How Do I Enforce My Trade Secrets, and What Monetary Damages Can I Get?

If you own a trade secret, you can obtain a court order to prevent someone from engaging in misappropriation (unauthorized use or publication) of your trade secret.  Moreover, you can recover money damages for losses caused by the misappropriation.

You can enforce trade secrets in either federal or state court.  In both cases, you will have to establish ownership of the trade secret, and show that someone misappropriated it. 

To establish ownership, you must show that you possessed and controlled the information, and took precautions to keep it secret. 

To establish misappropriation, you must show that someone acquired the information using improper means, and used the information to his or her own benefit, or disclosed the secret to a third party or published the information. 

The typical remedy for trade secret misappropriation is an injunction.  The court will order the wrongdoer to cease use, disclosure, or publication of the secret information.  To obtain an injunction, you must show that the information was a protectable trade secret, that the defendant acquired it improperly, and that you will suffer irreparable harm without an injunction. 

Money damages may also be available for misappropriation.  The availability of damages differs depending on whether you are in federal or state court. 

Under federal law, if someone has caused you financial or business harm by misappropriating your trade secret, you may be entitled to damages in the amount of the actual monetary loss caused by the misappropriation.  Damages may also be awarded for any unjust enrichment caused by the misappropriation.  If the misappropriation was willful or malicious, exemplary damages up to twice the amount of other damages may be available.

What damages are available under state varies from state to state.  Under the Uniform Trade Secrets Act adopted by many states, you can recover damages for the actual loss caused by misappropriation.  That can be based on lost profits, loss of goodwill, the misappropriator’s profits, or any combination of these measures.  Punitive damages of up to twice the amount of actual loss may be available if the trade secret was willfully and maliciously appropriated.

The decision of whether to seek enforcement of your trade secret rights in federal or state court depends on a number of factors.  Experienced counsel can advise you about what court is the right fit for your situation.

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