What Information Is Considered a "Trade Secret" Under California Law?

In 2019, approximately 1,400 new trade secret cases were filed in federal courts across the United States. Plaintiffs who were successful in their trade secret claims were awarded over $45 million in total. Trade secrets can include methods, techniques, programs, processes, patterns, and devices. As a business, your trade secrets give you an economic advantage over your competitors. If you're involved in a trade secret dispute, consulting with an attorney is important for detailed guidance.

At Wood Litigation, APC, we are committed to providing comprehensive legal services and dedicated representation in trade secret matters. Whether you are considering filing or defending yourself against a trade secret lawsuit, Attorney Greg Wood and his team of experienced commercial litigation attorneys can examine your unique situation and discuss your options. We are proud to represent clients throughout San Francisco, California, and surrounding communities, including San Jose, Oakland, and San Mateo.

What is a "Trade Secret"?

The World Intellectual Property Organization (WIPO) defines trade secrets as confidential business information, which gives an organization or company an economic advantage over their competitors. Trade secrets may include algorithms, compilations, devices, ingredients, methods, formulas, techniques, programs, patterns, and processes, used for business operations but not known to all.

California Uniform Trade Secrets Act ("UTSA")

Under the UTSA, any common, every-day piece of data or information that a company takes reasonable measures to protect is considered a trade secret. Valuable information that is kept secret is also recognized as a trade secret by California courts (Civil Code sections 3426.1-3426.11).

Trade Secret Misappropriation

Pursuant to Civil Code section 3426.1 of the UTSA, trade secret misappropriation is a misuse which occurs when:

  • A trade secret is obtained through improper means, such as theft, misrepresentation, bribery, espionage, or breach of duty to maintain secrecy
  • A trade secret is used or disclosed without the owner's consent

Statute of Limitations

A California trade secret misappropriation action must be brought within three (3) years after the misappropriation is discovered or should have been discovered by exercising reasonable diligence.

Former Employee Provision

Furthermore, a trade secret doesn't have to be stolen physically for misappropriation to occur. Sometimes, it may be as a result of the memory of a former employee. Under the UTSA, a company doesn't have to show that a former employee physically took trade secret information. To demonstrate that a misappropriation occurred, the employer or company will only be required to prove that the former employee disclosed or used the contents of his or her memories regarding a trade secret.

Penalties for Misappropriation

Trade secret misappropriation is a serious offense that attracts severe punishment. If convicted, possible penalties include:

  • Imprisonment for up to 15 years
  • Fine of up to $500,000 against an individual
  • Fine of up to $500,000 against a corporation
  • A court injunction preventing the trade secret thief from disclosure

In circumstances where the misappropriation is egregious, additional penalties may apply.

Possible Legal Defenses

Possible defenses against trade secret misappropriation charges include:

  • Independent development
  • Information used was public knowledge
  • No actual knowledge of wrongdoing
  • Failure to keep information secret

How Employers Can Protect Trade Secret Information

Companies and employers can protect trade secret information by taking the following measures:

  • Put contractual measures in place to protect confidential business information and trade secrets
  • Implement policies regarding the use of the company's e-mail system, internet, and electronic storage devices to help prevent trade secret misappropriation
  • Remind employees about their contractual obligations to safeguard confidential information and avoid disclosing trade secrets
  • Have a legal action plan in place to pursue or defend yourself against trade secret misappropriation claims

Furthermore, organizations should make clear that trade secret information is confidential by marking it as such and taking measures to keep it in a secure location. The more steps that are taken to protect the information, the more likely a court is to recognize the information as a trade secret.

Work With Experienced Legal Counsel

Navigating intellectual property lawsuits involving trade secrets can involve a lot of complexities. If you are trying to file or defend against a trade secret misappropriation lawsuit, retaining a knowledgeable California business litigation attorney is important to protect your rights.

Attorney Greg Wood and his experienced commercial litigation attorneys have dedicated their careers to handling trade secret lawsuits. Our team will review your case, evaluate your situation, conduct a thorough investigation, and determine the best approach for your unique circumstances. Wood Litigation, APC can help protect your business and defend you against false misappropriation claims.

Contact Wood Litigation, APC today, to schedule a one-on-one case assessment with knowledgeable California commercial litigation attorneys. Our team can offer you the experienced legal guidance you need and fight vigorously on your side to protect your rights and your business. We proudly represent clients throughout San Francisco, San Jose, Oakland, and San Mateo, California.

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