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Looking at state, federal trade secret protections

For businesses, protecting information valuable to the business is a necessary and ongoing responsibility. Protecting valuable business information can be done in a variety of ways. Intellectual property law provides several tools for businesses—trademarks, copyrights, and patents—and noncompete agreements allow businesses to prevent employees from defecting to competitors and taking valuable company information with them.

Another important way to protect valuable business information from competitors is trade secret protection. Like noncompete agreements, trade secret protection allows businesses to protect themselves from inside threats, particularly from opportunistic employees. Trade secrets are protected at both the state and federal level, and we’ll look briefly at these laws in this and our next post. 

The California Uniform Trade Secrets Act protects employers’ right to safeguard trade secrets from misappropriation. The law protects businesses from improper acquisition of trade secrets, as well as the use of disclosure of trade secrets. To qualify as a trade secret, the business must have made reasonable efforts to protect the information, and the information must be valuable precisely because the company keeps it secret.

California law provides protection from misappropriation not only for the physical aspect of trade secret information, whether in paper or electronic form, but also former employees’ memories of the trade secret information. Employees who use or disclose the contents of their memories of trade secret information can, therefore, be held to account. There must, however, be evidence of actual use or disclosure of protected information in order for there to be a valid claim, rather than mere opportunity and suspicion. Employers, too, can be held accountable for an employee’s use of disclosure of a former employer’s trade secrets if the new employer knew or should have known that the use or disclosure was occurring.

In our next post, we’ll look at the relatively recently passed federal Defend Trade Secrets Act, and the importance for businesses of working with an experienced attorney to protect valuable information and enforce trade secret rights against those who misappropriate such information. 

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