Should You Sue to Try to Protect Trade Secrets?

Trade secrets are some of the most valuable intellectual property that a business owns. In the Uniform Trade Secrets Act codified in California Civil Code Section 3426 trade secrets are defined to include: “information, including a formula, pattern, compilation, program, device, method, technique, or process” which is the subject of reasonable efforts to maintain its secrecy or which derives independent economic value from not being publicly known. If an organization’s secret proprietary information falls into the wrong hands, a competitive advantage can be eroded and the business can suffer in many ways. 

Smart companies take many different steps to protect trade secrets, including requiring employees to sign non-disclosure forms before they are given access to proprietary info. Sometimes, however, there is a situation where private information is made public or where there is a threat that trade secrets will be revealed. When this occurs, or if trade secrets have already been improperly disclosed, the affected organization will need to decide whether to file a civil lawsuit or not. An Orange County, CA business litigation lawyer at Brown & Charbonneau, LLP can provide assistance to companies making the decision on whether to sue to protect trade secrets or not.

Should You Sue to Protect Trade Secrets?

Filing a lawsuit can allow you to get an injunction to prevent the release of secret data if the court determines that it should intervene. A lawsuit can also allow you to recover compensation if trade secrets were improperly released or revealed, although sometimes it can be difficult or impossible to determine the value of damage or to be fully compensated for resulting losses.

While a lawsuit provides a remedy, suing to protect trade secrets is not necessarily the smartest choice under all circumstances. As you consider whether to file litigation or not, some factors that can help you to make up your mind include the following:

• Will the court consider your proprietary information to actually be a protected trade secret? If you sue and the court does not determine the information was eligible for protection, you won’t win and you’ll have wasted time and money during the litigation process. You’ll have to prove to the court that the information was private and that you took reasonable steps to keep it that way if you hope to prevail in your litigation.
• Will suing help you to achieve your business objectives or goals? You need to define what you hope to get out of the lawsuit. If secrets haven’t yet been released, an injunction preventing disclosure could definitely be worth suing to obtain- whereas if the data is already out there, you may find that a lawsuit that won’t even really fix the damages may not be the best use of resources. You should also keep in mind the deterrent effect of suing though, as filing litigation after the release of trade secrets lets employees know you take disclosures seriously.
• Will more disclosure result if you decide to sue? If you file a claim to recover compensation for the release of confidential information, you are going to need to disclose the proprietary info that you believe was taken. This can result in your trade secrets becoming even more widely known and can lead to more disclosure of information you’d prefer to keep private.
• Will customers or clients be affected if you have to prove harm? If you claim you suffered losses because of the release of trade secrets and you point to lost business, you may have to disclose info about your customers. Clients may not want to get dragged into the lawsuit and you could end up alienating clients and losing more business.

The decision of whether to file a lawsuit or not thus must be made on a case-by-case basis and in light of all relevant considerations. A lawsuit should be the last resort in terms of protecting against the release of proprietary information, as it is a lot easier to avoid your company’s private data falling into the wrong hands in the first place than it is to stop the damage once there is a threat of secrets being released.

Brown & Charbonneau, LLP provides clients with comprehensive advice on how they can protect trade secrets or other intellectual property. We also advise clients on whether lawsuits can help them to achieve their goals, and help clients to present their cases if they decide to file suit. Whether you need assistance with the goal of negotiating an out-of-court settlement or need a litigator who can help you to make a compelling case, give us a call today at 866-237-8129 or contact us online to speak with an Irvine business litigation lawyer with the skills to provide the legal advocacy you need.