For business owners in California and beyond, a company’s success or failure often hinges on how well confidential information about products or services is protected. If a former employee or someone else in the industry acquires such information and shares it with a competitor, it can have devastating results. This is why many company owners require employees or prospective buyers to sign nondisclosure agreements. The business industry refers to a protected piece of information as a “trade secret.”
If a breach of contract occurs or a trade secret is shared without authorization, a business owner or employer may have grounds for litigation. Before pursuing such options, however, it is important to know more about intellectual property laws. In fact, it is particularly helpful to gain an understanding about what type of information constitutes a trade secret in California.
In 1979, the U.S. government enacted the Uniform Trade Secrets Act (UTSA). California is one of many states that has adopted the UTSA as law at the state level. Under the state civil code, a trade secret is defined as:
- Information that carries independent actual or potential economic value by not being made available to the public or anyone who could benefit financially from acquiring the information.
- Information that a business owner or employer would have a reasonable cause to keep private.
“Information” includes any patterns, formulas, methods, devices, programs, ingredients, methods, techniques or processes that give the owner of the information an edge over competitors.
What to do if someone steals trade secrets
An example of trade secret theft would be a worker who quits a job and then shares proprietary information (information not available to the government or public) to an individual or group for profit or gain. If a California business owner can demonstrate that information was protected under trade secret laws, and efforts were made to retain its privacy, and that misappropriation occurred, grounds exist to file a civil lawsuit. An intellectual property attorney is a great asset to have on hand in such cases.