MISSAPROPRIATION ON TRADE SECRETS

​BUSINESS AND COMMERCIAL LAW

MISAPPROPRIATION OF TRADE SECRETS

Atlanta Attorney – Misappropriation of Trade Secrets

A company’s trade secrets are often its most valuable assets. A trade secret is defined as any valuable business information that is not generally known and is subject to reasonable efforts to preserve confidentiality. Specifically, trade secrets consist of information or material, including a formula, pattern, compilation, program device, method, technique, or process, that: (1) derives independent economic value from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and (2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

Almost every business has at least some trade secrets. In many cases, a company’s trade secrets are its very lifeblood, and their unauthorized use by third parties could cause irreparable harm. Depending on the circumstances, a list of customers or suppliers which is not commonly known by the public may qualify for trade secret protection.

Trade secret misappropriation can be thought of as a type of unfair competition. The owner of a trade secret may be injured by unauthorized disclosure of a trade secret as well as by unauthorized use. Any conduct by the actor that enables another to learn the trade secret is “disclosure” of the secret. In general, trade secrets will be protected from improper or unlawful use or disclosure by those who obtain access to them through improper means or by those who breach a promise to keep the information confidential. Trade secrets are entitled to protection so long as competitors fail to duplicate them by legitimate, independent research or processes.

Under the Georgia Trade Secrets Act, O.C.G.A. § 10-1-760 et seq., a claim for misappropriation of trade secrets requires a party to prove that (1) it had a trade secret and (2) the opposing party misappropriated the trade secret. A party misappropriates a trade secret when, among other things, it discloses or uses a trade secret of another, without express or implied consent, knowing that at the time of disclosure or use the trade secret was acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use. O.C.G.A. § 10-1-761(2)(B).

“Misappropriation ” means: (i) acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or (ii) disclosure or use of a trade secret of another without express or implied consent by a person who (A) used improper means to acquire knowledge of the trade secret; or (B) at the time of disclosure or use knew or had reason to know that his knowledge of the trade secret was (I) derived from or through a person who has utilized improper means to acquire it; (II) acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; or (III) derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use; or (C) before a material change of his position, knew or had reason to know that it was a trade secret ad that knowledge of it had been acquired by accident or mistake.

There are no technical limitations on the nature of the conduct that constitutes “use” of a trade secret. As a general matter, any exploitation of the trade secret that is likely to result in injury to the trade secret owner or enrichment to the defendant is a “use.” Thus, marketing goods that embody the trade secret, employing the trade secret in manufacturing or production, and relying on the trade secret to assist or accelerate research or development all constitute “use.” The unauthorized use need not extend to every aspect or feature of the trade secret; use of any substantial portion of the secret is sufficient to subject the actor to liability. Similarly, the actor need not use the trade secret in its original form. Thus, an actor is liable for using the trade secret with independently created improvements or modifications if the result is substantially derived from the trade secret.

An implied term of an employment contract is that an employee will not divulge a trade secret learned by virtue of his employment to a competitor of his former employer. When one has acquired knowledge of a trade secret by reason of a confidential business relationship with the holder of the trade secret, he can be enjoined from improperly using or disclosing it. Although such right exists irrespective of any copyright or patent, it does not exist with respect to matters that are generally known in the trade.

Notably, an employee’s skill, aptitude, and other subjective knowledge obtained in the course of employment are not the property of the employer. A former employee has a right to use such knowledge and information in his profession or trade, except to the extent limited by a valid restrictive covenant. In other words, a former employee has a right to take with him all the skill he acquired, all the knowledge he obtained, and all the information he received, so long as nothing is taken that is lawfully the property of the employer. The courts have held that an individual is free to use any information he can remember from his former employment, including trade secrets, in the absence of a valid and enforceable restrictive covenant.

Atlanta Lawyer Group represents businesses and entrepreneurs who have been or would be damaged by the unauthorized use and disclosure of their trade secrets. Whether your situation involves tens of thousands or millions of dollars, if your company has or will suffer damages, we can help address and resolve the situation. Call (404) 607-7100 to speak directly with Managing Principal Brian Pastorier, an experienced and dedicated business litigation attorney, or contact Atlanta Lawyer Group by e-mail.