Theft of Trade Secrets
Los Angeles Business Litigation Attorneys
For every business, there exists any number of competitors attempting to
offer the same or better product or service for less money. Oftentimes
the only way for a business to stand out from the crowd or find profitable
success is to offer something that no one else can, to use and harbor
a trade secret.
18 U.S. Code § 1832, a trade secret may be any:
- Physical object
- Formula, process, or pattern
- Collection of information
According to the same legal statute, a trade secret must also:
- Give its controller or owner a competitive advantage.
- Be hidden from the public or others with reasonable effort.
Like several other states, California has adopted its own trade secret law, the
Uniform Trade Secrets Act, which operates in tandem with federal statutes.
Cal. Civil Code §§ 3426-3426.11 the penalties for misappropriation can include:
- Compensation that equals the actual loss of the stolen attribute
- Compensation equal to the profits acquired by the thief
- Punitive damages up to twice the amount of any award
- In claims brought in bad faith, compensation for attorney fees
Due to the uniqueness and potential value of a trade secret, some businesses
may attempt to steal them from competitors for their own use. As theft
of trade secrets is a violation of state and federal laws, it must be
taken seriously and addressed immediately with appropriate legal action.
If someone has stolen your trade secrets or accused you of stealing their own, contact Dorros Law
Los Angeles business litigation lawyers can help defend you, your rights, and your business.
Potential Trade Secret Vulnerability
Most forms of intellectual property will be deliberately and officially
protected through patents, copyrights, and other forms of trademarking
or regulation. A trade secret is once again unique in the way that it
is protected by the law without anyone going through any official steps
or government registration to claim it as their own. To make and keep
it as a trade secret, you must only make reasonable efforts to keep the
information or object confidential.
Examples of “reasonable efforts” include:
- Password protecting a computer used by more than one person.
- Physically locking away information.
- Encrypting digital information that goes through internet channels.
As informal as it may be to create a trade secret, it can be eliminated
just as informally and readily. If your trade secret becomes available
to the public – something that becomes easier as time goes by and
we get deeper into the age of networking technology – it is no longer
protected as a trade secret. This may be true even if it was publicized
not by your own efforts and without your express permission.
Economic Impact of Trade Secret Theft
Stealing a trade secret through illegal or deceptive means may be a criminal
act under government legislation but it might not be enough for the controller
of that trade secret to pursue business litigation against the offending
party. An economic impact generally needs to take place before any compensatory
damages can be paid out through a lawsuit. Economic impact could either
be the clear loss of your own profits or sales, or the obvious increase
of your competitor’s profits, after the trade secret was made public.
Any financial settlements rewarded out of litigation would likely be equivalent
to the stated economic impacts with potential additions in the form of
Save Your Reputation and Your Business
Theft of trade secret cases can rapidly devolve into a he-said, she-said
scenario with two businesses challenging one another left and right. The
entire scene can be bad for business in more than one way. To protect
your company and your profits, whether you are being accused or are the
accuser, you should come to my firm, Dorros Law, and tell a Los Angeles
business litigation attorney what is happening during a