What if a computer or flash drive contains a trade secret that has been acquired by improper means, and the trade secret is at risk of further unauthorized disclosure or use?  Under the federal Defend Trade Secrets Act of 2016, a trade secret owner may petition a federal court to seize such property without providing advance notice of the seizure.  However, in addition to other requirements, a federal court will not order such a seizure unless:

1. “an immediate and irreparable injury will occur if such seizure is not ordered”‘
2. the harm to the trade secret owner in denying a property seizure outweighs the harm to the person currently in possession of the property if a seizure is ordered;
3. the harm to the trade secret owner in denying a property seizure substantially outweighs the harm to any other third party who may be affected by the seizure;
4. the person in possession of the trade secret (and associated property) likely either misappropriated the trade secret by improper means or conspired to use improper means to misappropriate the trade secret;
5. the trade secret owner must be able to describe the property to be seized and its current location; and
6. the court concludes that the person in possession of the property will “destroy, move, hide, or otherwise make such matter inaccessible to the court” if the person is notified of the court action.

If a federal court orders such a seizure, the court will also require the trade secret owner to post bond to provide payment to the party subject to seizure if the seizure is subsequently determined to have been wrongful or excessive.  In addition, any property seized will initially be held by the court and not by the trade secret owner.

Under emergency conditions with a lot at stake, this may be a valuable new tool for certain trade secret owners under the right circumstances.

[Legal advice not only involves an understanding of the law, but the application of the law to a particular set of circumstances or facts.  Typically blog posts are imperfect tools to address the subtlety and exceptions of the law that may apply in particular situations.  As a result, the information in this blog post does not represent legal advice.  If you are in a situation where you need or desire legal advice, we would be happy to help.  Check out our Contact Us page, and feel free to set-up a no-charge initial consultation.]

Wisconsin and federal law protect the owner of a trade secret from “misappropriation.”

First, what is misappropriation?  To misappropriate something is generally to take something dishonestly for your own use.

Second, and more importantly, if Wisconsin and federal law protect the owner of a trade secret from misappropriation, what does misappropriation of a trade secret mean under Wisconsin and federal law?

Under both Wisconsin and federal law, misappropriation of a trade secret includes acquiring the trade secret of another person when one knows or has reason to know that the trade secret was acquired by improper means.  Under federal law reverse engineering and independent derivation are not improper means to acquire a trade secret, but the following are improper means to acquire a trade secret: “theft, bribery, misrepresentation, breach or inducement of a breach of duty to maintain secrecy, or espionage through electronic or other means.”

Under both Wisconsin and federal law, misappropriation of a trade secret also includes disclosure or use of a trade secret  of another without express or implied consent by a person who:

1. Derived it from or through a person who utilized improper means to acquire it.
2. Acquired it under circumstances giving rise to a duty to maintain its secrecy or limit its use.
3. Derived it from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use.
4. Acquired it by accident or mistake.  In order to be misappropriation of a trade secret under federal law for a trade secret acquired by accident or mistake, the person must have known or had reason to know that the trade secret was a trade secret.

In laymen’s terms, Wisconsin and federal trade secret law will protect the owner of a trade secret from the dishonest acquisition of the trade secret by another person.  The owner of a trade secret may be more likely to have protectable rights if individuals with access to the trade secret:

1. Have a duty to maintain its secrecy or limit its use.
2. Know or have reason to know that the trade secret is, in fact, a trade secret.

What steps has your company implemented to protect its trade secrets?  What steps has your company implemented to ensure that it may not be liable for misappropriation of a competitor’s trade secrets from new employees or independent contractors?

[Legal advice not only involves an understanding of the law, but the application of the law to a particular set of circumstances or facts.  Typically blog posts are imperfect tools to address the subtlety and exceptions of the law that may apply in particular situations.  As a result, the information in this blog post does not represent legal advice.  If you are in a situation where you need or desire legal advice, we would be happy to help.  Check out our Contact Us page, and feel free to set-up a no-charge initial consultation.]

What is a trade secret under Wisconsin and federal law?

Under both Wisconsin and federal law, a “trade secret” generally involves three things:

1. certain types of information which may be protected as a “trade secret”;
2. the information derives independent economic value (either actual or potential) from not being generally known to, and not being readily discovered by proper means by, others who could obtain economic value from its disclosure or use; and
3. the information is subject to reasonable efforts to keep it secret.

Under Wisconsin law a “formula, pattern, compilation, program, device, method, technique or process” are types of information which may be protected as a “trade secret” if points 2 and 3 above also apply.

If points 2 and 3 above also apply, the following types of information may be protected as a “trade secret” under federal law: “all forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing.”

Congratulations, you may have a trade secret if you have protectable information under either Wisconsin or federal law to which points 2 and 3 above also apply.  But what reasonable business processes are you developing and what reasonable legal steps are you taking to protect  the secrecy of your trade secret?

[Legal advice not only involves an understanding of the law, but the application of the law to a particular set of circumstances or facts. Typically blog posts are imperfect tools to address the subtlety and exceptions of the law that may apply in particular situations. As a result, the information in this blog post does not represent legal advice. If you are in a situation where you need or desire legal advice, we would be happy to help. Check out our Contact Us page, and feel free to set-up a no-charge initial consultation.]