Most companies spend a lot of time and monies to protect their trade secrets. Whether it's the formula for a popular soft drink, the recipe for take out chicken, or the design of the latest software platform, somebody could take the thing that makes your business or process unique and reap the benefits of what you've sown without remuneration to you. Attorney Mark Clark discusses trade secret law and what you can do to protect yourself.
- A trade secret is now defined under the law by statute.
- Most states in the United States have adopted some form of the Uniform Trade Secret Act.
- Trade secrets are defined as a formula, pattern, compilation, program, device, method, technique or process that has both independent economic value and is not generally known to or not readily accessible by other persons and is the subject of efforts to maintain its secrecy.
Today’s trade secret law program is brought to you by the attorneys at Traverse Legal, PLC, a global law firm specializing in internet law, trademark infringement, copyright infringement, cybersquatting, online defamation, non-compete and trade secret law, and complex litigation. If you have a legal or trade secret protection matter arising on the web, contact one of Traverse Legal’s internet lawyers today. Now here’s your host, Damien Allen.
Damien Allen: Good morning, and welcome to Traverse Legal Radio. My name is Damien Allen, and today joining me on the phone is Mark Clark, attorney at Traverse Legal, PLC. Good morning, Mark, and welcome to the program.
Mark Clark: Good morning, Damien. How are you?
Damien Allen: I’m doing just fine. I hope you’re doing well, sir?
Mark Clark: I am indeed.
Damien Allen: Well today we’re talking about protecting business trade secrets. Mark, what is a trade secret?
Mark Clark: Well, Damien, a trade secret is now defined under the law by statute. Formerly, it used to be defined by case law, but most states in the United States have adopted some form of the Uniform Trade Secret Act. Michigan has adopted its own version of the Michigan Uniform Trade Secret Act, and trade secret is now defined by the Michigan Uniform Trade Secret Act. A trade secret is defined as a formula, pattern, compilation, program, device, method, technique or process that has both independent economic value and is not generally known to or not readily accessible by other persons and is the subject of efforts that reasonable under the circumstances to maintain its secrecy. So you have two components. The one that is litigated most often is whether or not the company alleging that it has a trade secret has done enough to maintain its secrecy and its privacy.
Damien Allen: What are the ways to protect trade secrets, Mark?
Mark Clark: Well, there’s several ways to protect trade secrets. The best way to protect a trade secret is contractually with your employees by having them execute either a non-compete agreement or a confidentiality agreement or both. But absent that, the Michigan Uniform Trade Secrets Act provides a statutory legal remedy in addition to the contractual remedies that we just spoke about, which were the non-compete agreements and confidentiality agreements.
Damien Allen: What does a business do to protect its trade secrets once they’ve been stolen?
Mark Clark: Well, once a trade secret has been taken by typically a former employee, it can be espionage, it can be a spy as well, once it’s out of the realm of the company, really the only thing that can be done is to send a threat letter or to file a lawsuit in order to request that a court grant you some relief in terms of re-acquiring the trade secret or certain remedies under the Act that are available that will allow a company to prevent its trade secrets from going any further.
Damien Allen: What are the remedies for trade secret theft?
Mark Clark: Well, the Michigan Uniform Trade Secrets Act, and most of the Uniform Trade Secrets Acts around the country, provides several different remedies. The most widely utilized remedy is that of an injunction, which is essentially a court order that requires the company illegally in possession of the trade secret to return it and to prevent it from using or disseminating the trade secret any further. The other remedy is damages. In other words, if the Court is either unwilling to give the injunction or for whatever reason the injunction becomes impractical, the Court can award damages, such as royalties, or damages based upon that company’s losses for the breach of the trade secret.
Damien Allen: What are the options for businesses faced with trade secret theft? What should they do if somebody’s stolen the one thing that makes this company special? What do they do?
Mark Clark: Well, the one thing that they should do is take immediate action, otherwise the trade secret will, or may be become widely disseminated. But there are several options. The first option would be to consult with an experienced trade secret attorney so that you can best identify and flush out the best plan of attack. Typically, you can either start with a threat letter demanding the return of the trade secret and a cease and desist for use of any trade secrets, but absent having a positive affect with a threat letter, the company normally must file litigation and ask the Court for an order preventing further use or disclosure of the trade secret. Oftentimes the issue that is widely litigated whether what’s at issue is, in fact, a trade secret. Normally some of the defenses to trade secret litigation is, in fact, that it had become known beyond the company doors that’s alleging violation of a trade secret and that they didn’t do enough to keep it secret or that they came up with it simply on their own and then it wasn’t stolen at all. Courts do allow companies to attempt to prove their case by circumstantial evidence in terms of its theft because oftentimes it’s virtually impossible to identify the actual theft or catch the person in the act of taking the trade secret. Oftentimes these cases are proven by circumstantial evidence in terms of an employee, for instance, leaving the company and going to work for a competitor and that competitor coming up with the trade secret or product that’s a by-product of the trade secret miraculously or mysteriously after the individual with that knowledge joins the other company. The best remedy and the most often utilized remedy is that of a lawsuit which asks the Court to issue an injunction to cease the further use or dissemination of that trade secret.
Damien Allen: Thank you for joining us today, Mark, and discussing business trade secrets.
Mark Clark: Damien, it’s been a pleasure. It’s always a pleasure to be on your show.
Damien Allen: You’ve been listening to Traverse Legal Radio. My name is Damien Allen. Have a good day.
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