Many companies have trade secrets that they have invested a significant amount of time and money into developing. Trade secrets are an essential form of intellectual property protection — and can sometimes be an easier alternative to securing patent protection while having the benefit of no expiration date, as long as it remains a secret. Like other forms of intellectual property, a trade secret can be infringed upon — and it may be necessary to take legal action if a trade secret has been misappropriated.
A trade secret is any type of confidential information that provides a business or enterprise with an economic advantage over the competition. They can include commercial, industrial, and manufacturing secrets. Trade secrets can also be formulas, programs, patterns, devices, techniques, financial data, customer lists, processes, and compilations. These things have actual or potential economic value to a company because they are not generally known to the public.
In addition, to qualify as a trade secret, reasonable steps must be taken by the rightful owner of the information to help ensure it is kept confidential — such as with a confidentiality agreement. Illinois courts will evaluate several factors to determine whether information constitutes a trade secret, such as the extent to which the information is known outside of the business and the amount of effort expended to develop the information. A judge will also look at the value of the information to the business and its competitors and the ease or difficulty for others to acquire or duplicate the information.
Trade secrets are protected under the Illinois Trade Secret Infringement Act from misappropriation — which is sometimes referred to as “infringement.” Misappropriation occurs when a trade secret has been wrongfully taken without consent or disclosed without permission. It can also happen if an individual knew or had reason to know the trade secret was derived from improper means at the time it was acquired.
Some examples of the ways in which trade secret misappropriation can happen may include the following:
Trade secret misappropriation isn’t always intentional. It can happen as a result of carelessness or negligence. Unfortunately, once a trade secret has been misappropriated and has been widely disseminated, trade secret status is typically lost and the information is no longer protected. This is why it is crucial to take steps to safeguard the information that constitutes a trade secret.
Trade secret misappropriation can involve a nuanced set of facts and circumstances — and lawsuits surrounding these matters are often complex. To determine whether you have a claim for trade secret misappropriation, a court will have to consider (1) whether the information is actually a trade secret; (2) whether the trade secret was stolen; and (3) the damages associated with the misappropriation. If your claim meets these three elements, you may be able to recover a remedy by filing a lawsuit.
Under Illinois law, actual or threatened misappropriation may be enjoined. An injunction is an equitable remedy that may be issued to eliminate the commercial advantage that would otherwise be derived from the misappropriation and stop the defendant from using the trade secret. A plaintiff in a trade secret infringement suit may also request monetary damages to cover the costs associated with their economic losses. Such damages can include the aggrieved party’s own losses, as well as the profits the defendant made through misappropriation of the trade secret.
There are several defenses an alleged wrongdoer may assert in a trade secret infringement lawsuit. For instance, they may argue that they developed the trade secret independently. Or, they might assert that there was no trade secret to misappropriate because reasonable steps to keep the information confidential were not taken.
Companies should implement strict protocols to help ensure their trade secrets are protected from misappropriation. This can mean protecting files, keeping the secrets in a locked area, or similar measures. A business should also ask employees who have access to the trade secrets to sign a non-disclosure agreement, an agreement protecting confidential information, or a non-compete agreement. Significantly, the measures taken to protect trade secrets must be reasonable and taken within a reasonable time period.
A company must also take reasonable measures to continue to ensure trade secrets are safeguarded from misappropriation after the initial protective steps have been taken. If a business becomes aware that a current or former employee is disclosing a trade secret, a cease-and-desist letter should be issued immediately. Depending on the circumstances, immediate injunctive relief might also be necessary.
It’s important to take every possible measure to safeguard your company’s trade secrets — and take legal action in the event they are threatened by misappropriation. Located in Rolling Meadows, Litico Law Group is committed to serving the legal needs of business owners and entrepreneurs in Illinois for a wide variety of matters, including those involving trade secret misappropriation. We welcome you to contact us by filling out our online form or calling 847-307-5942 to schedule a consultation to learn more about our legal services.