What is trade secret misappropriation?

On Behalf of | Aug 25, 2021 | Trade Secret Protection |

Before we can answer the question in the title, we must first answer another: What is a trade secret? The World Intellectual Property Organization (WIPO) says “trade secrets are intellectual property (IP) rights on confidential information which may be sold or licensed” and that generally, trade secrets are commercially valuable because they’re secret.

In addition, trade secrets must be known to a limited group of people and there must be reasonable steps taken by the owner of the secret to keep it secret. “Reasonable steps” include such things as confidentiality agreements for employees and business partners.

Famous examples of trade secrets

  • Google’s search algorithm
  • The formula for determining the New York Times bestseller list
  • KFC’s blend of 11 herbs and spices
  • Coca-Cola’s secret Coke recipe

Less famous, but more valuable to you or your company

  • Client lists
  • Marketing plans
  • Industry forecasts
  • Unannounced business relationships
  • Cost and pricing information
  • Manufacturing processes
  • The inbred lines and combinations of inbred lines used to make a plant hybrid

Now that trade secrets are clear, let’s return to the question in the title: What is trade secret misappropriation?

If you read through the Uniform Trade Secrets Act, “misappropriation” is a term that describes what a person cannot do with a trade secret one doesn’t own.

Improper acquisition

At the very top of the list of things you cannot do: you can’t acquire a company’s trade secret by improper means (theft, fraud, bribery, breaching a confidentiality agreement or inducing others to breach a confidentiality agreement).

Even if trade secrets are lifted but not sold or shared, the owner’s rights might have been breached. For instance, if an employee takes home confidential information in violation of their employment contract, that act, by itself, could be considered misappropriation.

You can also commit trade secret misappropriation by publishing a secret when you know that the person who gave you it to you obtained it improperly or they got it in circumstances in which they had a duty to maintain secrecy or limit the secret’s use.

The suggestion of impropriety

You don’t even have to know that the trade secret was acquired improperly. You might be liable if you’re aware of facts merely suggesting that it was acquired improperly. (Example: The secret is inside a file marked “confidential.” You might not know it was stolen, but there’s strong circumstantial suggestion that it was taken improperly.)

It makes sense to speak with an intellectual property attorney before obtaining or using trade secret information.

For those with intellectual property to protect, an IP lawyer can help you develop security measures or litigate when a trade secret has been misappropriated.

FindLaw Network