Trade secrets protect the valuable information that gives your business a competitive edge. When someone takes or uses that information without permission, they may commit misappropriation. Knowing what counts helps you avoid risk and take action if needed.
Definition of a trade secret
A trade secret includes confidential business information that gives your company an advantage. This can include a formula, method, design, process, or customer list. To qualify, the information must stay unknown to the public, and you must take reasonable steps to protect it. You can use non-disclosure agreements or restrict access to important files.
What misappropriation looks like
Misappropriation occurs when someone acquires or uses a trade secret without permission. This often happens when an employee shares confidential information with a competitor. Someone might also steal data through hacking or trickery. Even if someone uses trade secrets by accident, it can still count if they had reason to believe the information was confidential.
Intent and knowledge matter
Misappropriation involves more than just using the information. The person’s intent and awareness play a major role. If someone knows or should know that the data is confidential, their actions may qualify as misappropriation. Courts examine how the person obtained the information and what they did with it. If someone receives protected data unknowingly, they may not face legal trouble. But using it after learning its source can cause problems.
Set up strong internal controls to reduce the risk of misappropriation. Use contracts, limit employee access, and train your team on what counts as confidential. If you think someone took a trade secret, act quickly to minimize damage and support your legal claim.
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