Experts in Trade Secret Misappropriation

Trade Secrets

Trade secret misappropriation often resembles trademark and copyright infringement with respect to the elements of damages courts award; however, trade secret litigation is governed by state, rather than federal statute and case law. In addition, rights associated with trade secrets are markedly different from rights associated with other intellectual property. A trade secret owner cannot exclude others from recreating the trade secret through legal and legitimate means.

In most instances, the owner of a trade secret must show that the claimed secret information is not generally known, confers an economic benefit from its secrecy, and that the owner has consistently made reasonable efforts to maintain the secrecy of the confidential information.

Misappropriation Damages

To help define common law rights and remedies involving trade secrets, the National Conference of Commissioners on Uniform State Laws—a state supported organization that helps clarify state law—finalized the Uniform Trade Secret Act (UTSA) in 1985.¹ Not all states adopted the UTSA, and some states have adopted a modified version of the act. According to section three of the UTSA, remedies for trade secrets misappropriation can include “both the actual loss caused by misappropriation and the unjust enrichment caused by misappropriation that is not taken into account in computing actual loss.” ² The act also establishes a reasonable royalty as an alternative measure of damage. If the court determines the trade secret misappropriation was “willful and malicious,” it may award exemplary damages of twice the award plus attorney’s fees.³ The UTSA imposes a three-year statute of limitations after the misappropriation is discovered (or should have been discovered through reasonable diligence) to bring damage claims against the wrongdoer.⁴

Notes

1. The National Conference of Commissioners on Uniform State Laws, accessed June 8, 2007.
2. Uniform Trade Secrets Act with 1985 Amendments
3. Ibid.
4. Ibid.