What Are the Legal Remedies for Theft of Trade Secrets?
Trade secrets, such as proprietary formulas, strategies, designs, or client lists, can provide a significant advantage in the marketplace. However, when these confidential assets are misappropriated, it’s not just the business that suffers; employees, investors, and customers often feel the ripple effects as well.
Theft of trade secrets can cause significant harm to a business, jeopardizing its competitive edge, innovation, and growth. If you've been the victim of trade secret theft in California, it's important to obtain strong legal support.
For over 40 years, William B. Hanley, Attorney at Law, has provided California businesses with clear, direct, and results-driven representation. Known for achieving one of the largest punitive damage awards and an impressive $50 million verdict, his exceptional track record speaks for itself.
Whether the theft occurred due to an employee, a competitor, or a third party, there are legal measures in place to hold the offending party accountable and protect your business.
What is Theft of Trade Secrets?
Under California law, trade secret theft involves the unauthorized acquisition, disclosure, or use of confidential business information that provides an economic advantage due to its secretive nature. For a piece of information to qualify as a trade secret, it must meet two conditions:
It has independent economic value due to its secrecy.
The owner has made reasonable efforts to maintain its confidentiality.
This could include anything from proprietary technology and operational processes to client databases and marketing strategies. The theft of valuable information typically involves acts such as:
Disgruntled employees taking proprietary files to a competitor
Hacking into secure databases to steal sensitive information
Breaching non-disclosure agreements (NDAs)
Unauthorized sharing of confidential knowledge acquired during employment or partnerships
Stolen trade secrets can significantly impact the reputation and profitability of a business. However, when these instances occur, businesses have multiple legal avenues available to pursue justice. An experienced business litigation attorney can help you understand your rights and your next steps.
Legal Remedies for Trade Secret Theft
Victims of trade secret theft have access to various remedies under state and federal laws. These legal options allow businesses to recover damages, prevent further dissemination of their information, and hold the responsible parties accountable. Some of the most common remedies include:
Injunctions: One of the most effective ways to secure immediate relief is by seeking an injunction. This court order prevents an individual or entity from using or disclosing stolen trade secrets. By halting further misuse, injunctions protect a business from further harm while legal proceedings are underway.
Monetary damages: Recovering financial compensation is an essential legal remedy for trade secret theft. Courts may award damages for the actual economic losses suffered by the business, unjust enrichment gained by the offender as a result of using the stolen trade secrets, and any liquidated damages if such clauses were present in pre-existing contracts, such as NDAs or employment agreements.
Punitive damages: Courts may award punitive damages for particularly egregious cases. This form of compensation is designed to punish the offender and serve as a deterrent to others from engaging in similar conduct.
Attorney’s fees: Many trade secret cases allow the prevailing party to recover attorney’s fees, especially in scenarios where the theft was willful and malicious.
Criminal prosecution: Perpetrators can also face criminal charges under California state laws and federal statutes, such as the Economic Espionage Act. Criminal penalties can include significant fines and prison sentences, serving as an additional layer of accountability.
California Laws for Trade Secret Theft
California provides robust legal protections against the theft of trade secrets under both state and federal frameworks. Some of the key legal protections you can use to help hold violators accountable include the following.
California Uniform Trade Secrets Act (CUTSA)
The CUTSA establishes the foundation for trade secret protections. It defines what constitutes a trade secret and specifies the civil remedies available to victims. The key provisions of the CUTSA include:
Allowing businesses to file civil lawsuits for misappropriation
Providing remedies like injunctive relief and monetary damages
Permitting punitive damages and attorney’s fees for wilful misappropriation
Defend Trade Secrets Act (DTSA)
Under the federal DTSA, victims can pursue claims against perpetrators across state lines. This law supplements state-level statutes, such as CUTSA, and allows businesses to address trade secret theft in cases involving interstate commerce. The DTSA empowers authorities to seize stolen trade secrets in exceptional cases, effectively preventing their distribution.
Non-Disclosure Agreements (NDAs) and Employment Contracts
In California, NDAs and employment contracts play an important role in protecting trade secrets. While California prohibits non-compete agreements in most cases, NDAs and confidentiality clauses can be used effectively to protect sensitive business information.
Exceptions Under California Labor Code
California’s Labor Code emphasizes employee rights, including protections that allow employees to use the general knowledge and skills they acquired during previous employment. However, the line is drawn firmly at the theft or use of confidential trade secrets.
Trade Secrets Attorney Serving Irvine and Newport Beach, California
Trade secret theft can have a significant impact on a business. However, there are legal remedies available to hold violators accountable. For over 40 years, William B. Hanley, Attorney at Law, has been dedicated to seeking justice for his clients. If your trade secrets have been compromised, reach out today to schedule a consultation. Located in Newport Beach, California, the firm serves clients in Irvine, Orange County, Los Angeles County, and San Diego County.