Trade secrets are some of the most valuable assets a business can possess. Critically, the Illinois Trade Secrets Act offers a broad scope of protection to businesses when it comes to their confidential trade secret information. While one of the most famous — and well-protected — trade secrets is the formula for making Coca-Cola, trade secrets can come in a variety of forms. Whether your business has a proprietary process, method, instrument, pattern, or practice that gives it a competitive edge over others, it’s essential to understand the legal protections it is afforded.
A trade secret is a type of intellectual property that has value because it is not generally known by others and reasonable measures are taken to keep it secret. The Illinois Trade Secrets Act defines a trade secret as information that includes, but is not limited to, the following: technical or non-technical data, a formula, a pattern, a compilation, a program, a device, a method, a technique, a drawing, a process, financial data, and lists of actual or potential customers or suppliers.
In addition, the information must be sufficiently secret to derive actual or potential economic value as a result of not being generally known to those who can obtain monetary value from its disclosure or use. It must also be the subject of reasonable efforts to maintain its confidentiality. The most crucial factor in determining the existence of a trade secret is whether and how the owner acts to ensure the information is kept secret.
Under the Illinois Trade Secret Act, the existence of a trade secret is a question of fact. Illinois courts look to several factors to determine whether information constitutes a trade secret. Specifically, a court will consider:
Courts have found trade secrets to include computer software source codes, financial data related to profits, research and marketing plans, product formulations, production methods, and circuitry schematics. Things like mailing lists, phone books, trade publications, and directories are not classified as trade secrets. However, Illinois courts have recognized customer lists and pricing information as trade secrets.
Trade secret infringement is referred to as “misappropriation.” Trade secret misappropriation can arise in several different ways. For instance, it can occur when someone improperly acquires a trade secret, discloses it, or uses it without consent. Trade secret misappropriation can also arise through the use of a trade secret without express or implied consent by a person who acquired it under circumstances giving rise to a duty to maintain its secrecy.
To pursue a cause of action for trade secret misappropriation in Illinois, three elements must be proven in court. A plaintiff must demonstrate that (1) a trade secret exists; (2) the trade secret was misappropriated; (3) damages were incurred. Unlike with patents, there are no time restrictions on trade secrets. A trade secret can potentially be protected indefinitely — as long as a business takes reasonable efforts to keep them confidential, the Illinois Trade Secret Act safeguards them from misappropriation.
Under the Illinois Trade Secret Act, there is a five-year statute of limitations to bring a claim for trade secret misappropriation. If a plaintiff can establish trade secret misappropriation, they may be entitled to a wide variety of damages, including the actual monetary losses suffered, unjust enrichment damages, the profits made by the defendant’s misappropriation, and the cost of development. They may also be eligible to recover exemplary damages which are punitive damages meant to punish the wrongdoer.
Injunctive relief may also be granted in some cases, when applicable. This type of relief can bring an early resolution at the beginning of the case by ordering the defendant to stop engaging in certain activities. For instance, the judge might issue an order to cease production of an item that uses a process constituting a misappropriated trade secret.
Trade secret litigation can be lengthy and costly. If the plaintiff prevails in the lawsuit, they may be awarded their attorneys’ fees. However, in the event that the defendant prevails, the court may award them attorneys’ fees if it finds the plaintiff pursued the action in bad faith.
It’s vital to take every possible measure to protect your company’s trade secrets — and pursue the necessary legal action if they are threatened by misappropriation. Located in Rolling Meadows, Litico Law Group is dedicated to serving the legal needs of business owners and entrepreneurs in Illinois for a wide variety of matters, including those involving trade secrets. 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.
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