Pleading And Identifying Trade Secrets In Calif.

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Trade secrets are valuable assets. Businesses must go to great lengths to protect their trade secrets from use or disclosure or trade secret under california law losing their protection.

When they are improperly acquired, used, or disclosed by others, companies must not sit on their rights or risk losing them. The improper acquisition of company information is as easy as dragging files to a portable memory stick.

Because employees rarely stay at the same company for their entire careers, the problem is inevitable. At the same time, former employees are sometimes accused of improperly acquiring company files when they did not do so, did so without knowledge, or did so without the intent to improperly use or disclose trade secrets.

To state a claim for misappropriation of trade secrets under CUTSA, a plaintiff must allege two elements: The first element requires the plaintiff to describe the subject matter of the trade secret with sufficient particularity so as to give the court and the defendant reasonable notice of the issues.

The second element requires a showing that the defendants misappropriated a trade secret, which can occur by improper acquisition, use, or disclosure. If the employee acquired the information under circumstances giving rise to a duty to maintain its secrecy, however, subsequent breach of that duty by use or disclosure is misappropriation actionable under the Act.

Misappropriation claims under CUTSA are often brought along with a number of related claims that arise from the circumstances. An employer may bring claims against the former employee for common law unfair competition, statutory unfair competition, breach of fiduciary duty, intentional interference with economic advantage or contract, and unjust enrichment. Employers will often seek to protect trade secrets through restrictive covenants and non-compete agreements, but California law may not enforce such agreements.

If you need assistance with a trade-secret issue, we may be able to help you. Bona Law PC is a boutique law firm that focuses on business trade secret under california law real-estate litigation, appeals, and antitrust. You can contact us at Bona Law PC Home. Contact Bona Law PC. Home Professionals Jarod M. Bona William Markham Aaron R. Trade Secret Litigation In California. Defenses Defenses to a misappropriation claim include: The information is not a trade secret The information is readily trade secret under california law by proper means The trade secret owner failed to protect its trade secrets and alert third parties who acquired the information in good faith of the misappropriation claims No misappropriation occurred Statute of limitations The trade secret has not trade secret under california law described with requisite specificity No standing Preemption Traditional equitable defenses Related Claims Misappropriation claims under CUTSA are trade secret under california law brought along with a number of related claims that arise from the circumstances.

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One goal of the UTSA is to make the state laws governing trade secrets uniform, which is especially important for companies that operate in more than one state. Historically, the law governing misappropriation of trade secrets developed separately in each state. Of course, achieving the goal of uniformity depends upon the number of states that choose to adopt it. A valid patent provides a legal monopoly for seventeen years in exchange for public disclosure of an invention.

If, however, the courts ultimately decide that the Patent Office improperly issued a patent, an invention has been disclosed to competitors with no corresponding benefit. In view of the substantial number of patents that the courts invalidate, many businesses now elect to protect commercially valuable information by relying on the state trade secret protection law. The UTSA made note of the commercial value and competitive advantages inherent in trade secrets. Unlike patent protection, which was addressed at the federal level, trade secret misappropriation was addressed at the state level.

In the United States there existed a prevalence of interstate commercial transactions that extended beyond the jurisdiction of individual state legislation. As a result, the UTSA sought to alleviate the uneven development and "uncertainty concerning the parameters of trade secret protection" by recommending a uniform trade secret law and, at the same time, allowing the states the flexibility to meet local circumstances by modifying the text as enacted in each state.

In addition to providing some recourse for any uncertainty associated with a patent, the UTSA also serves to codify the common law remedies that have emerged in many states. These remedies are based on legal precedent set by previous cases, and therefore allow for greater uncertainty, particularly in less industrial states where there have been fewer trade secret cases. The UTSA notes that any confusion caused by having strictly common law remedies to trade secret misappropriation was exacerbated by omitting trade secret rules from the second edition of the Restatement of Torts.

The UTSA contained a prefatory note followed by 12 sections of proposed law. Each section was followed by a "comments" section that provided clarifications and examples as to the intent of the law. Sections 2—4 provided remedies for potential wrongs committed in violation of the act, including injunctive relief , damages and attorney's fees. Sections 5—12 made additional provisions related to the implementation of the law, and the relationship to other laws.

The UTSA provided several definitions of terms as they are used throughout the act. Some of these definitions are replicated here for the benefit of the reader. Although not included in the definition itself, the original text of the UTSA provided clarification regarding the definition of proper and improper means. The comments refined the definition by listing several proper means of discovery , including discovery by independent invention, reverse engineering , licensing arrangement , and published literature.

The comments also clarified that improper means included actions that were, "improper under the circumstances; e. The UTSA noted that the types of accidents or mistakes that would lead to use of a learned trade secret being misappropriated did not include actions or mistakes that "constitute a failure of efforts that are reasonable under circumstances to maintain its [the trade secret's] secrecy".

Regarding reasonable efforts to maintain secrecy, the UTSA maintained that actions such as restricting access to a "need-to-know basis" and informing employees that the information is secret met the criteria for reasonable efforts.

The UTSA stated that the courts do not require procedures to protect against "flagrant industrial espionage" were not necessary. The UTSA provided for several potential remedies for wrongs committed under the act, including injunctive relief , damages , and attorney's fees.

Section 2 of the UTSA provided for injunctive relief from trade secret misappropriation. Section 2 a stipulated, "Actual or threatened misappropriation may be enjoined". However, the length of the injunction was limited to the length of time the trade secret exists i. In addition to the possible enjoinment described in section 2 a , section 2 b allowed for the payment of reasonable royalties in place of an injunction under exceptional circumstances.

The UTSA, in the comments for section 2, referenced a court case in which a misappropriated trade secret was used to build military technology for use during the Vietnam War. As an injunction may have prevented necessary equipment from reaching U. In addition to injunctive relief offered under the UTSA, parties may also receive damages. Section 3 a states that, "Damages can include both the actual loss caused by misappropriation and the unjust enrichment caused by misappropriation that is not taken into account in computing actual loss".

Restrictions similar to those imposed on the duration of injunctive relief are imposed on the duration of damages as well. Section 4 of the UTSA stipulated that the court may award attorney's fees to the prevailing party for actions made in "bad faith or willful and malicious misappropriation".

As of May [update] , the UTSA has been adopted by all states except New York, North Carolina but its law is very similar and seems to borrow heavily from the act [1] , and Massachusetts.

Each party shall provide the legal means for any person to prevent trade secrets from being disclosed to, acquire by, or used by others without the consent of the person lawfully in control of the information in a manner contrary to honest commercial practices, in so far as:. Trade Secrets in Europe are dealt with on a country-by-country basis. Germany 's Act Against Unfair Competition states, "any person who, in the course of business activity for purposes of competition, commits acts contrary to honest practices" and hold violators responsible for damages.

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