Employees often leave a company with valuable knowledge and experience. While they are generally free to use their skills in a new job, they cannot take or misuse confidential business information that qualifies as a trade secret.
When an employee improperly uses protected information after leaving a business, it may lead to trade secret litigation. Understanding when trade secret misappropriation occurs can help business owners protect valuable assets and respond appropriately.
What are the grounds for a claim?
A business may have grounds to file a claim when a former employee improperly acquires, uses, or discloses confidential information that qualifies as a trade secret. This often arises in employment litigation involving former employees who join a competitor or start a competing business.
Not every piece of confidential information is a trade secret. To qualify for legal protection, the information generally must:
- Have independent economic value because it is not publicly known
- Be kept confidential through reasonable security measures
- Provide a competitive advantage to the business
Examples may include customer lists, pricing strategies, manufacturing processes, proprietary software, marketing plans or technical designs.
Trade secret misappropriation may occur when a former employee copies confidential files without permission, shares protected information with another company, or uses trade secrets to compete against a previous employer. In some cases, even information retained from memory may become an issue if it involves protected trade secrets rather than general knowledge or skills.
Successful trade secret litigation may result in court orders preventing further use or disclosure of the information. A business may also seek financial compensation for losses caused by the alleged misappropriation. Depending on the circumstances, a new employer that knowingly benefits from the improper use of trade secrets may also face legal liability.
Acting quickly is often important because evidence can disappear and confidential information may continue to spread once it has been disclosed. Businesses should also document the steps they have taken to protect confidential information, as these efforts may be relevant if a dispute arises.
If you believe a former employee improperly used confidential business information, seeking legal guidance can help you evaluate whether trade secret misappropriation occurred and whether employment litigation or trade secret litigation may be appropriate under the circumstances.
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