Definition

Trade Secret Disputes

Trade secret disputes arise most frequently when an employee leaves a firm to join a competitor and is accused of taking confidential information along. For example, a marketing executive for one firm may take a job with a competitor and create a marketing plan for the new employer that is nearly identical to the plan being worked on at the previous job. The original employer could argue that the marketing plan on which the departed employee was working was a company trade secret and that the employee essentially stole the plan and took it to the new job. The key factor in winning a trade secret dispute is that some type of theft or misappropriation must have taken place. Trade secrets can be lawfully discovered. For example, it’s not illegal for one company to buy another company’s products and take them apart to see how they are assembled. In fact, this is relatively common practice, which is another reason companies continuously attempt to innovate as a means of trying to stay at least one step ahead of competitors.

A company damaged by trade secret theft can initiate a civil action for damages in court. The action should be taken as soon after the discovery of the theft as possible. In denying the allegation, the defendant will typically argue that the information in question was independently developed (meaning no theft took place), was obtained by proper means (such as with the permission of the owner), is common knowledge (meaning it is not subject to trade secret protection), or was innocently received (such as through a casual conversation at a business meeting). Memorization is not a defense. As a result, an employee of one firm can’t say that “all I took from my old job to my new one was what’s in my head” and claim that just because the information conveyed wasn’t in written form, it’s not subject to trade secret protection. If the courts rule in favor of the firm that feels its trade secret has been stolen, the firm can stop the offender from using the trade secret and obtain substantial financial damages.

Share it:  Cite

More from this Section

  • Market penetration strategy
    Market penetration strategy refers to a strategy designed to increase the sales of a product ...
  • Balance sheet
    Balance sheet is a snapshot of a company’s assets, liabilities, and owners’ equity ...
  • Execution Intelligence
    Execution intelligence refers to the ability to fashion a solid idea into a viable business ...
  • Barrier to Entry
    A barrier to entry is a condition that creates a disincentive way for a new firm to enter ...
  • Concept Test
    Concept Test is a representation of the product or service to prospective users to gauge ...