If your company is a technology-enabled business, your most valuable assets may include trade secrets. Economists estimate that trade secrets comprise two-thirds of the value of business information portfolios.  Software, algorithms, secret formulae, data sets, processes and other potential trade secrets are essential to driving investment, innovation, and economic growth. A wrongful acquisition, misuse or disclosure of trade secrets can cause significant damage in lost profits and litigation costs, leading to the paralysis of an otherwise successful business.
Not all confidential information has equal protection before the law. Trade secret designation may allow a business to file a civil action in federal district court, seek an injunction to preserve evidence and prevent trade secret disclosure, recuperate damages for misappropriation, seek increased damages for willful and malicious misappropriation, and recover attorney’s fees. However, the path to successful trade secret litigation is littered with pitfalls where unaware parties may forfeit right to assert trade secret protection, recover attorney fees, or recover increased damages.
Unlike other types of intellectual property, such as patents, trade secret protection does not begin by filing an application with a government authority. Information only becomes a trade secret if the information meets specific criteria about availability, treatment, and commercial value. Trade secrets derive their long-term value from their continuing secrecy. As a result, businesses must diligently enact a program to protect trade secrets and continuously act to prevent trade secrets from being disclosed to third parties without appropriate restrictions.
Often, companies are unsure what steps are necessary to maintain the secrecy of trade secrets. Rapid changes in technology, like the proliferation of digital storage devices, means policies that may have been best practices for trade secret protection years ago are no longer reasonable. Increased employee mobility, where employees often transition to competitors, creates a difficult environment when determining if former employees or competitors are misappropriating trade secrets.