question.jpgIn Trade Secrets

What happens when someone with access to my trade secret steals it?

Often times, people will have legitimate and permitted access to a trade secret. For example, if your business has a trade secret in the manufacturing process of some product, your engineers would likely have knowledge of (and access to) your trade secret. When someone with legitimate access like this later uses your trade secret for his or her own advantage, or discloses it to others, they may have committed trade secret misappropriation, which means you could seek legal relief from the courts. The question of whether their actions were actually misappropriation turns on whether or not they had a duty of trust and confidence which they violated by using and/or disclosing your trade secret.

A duty of trust and confidence is most often created explicitly. For example, if your employee signs a nondisclosure agreement, that creates an explicit duty of trust and confidence. Similarly, if you license your trade secret to another party and the license agreement contains a confidentiality provision, the party who has licensed your trade secret has an explicit duty of trust and confidence. Anytime such an explicit duty is breached with regard to your trade secret, the breaching party has committed trade secret misappropriation.

However, someone with legitimate access to your trade secret may have committed misappropriation even if there was no formal agreement or explicit duty created. This is because the duty can also be implicit. An implicit duty is found where the circumstances of a particular situation suggest that both parties contemplated secrecy. This most often occurs in the employer/employee relationship, where an employee is given access to a trade secret but does not sign a confidentiality agreement. If the employer informed the employee of the confidential nature of the information, and the employee understood this, courts would likely impose an implicit duty of trust and confidence on the employee, which means the employee could be liable for trade secret misappropriation if they later use or disclose that information without the employer’s consent.