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.

According to 18 U.S. Code § 1832, a trade secret may be any:

  • Physical object
  • Idea
  • 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.

According to 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 today. My 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 punitive damages.

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 case evaluation.

Contact Dorros Law Today

Aggressive Advocacy & Individualized Service

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