Trade secret law relates to protecting confidential business information that is both valuable and secret. Trade secrets include valuable information (e.g. a formula, pattern, device, method, technique, or process) that is not generally known in the trade where information holder makes reasonable efforts to keep secret. There are certain requirements for information to constitute as a trade secret and to be afforded protection under law. Information that is generally known in an industry cannot qualify or be protected as a trade secret.
Trade secrets are very unique in that their protection lies entirely in prevention. Nouveau Law LLC can help you understand the initial requirements to qualify for trade secret protection, and help prevent the loss of your trade secret. We can explain to you how trade secrets affect your other intellectual property assets, and perhaps most importantly, we draft the appropriate contracts and documents to ensure that your confidential business information remains protected under the trade secret law.
Trade Secrets and Other Areas of Intellectual Property Law:
Trade secret law may, and often does, coincide or overlap with other areas of intellectual property law including: trademarks, copyrights, and patent law. For example:
Trademark Law: A trademark is “a word, name, symbol, or devise, that is used in trade with goods to indicate the source of goods and to distinguish them from goods of others.” A service mark is the same as a trademark, except it is used to distinguish the source of a service, rather than goods. While trademark law is distinguishable from the trade secret law, there is often overlap. For example, the very fact that a company is preparing for a product launch is typically a closely held trade secret. Pre-filing screenings and evaluations when choosing or selecting a trademark may also be a trade secret until a final selection is made, or rights secured for the mark.
Copyright Law: A copyright is a form of protection provided to authors of “original works of authorship.” Copyright law protects works including literary, dramatic, musical, artistic, and other intellectual expressions.Copyright law and trade secret law is not the same; however, copyright and trade secret law often coincides in situations involving unpublished copies, drafts, notes etc. of copyrighted material. Copyright and trade secret protections also often overlap with software. For example, in many cases where copyright infringement is found involving software, the infringing software may have been acquired through theft of certain coding or other material qualifying as a trade secret and owned by the software developer.
Patent Law: Patent law protects ideas as they are embodied in useful, new, and non-obvious inventions. Importantly, to meet the requirements of patentability, an invention must generally be a new and non-obvious improvement over previously discovered or known technology. This requirement (referred to as the “novelty” requirement) requires that the inventor not publicly disclose his own invention prior to the date set forth under patent law, prior to filing the patent application. In this sense, research and development of an invention is usually afforded trade secret protection and is imperative to prevent the loss of a patent.
Protection of Trade Secrets
Sometimes–particularly in the business partnership or employer-employee context–trade secrets are disclosed during the course of business. Business partners or employers may protect their trade secrets against other partners or employees by having particular documents or contracts drafted and signed. These documents include Non-Compete or Employment Agreements, Non-Disclosure Agreements, and Exit Interview Forms.
Non-Compete or Employment Agreements: A non-compete agreement protects a company by legally binding an ex-employee from working for a direct competitor for a certain amount of time after leaving the company. This is done with the intention that during the non-compete period, the trade secret may change, or not longer have value.
Non-Disclosure Agreements: A Non-Disclosure Agreement (“NDA”), is a confidentiality agreement that is used to protect a trade secret in the course of business negotiation. The agreement permits you to disclose a trade secret to employees or business partners but forbids the information from being disclosed to third parties. These agreements may be incredibly helpful to inform another party that information they receive is confidential; to define confidential information; and, define how disputes will be resolved in the case that one arises. If a party to an NDA violates the terms of the NDA, the person who holds the trade secret may sue the violator for an injunction and/or damages.
Exit Interview Forms: Exit interview forms can be useful ways to remind an employee, that upon their departure, they must keep the company’s trade secrets and return any relevant information or documents. It is also a way to protect a company if the employee uses the trade secret in new employment.
Trade Secret Enforcement:
Trade secrets may be defended through civil litigation, and misappropriation of a trade secret may also result in criminal prosecution.
A plaintiff may file a lawsuit for trade secret misappropriation, but must meet certain requirements in order to be successful. A plaintiff must prove that he or she has property rights in the trade secret. This involves showing that information qualifies as a trade secret; that the plaintiff has ownership rights in the information; that the defendant knew about the trade secret; that the defendant had access to the information; that the defendant used or disclosed the information; and finally, that the plaintiff was harmed by the defendant’s use of the information. If a plaintiff is successful, he or she may be entitled to certain remedies including: an injunction, money damages, or royalties.
Criminal Law provides protection for trade secrets under the Economic Espionage Act of 1966. Many states also have criminal statutes that allow prosecution for theft of trade secrets.