What Is Trade Secret Abuse: Is Your Business At Risk?

No matter what industry you are in, it is important to protect your trade secrets and maintain confidentiality.
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KFC’s secret blend of 11 herbs and spices, Burger King’s secret sauce, and Google’s algorithm are examples of trade secrets. These are things that competitors don’t know about and accordingly create a competitive advantage.

While it’s easy to cite these famous examples, not all trade secrets are as high profile. Most companies have trade secrets that they take steps to protect, such as: B. the customer lists that they have sometimes built up over years and depend on to stay profitable.

So what happens when these trade secrets are misused? And how can business leaders determine if a business is at risk?

READ – Non-compete changes also mean you need to pay more attention to your trade secrets

The Misuse of Trade Secrets Act

Trade secrets are generally protected by being “secret” due to the way a company manages the information, often through contracts and policies. If a violation of these contracts and policies gives rise to a dispute, the dispute is usually a matter for the state courts.

However, trade secret misappropriation can sometimes become an issue more appropriately resolved in federal courts. This often happens when multiple states are involved, e.g. B. when a company engages in interstate trade. In this case, 18 USC § 1839(5) may apply.

Of course, the law is special and uses specific words that have been widely discussed in many court cases. In general, trade secret misappropriation occurs when someone unlawfully acquires a trade secret, unlawfully discloses it, or uses it without permission. Misappropriation can also occur where the trade secret was obtained by mistake or accident, so long as the person who obtained the information knew or should have known that it should not be disclosed by the Company.

READ – How to protect your trade secrets

Businesses at risk of trade secret abuse

Some companies are at greater risk of trade secret abuse than others. Startups are particularly vulnerable due to their rapid growth rate. A start-up often arises with only a few employees. Because of this, it is run with less formal policies than an established company.

However, pending the establishment of formal policies, one of these employees may have taken action to misappropriate valuable trade secrets.

Reducing the risk of misuse of trade secrets

There are many ways to reduce a company’s risk of trade secret abuse, including developing policies to protect valuable secrets. For example, access can be restricted to certain executives and protected by passwords. In addition, the secrets can only be stored on secure servers instead of in less secure locations such as B. Laptops that can be lost, stolen or hacked.

Employees and contractors may also be required to sign non-compete or non-solicitation agreements preventing them from misappropriating trade secrets. When employees or contractors breach these agreements, sometimes a more cost-effective solution can be achieved by resolving the breach of contract through alternative dispute resolution methods.

The best way to protect a company from trade secret misappropriation is to take these steps and protect the information before it is ever leaked. Again, an experienced attorney can guide the company through this process and provide valuable advice.

For more information about trade secret abuses in Colorado, contact Hackstaff Snow Atkinson & Griess, LLC at 303-534-4317 or visit our website.

Aaron Atkinson, Doug Griess and John Snow of Hackstaff Snow Atkinson & Griess, LLC are leading commercial attorneys and trial attorneys in Denver with expertise in multiple industries. Specializing in business law, litigation, intellectual property, tax and dispute resolution, the firm provides an in-depth understanding and knowledge of general real estate and litigation rules and regulations and is a trusted resource for business owners throughout Colorado.


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