South Carolina Intellectual Property Litigation

Intellectual Property & Litigation SC

Trade Secret Misappropriation — Injunctions, Litigation (and Protection)

Have you or your company been the victim of trade secrets theft? Have you as an individual been accused of trade secret theft?

The theft of trade secrets in today’s markets is so great that it is likely to be the subject of a federal trade secrets law in the near future. As of this moment, with a few exceptions, the theft of trade secrets has been “regulated” by a patch-work of so-called “uniform” trade secret statutes, which can be unique to each of the 50 states.

While most of the primary provisions are similar in these “uniform” state laws, there can be significant differences, and then there is also the issue of the way in which the state courts have interpreted these “uniform” trade secret laws, and confusion amongst lawyers and judges regarding the the impact / interplay of a non-compete (or lack thereof) when trade secrets are involved.

Why is Trade Secret Theft an even Bigger Threat Today … What has Changed?

Consider the following changes to the way information is stored today … as compared to say, for example, 1976:

  • Company data / ESI is stored in the “cloud” … hard copies of notebooks locked in filing cabinets;
  • Access to ESI is limited / controlled by IT professionals and passwords … giving out keys);
  • Almost all employees have access to company IT system / ESI … only management / white collar; and
  • Most, if not all, employees have access company data / ESI remotely and / or by smartphone … no access.

The above are just four very simple examples of the incredibly increased risk that nearly every company faces in 2015 from trade secret theft. The threat of trade secret theft is greater than ever before, and it will almost certainly be even greater tomorrow than it is today.

More than Trade Secret Theft / Confidential Information

Not only is trade secret theft a legitimate concern, but the loss of confidential information in violation of confidentiality agreements or other proprietary information can also significantly harm your business. Once the former employee is gone, you may or may not be able to prove what they took with them or what information they have disclosed to your competitor(s). Therefore, another issue to consider in this arena is whether or not to use employee “non-compete” agreements. If you are en employee, you may want to know is the “non-compete” agreement enforceable, and to what extent? The effectiveness of non-compete agreements, and similar non-solicitation provisions vary even more from state to state, as non-competes are not even enforceable in some states!

What Can You Do If …

So what are your options if you think someone has stolen your trade secrets, or if you are accused of wrongdoing with respect to trade secrets or other confidential information:

  • file a lawsuit seeking an injunction, damages, attorneys’ fees, etc.;
  • send a letter demanding return of the trade secret information and destruction of all copies;
  • seek help of law enforcement for criminal trade secret theft based upon state or federal statutes; or
  • other options depending on the particular situation.

Because many trade secret and non-compete cases end up being filed and are therefore, publicly available, the track record(s) of other parties in these cases can help us understand and better predict the likely outcomes of certain factual situations based upon the facts as we think we know them. You must understand that, as lawyers or counsel, we cannot guaranty the outcome of any particular situation as most all situations involve risk of some kind, even if that is only having to publicly admit that someone hacked your system or stole valuable information.

Below are a few examples of cases Mr. Few has handled addressing trade secrets, non-competes and related issues:

Example 1 – Business Non-Compete, Alleged Trade Secret Theft

Served as counsel to a business client that was being sued over enforcement of non-compete provisions related to the break up of a franchise agreement. Assisted in negotiating a settlement to limit the terms and enable both parties to continue to do business, and dismissal of the lawsuit.

Example 2 – Alleged Trade Secret Misappropriation by Departing Employee

Served as counsel to departing employees that were being accused of trade secret theft by their former employers. Assisted in negotiating settlements, including complete computer forensic audits and enabling the clients to continue to work and earn a living.

Example 3 – Irreparable Harm – Contract

Served as counsel to a start-up pharmaceutical company and obtained a Temporary Restraining Order (“TRO”) in federal court, which converted to a Preliminary Injunction. The injunction required that only our client could sell the product, which was later the subject of an FDA recall. The injunctive relief in this case was based upon a contract, or an exclusive license between the parties. The case was settled a few months before the scheduled trial.

Example 4 – Trade Secret Misappropriation

Obtained a Temporary Restraining Order (“TRO”) in state court based upon a former employee of the client that our client alleged had taken trade secrets. The case was later settled at mediation.

If you or someone you know thinks they have been damaged by the misappropriation of your trade secrets, have been accused of trade secret theft of improper actions regarding confidential information, or have received a cease-and-desist letter regarding trade secrets or a non-compete agreement, contact our firm at 864-527-5906 for a free consultation.

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