Business meeting


David H. Schwartz Jan. 22, 2019

Trade secret infringement is a colossal problem for California business owners. Part of the reason for this issue is the fact that many business owners aren’t taking the proper precautions to protect their trade secrets in the first place. Another part is that it can be difficult to prove infringement once an employee or partner has spilled the beans on your secrets to success.

For both those reasons, it pays to get informed and to consult with an experienced business litigation attorney as soon as possible.

Trade Secrets vs. Patents & Copyright

As far as the “getting informed” part of the above-mentioned plan, first things first. Let’s make sure that the company knowledge you’re wanting to protect is in fact a trade secret.

California law classifies trade secrets as information that is valuable to a business, not known to the general public, and actively kept under wraps by those running the company. So things like customer lists, business plans, company minutes, internal documents, and software source code could all be considered trade secrets for your company — so long as you’re actively working to keep them from public knowledge.

On the other hand, some types of intellectual property aren’t considered trade secrets. For instance, works of authorship like written words, audio recordings, and captured images are often protected under local copyright laws, disqualifying them from the “trade secret” classification.

Likewise, company information that you manage to patent wouldn’t be considered a trade secret either. Instead, that knowledge would be protected by your registered patent. To learn more about these concepts and how they may impact your intellectual property, don’t hesitate to brush up on the differences between trade secrets, patents, and copyright law.

How to Protect Trade Secrets

Assuming the information you want to protect is indeed a trade secret, there are a number of steps you can take to significantly reduce the chances of it being spilled:

  • Don’t overshare. Only grant trade secret access on a need-to-know basis.

  • Get signed nondisclosure agreements. Having those need-to-know employees and business partners sign nondisclosure agreements is an absolute must if you hope to hold infringers legally accountable.

  • Set a clear tone. Make sure that each employee and partner you share with understands and appreciates the importance of discretion, as well as the consequences of misappropriation (abusing trade secret information).

  • Actively, physically protect your intellectual property. Put that original recipe in a vault, don’t leave important digital files vulnerable to cybertheft, lock up telling documents — you get the idea.

  • Consider registering for a patent. Sometimes registering for patent is a better way to protect your intellectual property than striving for confidentiality. Discuss with your attorney whether this is a viable option for your particular situation.

  • Change with the times. Regularly consult with your attorney to ensure your methods are staying up to date as local laws change and your business evolves.

Remember: once a trade secret is “out,” it’s impossible to put the genie back in the bottle. So take these preventative measures to heart, and don’t wait to enlist the help of an effective local law firm.

Laws That Help Protect Trade Secrets

Should worst come to worst — that is, should one of your company’s trade secrets be misappropriated — there are a number of avenues you can explore to hold the secret sharer legally responsible. Specifically, you and your attorney should discuss which of these three acts can aid you in your mission to pursue fair and just compensation:

The Uniform Trade Secrets Act (UTSA)

The UTSA was established in 1979 and sought to make trade secret regulations more uniform throughout the U.S. The act helped to define trade secrets, as well as what qualifies as trade secret misappropriation.

The California Uniform Trade Secrets Act (CUTSA)

CUTSA is simply the name given to the UTSA as it’s used in California. For all intents and purposes, the UTSA and the CUTSA are essentially the same thing.

The Defend Trade Secrets Act (DTSA)

The DTSA was established in 2016. Although very similar to the UTSA, the DTSA has a few variations that have made it much easier for businesses to effectively take legal action against trade secret infringers. In fact, since the DTSA was enacted, U.S. trade secret case filings have increased from a range of 860-930 cases per year to 1,134 cases filed in 2017.

Contact the Law Offices of David H. Schwartz

As a commercial business litigator with more than 45 years of experience, David H. Schwartz is the attorney to see if you have any questions or concerns about protecting your company’s intellectual property. Based in San Francisco, David is proud to work with business owners throughout the Bay Area. Schedule your consultation with David today.