Trade secrets are difficult to protect as they cannot be registered or pre-protected. Misuse is punished, but proving theft is challenging. Penalties vary and can include monetary damages, returning profits, compensating the owner, and even jail time.
Trade secrets can be one of the more tricky intellectual property rights to protect and enforce. Unlike trademarks, copyrights and patents, trade secrets generally cannot be registered or pre-protected. Most laws establish definitions of what types of information constitute trade secrets, but usually there is no such thing as a “registered trade secret.” In practice, this often means that the misuse of trade secrets can be more difficult to prosecute, although misuse is punished almost everywhere. Penalties for trade secret theft vary by jurisdiction, but typically range from monetary damages and clearing profits to handing over information and sometimes even jail time.
The crime of trade secret theft, also often called trade secret embezzlement, occurs when someone knowingly accesses and uses another’s protected information. Local statutes define what “protected information” qualifies as trade secrets, but common examples include business plans, sales models, marketing strategies, and sometimes even client lists. Any proprietary information that helps a person or company do business, or any data that is crucial to the running of an operation, often falls under the definition of a trade secret.
Proving the theft of trade secrets is often the hardest part of recovering damages. Owning information that qualifies as a trade secret is a start, but by itself it is not enough to initiate a trade secret theft lawsuit. To punish an alleged trade secret thief, a court must be satisfied not only that information worthy of a trade secret exists, but also that it was intentionally taken by another for malicious purposes.
Judges usually look to trade secret statutes to make this assessment. In the United States, trade secrets law is codified at the state level. Almost all states have codified versions of a model trade secrets law known as the “Uniform Trade Secrets Act,” or UTSA. UTSA prohibits a standard definition of a trade secret and offers a variety of recommended penalties for trade secret theft. Neither the UK nor Canada has any official legal protection against theft of trade secrets, although each of these countries has an active body of precedent that judges apply when considering trade secret cases.
Most of the time, the penalties for theft of trade secrets involve money. Those held accountable for trade secret theft are often required to return any money they earned using the trade secret. They also usually have to compensate the trade secret owner for lost profits and damaged reputation caused by the misappropriation. Sometimes, courts order trade secret thieves to pay additional money as a penalty for the crime. These types of awards are known as punitive damages.
However, not all punishments are monetary. If the alleged trade secret theft was committed by an employee against a present or past employer, he could be fired. Likewise, if that employee had signed a confidentiality or non-competition agreement, he could be punished for breach of contract and unfair competition. If the theft of trade secrets has resulted in fraud, either in the theft itself or in the subsequent use of the stolen information, in most places jail time is also usually a possibility.
Protect your devices with Threat Protection by NordVPN
