IPR

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Trade Secret Litigation
Trade secret litigation comprises of two aspects:
1. Violations of trade secret law takes places when the confidential information is
obtained through misappropriations.
Misappropriations means where someone acquires, uses and/or discloses company
trade secret without taking any permission from company in an improper
manner.
2. Violations of non disclosure agreement takes place when a party in the contract
from the breach to the agreement.
 Misappropriation in violation of a state trade secret law.
 If no written agreement exists, the plaintiff must rely upon case law.
 To protect trade secret violations, companies should require new employees who will
have access to confidential information to acknowledge in writing agreement that
accepting employment.
 If grounds for federal jurisdiction exist, the action may be brought in federal court.
 If the action also involves copyright or patent, it must be brought in federal court.
 Otherwise, the action will be brought in a state court.
 If the action is instituted in federal court, a federal court will apply state law inasmuch as
there is no general federal trade secret law.
 The UTSA provides that an action for misappropriation must be brought within three
years after misappropriation is discovered.
 In federal court, the action will be governed by the Federal Rules of Civil Procedure
relating to federal civil actions.
 These rules set the times for responding to the complaint, matters pertaining to motions
and discovery, and any other litigation related matters.
 After the complaint is filed, the defendant will respond by filing an answer, usually
denying that any breach of agreement.
 If the defendant has a cause of action to assert against the plaintiff relating to the trade
secret, it must be asserted by way of a counterclaim in the litigation so that all disputes
between the parties relating to the information can be resolved at the same time.
 The plaintiff and defendant will take depositions to obtain testimony from those who may
have information about the case.
 For example, the plaintiff may depose individuals in the defendant’s company to
determine whether they were instructed to misappropriate the plaintiff’s information.

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 Interrogatories may be served on either party to obtain information, such as to inquire
about experts either side may intend to call.
 If the matter cannot be resolved by private agreement, it will proceed to trial.
 The trade secret owner must prove misappropriation by a preponderance of the evidence.
 Either party may request a jury trial; otherwise, a judge will render the decision.
 One of the difficult issues in trade secret litigation arises from the fact that the trade
secret sought to be protected often must be disclosed in the litigation so the judge or jury
can evaluate whether the information is sufficiently valuable.
 Similarly, the owner’s methods of protecting the information often must be disclosed so
the fact finder can determine whether the owner has taken reasonable measures to protect
the alleged trade secrets.
 Courts can fashion a variety of means to protect the information, from issuing protective
orders, to holding private hearings in the judge’s chambers, to closing the courtroom to
the public, to sealing court records.
Trade Secret Protection Programs
 Because trade secrets are legally broken and may be lost by accidently disclosure or
failure to reasonably protect.
 Companies should implement trade secret protection programs to safeguard valuable
information.
 While it is common for businesses to assume that only scientific and technical data
constitute trade secrets.
 Protection is available for a much broader range of subjects, such as customer lists,
marketing plans, hiring tactics, and other information that would be valuable to a
competitor, and that are common to many companies.
 Companies that value their trade secrets should implement trade secret protection
programs.
 Developing programs and measures to protect trade secrets is an easy way to demonstrate
to a court that an owner values its information and takes appropriate measures to maintain
its secrecy.
Physical Protection
There are a variety of tangible measures a company can implement to protect trade secrets,
including the following:
 Safeguarding information under lock and key
 Protecting the information from unauthorized access

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 Conducting background checks of employees who will have access to key information
 “Badging” doors and entrances so access beyond the company’s reception area requires
key code or bar code access and so that employee location is monitored
 Retaining adequate security during evenings and weekends either through alarm systems
or security services, including surveillance cameras
 Ensuring tours of the company premises do not expose outsiders to valuable processes or
information.
 Marking materials with legends or stamps such as “Confidential - Trade Secret
Information”
 Monitoring activities of former employees who had access to confidential information
and monitoring trade journals for articles that may show a competitor has gained access
to company trade secrets
 Ensuring no one person has access to critical information but rather that several people
“share” parts of the information.
 Implementing inventory control systems
 Securing computers with password or encryption protection and monitoring devices to
track which employees access certain information.
 Requiring use of paper shredders for disposal of sensitive documents
 Designating a person to be responsible for trade secret information and release to others
(including the media), and for reviewing bids, proposals, marketing materials, and plans
by employees to publish articles or speak at conferences
 Implementing photocopying policies and maintaining logbooks or electronic monitoring
of copying.
 Monitoring employees’ use of e-mail and the Internet to ensure confidential information
is not being disseminated.
 Conducting exit interviews with employees to obtain return of company materials and to
remind them of their obligations not to use or disclose proprietary company information
 Using encryption technology and antivirus protection programs to protect information
stored on computers
 Educating employees on trade secrets and protection of trade secrets
 Requiring visitors to the premises to sign in and wear badges
 Ensuring information retained on computers is available only on company networks so
that access can be easily tracked

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 Most companies will not need to implement all of the measures described.
 Courts do not require absolute secrecy or that extreme measures be taken to protect
information.
 The lab is in an unmarked building in a typical office park, and visitors must pass through
a metal detector that scans for camera phones.
Contractual Protection
 Another method of protecting trade secrets is by contract, namely, requiring those with
access to the information to agree in writing not to disclose the information to others.
 In licensing arrangements, trade secret owners should ensure the license agreements
contain sufficient protection for trade secret information.
 Employers should use noncompetition agreements to ensure former employees do not use
material gained on the job to later compete against the employer.
 Even without formal contracts, a company should include protection policies in its
employee handbooks, routinely publish reminders about confidentiality in company
newsletters and through e-mail messages, and remind employees of their duties during
their initial orientations and during exit interviews conducted when the individuals leave
the company’s employment.
 With the advent of the Internet and the increased ease of electronic communications,
employers have become concerned about the loss of trade secrets through dissemination
over the Internet.
 Thus, employers have a legitimate interest in monitoring the electronic communications
of their employees.
 Generally, employers have broad discretion to regulate the use of electronic
communications in the workplace so long as the employees have been informed that the
employer may do so.