Suing Third Parties for Using Your Stolen Trade Secrets

If your business has valuable trade secrets, you probably take measures to protect them. Maybe you have employees or contractors, or anybody exposed to or privy to your trade secrets, sign agreements promising they won’t disseminate, misuse, share, or misappropriate those trade secrets.

Stolen Secrets, Multiple Parties

But when those trade secrets are stolen, and used against you or your company, you may have a problem.

You do have an agreement with the former employee, who took and is using your trade secrets (the stealing party). And you can pursue those contractual remedies against the stealing party.

But a stealing party doesn’t always act alone—the stealing party may have shared your trade secrets with a new employer, be it partners in a business venture, a new boss, or another company that has hired or is using your former, stealing employee. And unlike the employee who stole your trade secrets, you don’t have any contract with any of these people.

Suing Those You are Not in Contractual Privity With

So the question becomes whether or not you can take legal action against a party that uses or benefits from your confidential trade secrets, but which is not the party that actually stole the trade secrets from you (we’ll call them the “benefitting party”).

As a general rule, to be liable for the theft of trade secrets when someone else steals them, the benefitting party needs to know that the information being provided by the stealing employee, was actually stolen, or at least, that the trade secrets didn’t belong to the stealing employee, or that the stealing employee has no right to use or possess the trade secrets. That means proving knowledge.

Some courts have said that this means actual knowledge—not just assuming the benefitting party knew, or imputing knowledge to them, or saying that they “should have known” that the trade secrets supplied by the stealing employee were actually stolen.

Independent Discovery Defense

The benefitting party can always defend a claim of misappropriated trade secrets, by claiming that it derived information independently of the (stolen) trade secrets—that is, by showing that whatever benefit the party received, was not realized by the use of your stolen trade secrets, but rather, by a process or procedure that was independent of any information derived from stolen trade secrets.

Starting a New Business

Note that this is where the stealing employee leaves, takes trade secrets, and works for someone else, or gives them to someone else. It does not apply to situations where the stealing employee takes trade secrets, and uses them to start a new, competing business.

Of course, when the stealing employee goes into business with partners or other managers, the co-owners of the new company also must have actual knowledge that the new company is using stolen trade secrets.

Trade secret cases can have multiple parties benefiting from your hard work. Get the compensation you deserve for unfair competition and theft of trade secrets. Call the West Palm Beach commercial litigation lawyers at Pike & Lustig today.

Source:

casetext.com/case/droeger-v-welsh-sporting-goods-corp