Trade secret disputes occur when one party uses another party’s sensitive business information without their consent. Examples of sensitive information include personal client lists, marketing plans, or chemical formulas that give them a competitive edge in their industry.
If you’re dealing with a trade secret dispute, you’ll want to know how to minimize your risks so your reputation and business aren’t harmed.
Read the rest of this article to explore the most common types of trade secret disputes, how to deal with them, and when to consult with a lawyer.
How are Trade Secrets Stolen?
Generally, trade secrets are exposed or stolen in one of three ways:
- Unauthorized access. This involves hacking or data breaches.
- Misuse of disclosure to third parties. An example includes sharing private information to other companies or contractors.
- Employee misuse. In some cases, trade secrets can be exposed by employees who have access to the information.
What are Red Flags of Your Trade Secrets Being Exposed?
You might not realize that your trade secrets have been exposed or misused right away. Here are some signs that might show up early on, which could signal a violation has occurred.
- You’ve noticed that clients or customers are using a competitor’s services instead of yours.
- You’ve seen evidence online that a competitor is copying your product specifications or formulas.
- Your company documents have been accessed for unauthorized use.
- An employee or business partner has accessed information that is outside of their work scope or role.
How Should You Deal with a Trade Secret Dispute?
When dealing with a trade secret dispute, it’s important to take action promptly.
Collect Evidence
Gather as much evidence as you can to show that trade secrets were leaked or stolen. This could include showing proof of similar products being released by a competitor or getting witness statements from employees about the misuse.
You should also collect any documentation that applies to the trade secret violation, such as contracts that contain clear and specific NDA clauses.
Send a Cease and Desist Letter
You can send the other party a letter informing them of the trade secret exposure and reminding them of their duty not to share it. You could also threaten litigation if they don’t stop their behavior.
In the letter, you can request that they return any outstanding items, such as company-issued USB devices.
Although you can hire a lawyer to draft a cease and desist letter, you can also purchase a cease and desist letter template from ContractsCounsel, an online legal network. It’s a legally-sound and clear document that’s been drafted by a vetted lawyer on the platform. You can purchase and download it within minutes.
Consider Mediation
You can hire a mediator to help you if you and the other party want to try to resolve the issue out of court. This works well for situations where you and the other party have a working relationship you want to maintain. A mediator will listen to and encourage amicable negotiations as you and the other party try to reach a settlement.
Choose Arbitration
If you need a more formal method for resolving the trade secret dispute, consider hiring an arbitrator who will listen to both parties’ evidence and then decide on a resolution or settlement. This can be useful if you and the other party aren’t able to negotiate amicably.
How Can You Prevent Trade Secret Disputes?
You can prevent many trade secret disputes by taking some important steps.
Define Confidential Information in Agreements
This will prevent disputes from arising between you and other parties. Your contracts and agreements should clearly specify what constitutes confidential information so that people know there are consequences should they expose them.
Give Employees Non-Disclosure Agreements (NDAs) to Sign
Employees and anyone who has access to your business’s trade secrets should sign an NDA that specifies what they should not disclose to other parties. This can be included as a clause in employment contracts.
Limit Disclosure
Where possible, try to limit how many people in your company have access to your trade secrets. You should only share the information on a need-to-know basis instead of making it easily accessible.
Improve Security Systems
It’s essential to have strong security measures in place, such as by using encrypted storage systems.
How Can a Lawyer Help You With a Trade Secret Dispute?
It helps to have an experienced, skilled lawyer on your side if you’re going through a trade secret dispute. Here are some ways in which they can support your case.
They’ll Gauge the Nature of the Dispute
A lawyer will investigate your case to find out if it involves a violation of a contract signed between you and the other party, or some other misconduct.
They will explore what duties parties had under the agreement and help you explore your options for how to resolve the dispute.
They’ll Initiate an Injunction
To prevent future trade secret use, a lawyer can request an injunction to prevent the other party from using the information.
They’ll Seek Compensation
Your lawyer can help you gain monetary damages if you’ve suffered financial losses due to the trade secret exposure by building a strong case in court.
They’ll Draft Legal Documents
Your lawyer will draft legal documents, such as cease and desist letters, to help you reach a settlement or negotiate with the other party. They can also review documents, such as NDAs or employment contracts, to ensure that your sensitive business information will be protected in the future.
They’ll Gather Important Evidence to Strengthen Your Case
It’s not always easy to know what constitutes effective evidence. A skilled lawyer will be able to build you a robust collection of evidence that increases the chance of getting a favorable dispute-resolution outcome, both in and out of court.
Do you need a lawyer for trade secret disputes?
On ContractsCounsel, it’s easy and advantageous to hire a lawyer for a trade secret dispute. They’ll help you by prioritizing your rights and guiding you through effective options to resolve the disagreement.
