Your Failure to Protect your Trade Secrets Could Result in Financial Ruin

By Los Angeles Trade Secret Attorney Robert G. Klein, Esq.

Trade secrets are information that derive economic value from not being generally known to the public or your competitors and have been the subject of reasonable efforts to maintain their secrecy. This information can come in many forms including a formula, recipe, program, technique, process, customer list or marketing strategy to name a few.

Some companies prefer to apply for a patent on their ideas, designs, processes, or techniques. However, when one applies for a patent you must disclose the specifics behind your invention, process or technique. After the patent expires, your secret no longer has value but is in the public domain capable of being used by anyone as they see fit.

Because of the requirement of disclosure when applying for a patent, often times companies prefer to keep their ideas, processes or techniques private and maintain them as a trade secret. The Coca Cola company has kept its recipe for its cola secret for many years and has taken great pride in that fact.

Misappropriation of your trade secret can occur in a variety of ways and requires that another acquire your trade secret by “improper means”. Improper means can include theft, bribery, misrepresentation or breach of inducement to breach of a duty to maintain secrecy. There was even case were an individual was found to misappropriate a trade secret when he obtained confidential or trade secret information by pretending to conduct business negotiations.

Some of the most common trade secret litigation comes when a former employee decides to leave his or her employment and go into competition with a former employer. If that person takes trade secrets and solicits the customers of his former employer, the chances are that former employee will be sued. That type of litigation presents numerous issues including whether the information actually qualifies as a trade secret, whether the employer made reasonable efforts to maintain the secrecy of the trade secret and whether the former employee “solicited” the customers of his former employer.

Trade secret litigation often requires a balancing of a person’s right to earn a living and engage in the free enterprise system with an employer’s right to protect its intellectual property.