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What is trade secret misappropriation?

Trade secret misappropriation occurs where someone acquires, uses and/or discloses your trade secrets without your permission and in an improper manner. The “improper” part here is very important - there are proper ways for someone to learn about and use a trade secret, such as through reverse engineering a product, which do not qualify as trade secret misappropriation (meaning you have no right to sue them or get them to stop their actions).

If someone has acquired your trade secret, it is improper if they knew or had reason to know that the information was your trade secret. If they were innocent of this fact (where, for example, a third party wrongfully acquired your trade secret and sold it without letting on that it was a trade secret), that innocence can be used as a defense to your claim of misappropriation.

With regard to the use or disclosure of your trade secret, it is improper if that party did not have your permission to use or disclose the information and they either acquired the trade secret through improper means or knew or had a reason to know that it was acquired through improper means.

Trade secret misappropriation typically falls into two areas - where the trade secret is misappropriated by someone who had proper access to it (such as an employee) and where the trade secret is misappropriated by a stranger.