When many people think of intellectual property protections, they think of trademark, copyright and patent protection. While these protections are certainly important, there is another form of intellectual property protection that businesses actually rely on more often: trade secrets.

A trade secret is essentially valuable information a business makes reasonable efforts to keep confidential. States have long allowed businesses to enforce trade secrets in court, but federal law now protects trade secrets as well. Understanding how these protections compare allows businesses to make the best choice regarding the forum in which they seek to protect their trade secrets. 

California’s Uniform Trade Secrets Act protects against trade secret misappropriation, consisting primarily of unauthorized use or disclosure. California law allows businesses to protect against both actual and threatened misappropriation of trade secrets.

Courts may prohibit future use of a trade secret by injunction.  In terms of monetary recovery, businesses seeking to protect a trade secret may be able to recover damages for actual losses caused by misappropriation, unjust enrichment to the extent it does not duplicate actual damages, or a reasonable royalty for the period of wrongful use. If the misappropriation was willful and malicious, punitive damages may be awarded as well.  

In order to take advantage of trade secret protection in California, a business is required to file a claim within three years after the misappropriation is discovered or within three years of when it should have been discovered with “reasonable diligence.”

Until fairly recently, it was only at the state level that trade secrets could be enforced. Just last year, the federal Defend Trade Secrets Act was passed into law, giving businesses another avenue of enforcing trade secrets. In our next post, we’ll look at some of the basic features of this law and some of the considerations that might go into choosing between state and federal trade secret protection