Business, like life, can be nasty, brutish, and short unless you know the right steps to take when confronted with adversity. One thing a business needs to keep in mind is their intellectual property rights and the maintenance thereof. Trade secrets are a valuable stick in the bundle of intellectual property rights a business owner enjoys, but they are also a coveted asset that competitors will look to make their own. This blog provides a brief overview of “trade secrets” and explores some of the possible remedies a business may seek if a competitor has stolen them.
“’ Trade secret’ means information, including a formula, pattern, compilation, program, device, method, technique, or process, that:
(1) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and
(2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.”1
The Indiana Uniform Trade Secrets Act (“IUTSA”) controls trade secrets claims and defenses in Indiana and is largely similar to the Uniform Trade Secrets Act. Several preliminary questions act as gatekeepers to every trade secret claim: (1) can my business show that a competitor has misappropriated my trade secret? (2) has it been three years since I discovered or should have discovered that my competitor has misappropriated my trade secret? If misappropriation can be demonstrated and the three-year limitation has not elapsed, then a business could request the court grant relief.
One potential remedy is injunctive relief and it is the most important initial relief as this minimizes the damage to the business. The court can order injunctive relief on actual or threatened misappropriation. The court may order injunctive relief thereby compelling the defendant to stop violating the plaintiff’s trade secret rights and also allows for the preservation of the plaintiff’s secret information. An equally important function of injunctive relief is the prohibition on publishing the trade secret. Once a trade secret is made public, this can have drastic repercussions for a business that relies on the secrecy of that information, and having a court compel a defendant to stop publishing your trade secret can be vital to the business surviving such a misappropriation. If the court deems a prohibition unreasonable, they may order payment of a reasonable royalty to the business instead.2
A business may also ask the court to order an infringing competitor to pay damages. Usually, the amount awarded corresponds to the actual economic harm suffered as a result of the infringing act. However, if a misappropriation has resulted in the unjust enrichment of your competitor, then the court may also award damages in the amount of the unjust enrichment that was not taken into account in computing damages for actual loss. What if my competitor acted willfully and maliciously? In circumstances evidencing a willful and malicious infringement, the court may award additional damages up to twice the damages calculated as actual harm. What if I cannot prove the amount of actual economic harm or unjust enrichment? A business may still be able to recover a reasonable royalty.3 For example, your competitor steals your trade secret that involved years of research and development and the costs associated with that process. Can the court grant relief in the amount of R&D costs that the competitor avoided through misappropriation of your trade secret? The attorneys at Dixon & Moseley. P.C. can help navigate your business through these issues.
Preventing legal issues from arising is one of the keys to running a successful business, but pursuing legal remedies can keep a business alive. Obtaining skilled counsel is key to relieving some of the burden and stress that comes with running a business and maintaining the rights you worked hard to create. This blog was written by attorneys at Dixon & Moseley, P.C., who handle a wide variety of business-related issues throughout the state. It is written and posted for general educational purposes and is not to be construed as legal advice or solicitation for services. It is an advertisement.