Your trade secrets are the lifeblood of your company. If you lose them you could lose your business.
This is why I strongly advise you to make every effort to protect your trade secrets from theft or misappropriation. Trouble is, with today’s de facto work culture of Bring Your Own Device (BYOD), your employees have many ways to access and retain company trade secrets across smartphones, tablets, personal email and social media. It’s not easy to keep those trade secrets from getting in the wrong hands.
Fortunately, there are robust trade secret laws in the state of Pennsylvania and at the federal level to protect you. This article provides an overview of those protections and the steps you can take to reduce your risk from trade secret loss.
Overview of Trade Secrets
In Pennsylvania, the generally accepted notion of trade secrets includes information that is known only within a firm by its employees, contractors and vendors. It isn’t generally known, nor is it easily accessible within the public domain. Trade secrets must also have value – with immediate or with potential economic importance – which isn’t easily replicated by competitors.
Trade secrets can include processes and formulas; manufacturing techniques; research; meeting notes; hardware and software; engineering designs; engineering notebooks; and even notes from testing and experiments that did not work.
Internal business documents are trade secrets. They can include hiring plans, sales forecasts, financial information, client lists, competitive and market analysis. And don’t forget all email correspondence, text messages, audio and video of internal meetings.
But, there’s a catch. Just because you consider it a trade secret, doesn’t make it so. Until you and your management team makes a proactive effort to communicate your trade secret policies, a trade secret is not necessarily a trade secret. You’ve got to explicitly define what those secrets are and how employees, vendors and contractors are to protect that information. Naturally, a non-disclosure agreement is a good first step, but it’s hardly enough in this age of widely dispersed data and social media.
Pennsylvania Trade Secrets Law
Pennsylvania law protects trade secrets under a statute known as Pennsylvania Trade Secrets Act (PUTSA.) This statute is similar to the federal law, Uniform Trade Secrets Act (UTSA). Many states have adopted similar trade secret protections based on UTSA.
Under PUTSA, the term “misappropriation” is often applied to trade secret theft. It can imply outright theft, or it can also mean obtaining a trade secret through other means such as bribery. The important point to remember is this: so long as someone knows, or has reason to suspect, that the information was obtained without consent, the disclosure is usually deemed illegal.
There is a three year statute of limitations. Once you know that your firm has experienced a trade secret misappropriation, you have three years to begin legal action.
Penalties In Pennsylvania
Pennsylvania courts have several remedies involving trade secret misappropriation. One is an injunction to prevent disclosure. This is effective when a company learns of a trade secret breech and has reason to believe that a competitor or former employee could disclose it. The other remedies can be financial awards and punitive damages. This usually applies to cases associated with wrongful enrichment by a defendant based on a plaintiff’s loss of profits.
Federal laws protecting trade secrets have been strengthened. The Economic Espionage Act was passed in 1996, making it a federal crime to misappropriate trade secrets. Penalties can include prison terms up to 15 years with fines up to $5 million.
In 2016, the Defend Trade Secrets Act (DTSA) became law. It provides significant latitude to law enforcement, permitting them to seize stolen trade secrets without advance warning. DTSA is the first such change in trade secret litigation allowing private parties to bring legal action to a federal court. It also provides employees with immunity against criminal and civil liabilities for disclosures to federal officials or attorneys investigating or reporting a violation of the law.
Contact Me For Help
Trade secrets are complex and technical issues. I strongly urge you to make every effort to protect your company against misappropriation. Please contact me if you have questions. I look forward to serving you.