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How businesses can handle trade secret thefts

While it is an uncommon occurrence, there are some instances in which a California employee will leave their employer's company and go to work for a competitor after stealing their original employer's trade secrets. A difficulty arises when the employer knows that the employee did so but is having difficulty proving it.

A big issue can arise if the employer files a trade secret suit when they do not know the specific trade secret that was stolen. In a case out of Utah, an employer who did just that was found to have filed its lawsuit in bad faith and was initially ordered to pay its former employee's legal bills. Although the order to pay legal fees was overturned on other grounds by the Utah Supreme Court, the case still demonstrates that filing a trade secret lawsuit under such circumstances may not be the best approach.

There are other options, however. The employer might be able to file a civil lawsuit on a different ground, such as for taking proprietary or confidential information as a breach of the employee's fiduciary duty. Criminal prosecution may also be an option, if the employer can get a federal prosecutor interested enough in the case. It is also possible to try to resolve the dispute before filing a lawsuit through mediation.

Proprietary trade secrets are invaluable to a company, and when information is stolen for use by a competitor, it can be devastating to the company that owns it. A business that believes an employee stole trade secrets may want to speak with an intellectual property attorney about what its best options are for seeking recourse.

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Costello Law Corporation
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