Trade Secret FAQs
1. What is a trade secret?
A trade secret is any information that has economic value from not being generally known to the public and that has been the subject of reasonable efforts to maintain its secrecy. Trade secrets may include formulas, methods, recipes, programs, techniques, processes, customer lists, customer requirements, product specifications, and pricing strategies.
2. How does one protect trade secrets?
Unlike copyrights and trademarks which, to maximize protection, are registered in public registries, trade secrets, by definition, are not disclosed to the public. Their secrecy must be maintained. Best practices dictate that any number of actions be taken to ensure that trade secrets are kept secret, including 1) keeping materials (e.g., documents, digital files, and prototypes) in a secure place, 2) marking documents CONFIDENTIAL, 3) limiting access to need-to-know employees, and 4) having employees and third party contractors who may have access sign non-disclosure agreements.
3. What is misappropriation of trade secrets?
Misappropriation occurs when there is use or disclosure of trade secrets through “improper means”: theft, bribery, misrepresentation, breach of a duty to maintain secrecy, electronic or other means of espionage. Reverse engineering (e.g., buying a product and taking it apart to see how it was constructed) is not improper means.
4. What are the remedies for misappropriation of trade secrets?
In addition to a permanent injunction, a preliminary injunction or temporary restraining order may be issued to prevent actual or threatened misappropriation. A plaintiff may also seek monetary relief in the form of actual damages and/or profits derived by the defendant. In cases where misappropriation is willful, the award may be doubled. If damages and profits are not provable, the court may award a reasonable royalty for so long as the use could have been prohibited absent the misappropriation. Attorneys’ fees may be awarded to the plaintiff in cases of willful infringement, or they may be awarded to the defendant where a bad faith claim is made against a defendant.