Have you ever wondered what Coca-Cola actually puts into its soda? Or what about the "special sauce" that your local sandwich shop uses on its signature menu item? These are examples of "trade secrets," or pieces of knowledge that are not generally known and that have value because their discovery is not wide-spread. Trade secrets make many businesses hum and without them, few people would care to dream up original or new ideas.
This was an important year for trade secret legislation. Back on May 11, the Defend Trade Secrets Act (DTSA) of 2016 was signed into law. The bill, which allows for federal jurisdiction in matters regarding trade secret theft, was passed unanimously in the Senate and ratified by the house 410-2.
In business, a trade secret is any confidential information that gives your company a competitive advantage within your industry. They are any piece of information that a) is not generally known or reasonably ascertainable by other, and that b) a business takes reasonable measures to protect for economic reasons. A famous example is the recipe for Coca-Cola. That recipe has always been a well-kept secret that has allowed Coca-Cola to earn millions and millions of dollars.
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.
California intellectual property owners may be interested to learn that most courts agree that federal copyright laws supersede many state law claims. In a 2015 decision, the U.S. Court of Appeals for the 5th Circuit held that a software marketing company that sought damages on the grounds that another firm stole its trade secrets and violated the Texas Theft Liability Act was not entitled to exemption from federal court jurisdiction.
One thing that California businesses may have trouble doing is protecting trade secrets. This was the case for DuPont, a chemical company headquartered in Delaware, which filed a trade secrets lawsuit against Kolon Industries Inc. and Kolon Corporation, two industrial companies in South Korea that are collectively represented as Kolon. On April 30, Kolon pleaded guilty to conspiring to misappropriate and convert trade secrets regarding DuPont's Kevlar technology.
California residents might be interested to learn about the outcome of a patent infringement case involving Ford Motor Company. On March 27, Ford announced that a U.S. jury had ruled in its favor after the company was sued for allegedly violating four patents. Further, the Tacoma, Washington, jury found that the plaintiff had stolen Ford's trade secrets.
Business owners and entrepreneurs in California might be interested in learning about the different ways to protect trade secrets from infringement. Trade secrets may be described as information, methods or formulas that provide an enterprise with a competitive advantage. Protecting the rights to this intellectual property is the one of the primary components to a company's ability to sustain success. Breaches in these rights typically occur inadvertently, according to experts, as opposed to retaliation from an employee or competitor.
If you are aspiring to create a start-up business, chances are that you believe that your pillars of success are based on innovative products and services, a unique business proposition and offerings that no one else has thought of before. Indeed, these are elements that can help propel a business from being just an idea to being a successful enterprise, but there are a few myths that small business owners may believe (at the outset) that could hamper their overall success.
For many businesses, trade secrets are what make their products or services unique; and thus make the company valuable. However, the question of what constitutes a trade secret, as well as what can be done to protect them, can be subject to debate. With that, we offer this post to give a brief definition of what a trade secret is, and to highlight some basic steps in protecting such secrets.