Non-disclosure Agreements Protect Trade Secrets

Non-disclosure agreements signed by employees and consultants are an effective way to protect trade secrets. When an employee leaves a job or a consultant leaves a client, trade secret protection comes in handy. That employee or consultant should understand the legal obligation to honor the privacy of the former business or client. Not every bit of information acquired during the relationship is a trade secret. Use of private information considered a trade secret is legally improper. Understanding what is, and what is not, a trade secret can help avoid a lawsuit arising from the theft of trade secrets.

Why Trade Secret Law is Important

For a business or the owner of creative works, it is extremely important to understand what trade secrets are and how best to protect and defend them. This may require the advice of an experienced intellectual property attorney who understands trade secret law. In order for a trade secret to be protectable, you should be able to demonstrate the means used to keep it secret. For example, this may require that you have employees and consultants sign enforceable non-disclosure agreements. If you have company or creative works information that needs protection, click here Contact Kilgore & Kilgore to request a free initial consultation with a Kilgore & Kilgore lawyer.

Federal Trade Secret Statutes

The U.S. government recently enacted the federal Defend Trade Secrets Act of 2016 (DTSA). Many are calling this legislation the most significant trade secret law development in recent history. The DTSA provides a federal cause of action for trade secret misappropriation. This means that anyone who believes someone stole a trade secret can file an action in federal court under federal trade secret statutes. This new law affects businesses, employees, and individuals. Almost every business depends to some degree on information that must remain confidential in order to maximize its success in the marketplace.

Texas Uniform Trade Secrets Act

Be aware that the DTSA does not preempt state trade secret laws. The Texas Uniform Trade Secrets Act was legislated in 2013. In most cases, someone bringing trade secret litigation can choose whether to bring the action in federal or state court. Federal and state trade secret statues are similar in most respects. However, they may differ in key parts such as the definitions of trade secrets and misappropriation. The types of relief available may also differ. The length of the statute of limitations may also differ between state and federal statutes.

Trade Secret Definition

A protectable trade secret has three basic components. The first component is information. This information could be tangible or intangible, regardless of how it is stored. This includes financial, business, scientific, technical, economic, or engineering information. The second component is secrecy. The owner of the information must take reasonable measures to keep the information secret. In addition, the third component is potential economic value. That is, information with potential economic value to an owner must keep it secret.

Secrecy Protects a Trade Secret

To understand trade secret law, it is important to know what information to protect. Keeping the information secret protects a trade secret. However, it is no longer a trade secret when that information becomes public. Here are some examples of a trade secret. A trade secret could be the confidential recipe for your best Texas chili. A trade secret could be the list of customers who use your landscaping business. A trade secret could be the discounts you give to preferred customers. Just remember, once that information is out there in the public domain, where anybody can use it to compete with you, that information is no longer a trade secret.

Theft of Trade Secrets

The state and federal trade secret laws provide a cause of action for the owner of a trade secret against any person who misappropriates that trade secret. The first type of misappropriation is the acquisition of a trade secret by improper means. What constitutes improper means versus proper means is subject to statutory definition and legal interpretation. The second type of misappropriation concerns the disclosure or use of a trade secret. This part of trade secret law is multi-leveled and a bit convoluted. In general, it means someone acquired and used a trade secret by improper means or in violation of a duty.

Maintain the Right to Protect Your Trade Secrets

It is extremely important that you actively maintain the right to protect your trade secrets and know when you are at risk. An intellectual property attorney can provide you with a list of opportunities for the theft of trade secrets. You should be vigilant when these actions occur. Here are some examples. When an employee leaves and starts a competing business, there is a risk of trade secret misappropriation. When an employee goes to work for a competitor, you may be at risk of trade secret misappropriation. When you disclose trade secrets to a potential business partner, there is a risk of trade secret misappropriation. You are always at risk when a disgruntled employee sells your protected information to a competitor. When these and other situations occur, you should use all legal means available to prevent the use of your trade secret information. Individuals and business of all sizes should be aware of their trade secret threats.

Employees Often Walk Away

Non-disclosure agreements and non-compete agreements are valuable tools for business owners and creative people. Non-disclosure and non-compete clauses in employment agreements and severance agreements are quite useful in protecting against trade secret misappropriation.

An Experienced Intellectual Property Attorney is Essential

Trade secret protection is critical to creative people and most businesses. Non-disclosure agreements are useful in protecting trade secrets. Whether you want to protect your trade secrets or navigate to a new employer, learn about Kilgore & Kilgore’s trade secrets law practice by clicking here Trade Secret Protection. Understand your rights with respect to trade secret misappropriation, click here to connect with a Kilgore & Kilgore lawyer for a free consultation Contact Kilgore & Kilgore.

Leave a Reply

Your email address will not be published. Required fields are marked *