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How do businesses build a viable trade secrets infringement case?

On Behalf of | Jun 16, 2023 | Trade Secrets

Trade secrets are arguably the most confusing of all types of business-related intellectual property. Unlike a trademark, which a company can register, or creative works, which will have a clear publication date and an option for copyright protection, trade secrets are details that businesses do not want to share with the public that are governed by contracts, not government oversight.

Trade secrets help to give a business a competitive edge, and, therefore, their protection is crucial to a company’s continued financial success. When there is reason to believe that a former employee or a competitor engaged in some kind of misconduct to access trade secrets, an organization may want to file an intellectual property lawsuit.

What is necessary to pursue a successful trade secrets claim?

Establishing the secrecy of the information

Whether a competitor duplicated a recipe or started poaching another business’s clients, the party claiming that misconduct related to trade secrets occurred will typically need to prove that there was non-public information utilized. Businesses alleging trade secret violations typically need proof that there was special information involved that was not available to the public. Proof that they attempted to protect such secrets, possibly via employment contracts, can also help.

Connecting the situation to misconduct or contract violations

Proving that one party intentionally violated the rights of the other often requires establishing a firm connection between the alleged violation of trade secrets and other activity. Communications with clients showing that they had all received solicitation messages from a competitor within days of them hiring a former employee could help a business challenge that the employee and possibly their new employee misused to trade secrets. Police reports from break-ins that could have resulted from an attempt at corporate espionage could also help establish how one party gained access to the trade secrets of another.

Producing documentation of a loss

Whether a company has seen its profit margins shrink or its market share decreased=, it will usually need to show that there was a financial loss likely generated by the violation of its trade secret rights. If one of the parties involved was bound by a contract with restrictive covenants, like non-disclosure or non-solicitation agreements, the breach of contracts involved could put the affected business in an actionable position.

Building a trade secrets case can be much harder than a case involving trademarks, copyright and other registered forms of intellectual property. Knowing what steps to take when a trade secret violation harms a company can help executives and investors fight back against misconduct from competitors or former employees.