3. How are trade secrets lost or stolen?

Information that qualifies as a trade secret is subject to legal protection (against theft and misappropriation) as a form of valuable property—but only if the owner has taken the necessary steps to preserve its secrecy. If the owner has not diligently tried to keep the information secret, courts will usually refuse to extend any help to the trade secret owner if others learn of the information.

Some activities that the courts will commonly treat as trade secret theft—which means the owner will be afforded some judicial relief, such as damages or an order preventing use of the stolen information—are:

• disclosures by key employees (current and former managers, scientists and others occupying positions of trust) in violation of their duty of trust toward their employer

• disclosures by employees (current and former) in violation of a nondisclosure agreement entered into with their employer

• disclosures by suppliers, consultants, financial advisors or others who signed nondisclosure agreements with the trade secret owner, promising not to disclose the information

• industrial espionage, and

• disclosures by any person owing an implied duty to the employer not to make such disclosure, such as directors, corporate offices and other high-level salaried employees.

When a disclosure is considered wrongful, the courts may also consider use of the information wrongful and issue an order (injunction) preventing its use for a particular period of time.

Related terms: accidental disclosure of trade secrets; antitrust law and trade secrets; beta testing and trade secrets; confidential employment relationship; covenant not to compete by employee; disclosure of confidential information; duty of trust; exit interview; Freedom of Information Act, exemption of trade secrets; illegal restraint of trade; improper acquisition of trade secrets; improper disclosure of trade secrets; industrial espionage; loss of trade secrets; maintained as a trade secret; nondisclosure agreement; notice to former employee’s new employer; piracy; public domain and trade secrets; public records and trade secrets; reverse engineering and trade secrets; unsolicited idea disclosure.