategy that will take the wind right out of your competitor’s trade secret sails.