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How does California law define trade secrets?

On Behalf of | Aug 2, 2023 | Intellectual Property |

If you’re a California business owner, you no doubt possess certain information regarding your company’s practices, products or services that you would never want your competitors to know. You might even have your employees or guests who tour your facilities sign agreements to never share private information to which they have had access for whatever reason. The law calls this type of information “trade secrets.”  

Theft of trade secrets is a common business problem, which often leads to litigation. Most trade secret thefts occur from within, meaning that employees, partners or others “on the inside” are the ones doing the stealing. The California Uniform Trade Secrets Act (UTSA) protects a business owner’s secret information from misappropriation. 

Trade secrets include tangible and intangible assets 

An idea is an intangible asset. A written list is a tangible asset. Trade secrets include anything that gives a business an edge over competitors because of the information kept private. Such assets often include things like client lists, designs, software, ingredients, patterns, systems and business plans.  

To prove that a former employee has stolen trade secrets, a business owner doesn’t have to show that theft of a physical item took place, although sometimes that is the case. On the contrary, the UTSA protects business owners from misappropriation of protected information. This means that, if a former employer uses protected information that he or she possesses in memory for financial gain after leaving the company, the former employer has grounds for trade secret litigation. 

Business owners have an obligation to protect their trade secrets 

It’s not enough to possess trade secrets as a California business owner for it to be possible to steal them. A business owner must execute all measures available to protect secret information. If a company accuses someone of trade secret theft, but that person can prove that the company did nothing to protect the information or that it was already available to the public, the court might rule in the defendant’s favor.  

There’s another aspect of business in which you might encounter legal problems regarding this issue. If you hire an employee who has stolen trade secrets (without you knowing) and uses them to benefit your company, you could wind up as a defendant in a lawsuit. Trade secrets belong to a complex area of law. To increase your chances of obtaining a positive outcome in court, it’s always best to seek guidance and support ahead of time from someone who has business litigation experience. 



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