The Legal Strategy - Misappropriation of Trade Secrets in California
What is the legal strategy surrounding the misappropriation of trade secrets in California? Non-compete agreements are mostly ineffective in the State of California. How can the proper identification and protection of trade secrets help to protect your company?
There are a few important steps in the process of creating a defensible trade secret under California law. The power of a trade secret (and the value of that trade secret to your business) is established by the very nature of the information or process itself. A trade secret should be information or a process that cannot be “reasonably or independently ascertainable” outside of the context in which it exists.
As a result, a genuine trade secret should not be available for access to every employee of your company. Courts are much less likely to recognize the protection of a trade secret if every employee in your organization can easily access it.
As such, significant steps must be taken when establishing trade secrets. The information must be secured, often under lock and key, with limited access on a “need-to-know” basis. Your company’s employee handbook, policies and procedures, employment contracts and other training materials should clearly establish the nature of the trade secret material and how it will be secured and protected. A confidentiality agreement is often required to add strength the protections of a trade secret designation.
The trade secret information, process or asset must be clearly labeled and controlled. There must be consistent communications and actions throughout your organization to reinforce the nature of the subject matter and how it is to be handled.
The legal strategy surrounding the misappropriation of trade secrets is grounded in the legal requirements to establish misappropriation when it occurs. The first element of a misappropriation of trade secrets case is to prove that the trade secret was accessed dishonestly or unfairly removed, disclosed and/or used by the party in question. A successful case must show the trade secret(s) were inappropriately accessed and then used against the interests of your company.
A sound conception and implementation of a legal strategy surrounding the misappropriation of trade secrets is one of the most effective tools to prevent employees, customers and vendors from using trade secret information or assets to compete against you. The legal remedies for misappropriation of trade secrets include but are not limited to an injunction to stop any further action by the other party as well as monetary damages which resulted from their actions.
Trade secrets can cover a variety of confidential, private corporate information and assets from customer lists to specific processes, marketing strategies, software, algorithms, secret recipes and ingredients, industry related intelligence or technical insights to name a few.
A thorough and carefully executed legal strategy surrounding the misappropriation of trade secrets can be a successful way to limit the opportunities for any employee, vendor, contracted worker or even a customer from taking your trade secret information, processes or technology and using it or selling it to others to compete against you.