A trade secret is a form of intellectual property that concerns the processes, methods, formulas, or other confidential information that has economic value to its owner (usually but not always a business). Many companies and individuals spend considerable money and time developing trade secrets that enable them to gain a competitive edge in the market. Others may steal or misuse this information, either to capitalize off of the trade secret or sell it to a competitor. When this occurs, the trade secret owner has the right to initiate litigation to demand monetary compensation and other judicial relief.
Trade secrets are protected in Illinois by both state and federal law. Whether you are the owner of a trade secret that has been misappropriated or you have been accused of the same, you will need seasoned legal counsel to advocate on your behalf. Count on The Keleher Appellate Law Group to work for you.
What Is A Trade Secret?
Under the Illinois Trade Secrets Act (ITSA), a trade secret is, first, a specific type of information which may include:
- Technical or nontechnical data
- Formulas
- Patterns
- Compilations
- Programs
- Devices
- Methods
- Techniques
- Drawings
- Processes
- Financial data
- Lists of actual or potential customers or suppliers
To qualify as a trade secret under ITSA, this information must meet both of the following criteria:
- It must be sufficiently secret to derive economic value, whether actual or potential, from the fact that it is not generally known to other persons who could obtain value from its disclosure or use
- It must be the subject of reasonable efforts to maintain its secrecy or confidentiality
In other words, a trade secret is a confidential information that confers economic value to its owner by virtue of being secret and is subject to efforts to keep it secret. In determining whether information meets this standard, a court will examine the following factors:
- How many employees and others involved in the business know the information
- How easy or difficult it is for others to properly acquire or duplicate the information
- The measures taken by the owner of the information to guard its secrecy
- Whether and to what extent the information is known outside of the business
- How much effort or money was spent to develop the information
- How valuable the information is to the business and its competitors
Proving A Claim Under ITSA
To litigate a trade secret claim pursuant to ITSA, the plaintiff must prove that the defendant misappropriated the plaintiff’s trade secret and used it in the defendant’s business. This raises the question of what constitutes “misappropriation” under the statute. The law defines this broadly to include:
- Acquisition of a trade secret by someone who knows or should reasonably have known that the information was obtained by improper means or
- Disclosure or use of a trade secret, without express or implied consent, by someone who:
A. Used improper (including illegal) means to acquire knowledge of the trade secret or
B. At the time of disclosure or use, knew or reasonably should have known that knowledge of the trade secret was:
I. Obtained from or through a person who used improper means to acquire it;
II. Acquired under such circumstances, for instance, the granting of a limited license that create a duty to maintain the information’s secrecy or restrict its use; or
III. Obtained from or through a person who had an obligation to maintain the secrecy of the information or limit its use or
C. Someone who knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake
Put simply, if a party either improperly takes or uses the information or takes or uses it knowing that it was acquired by someone else improperly (or that it was disclosed by mistake), that individual or company can be liable for misappropriation.
Businesses do have the right to license their trade secrets, but it is imperative that they do so in a way that expressly restricts how the information may be used. Carefully drafted licensing agreements that limit the use of trade secrets can accomplish this purpose. If either the licensee violates the agreement or someone else misappropriates the information from the licensee, that party can be held liable.
What Kinds of Damages Can the Plaintiff Seek?
Since trade secrets carry economic value, a plaintiff is generally going to seek compensation for the losses incurred by having the information stolen or misused. The plaintiff can demand the following damages and expenses:
Actual Damages
These damages can be calculated either on the basis of how much the defendant gained from misappropriating the trade secret or how much the plaintiff lost because of the misappropriation. Computing this amount does not have to be done to an exact mathematical certainty, but it must be reasonable.
Punitive Damages
ITSA also allows punitive damages in an amount that is double the actual damages. As the term indicates, these damages are designed to punish the defendant. A plaintiff must show, however, that the misappropriation was both malicious and willful.
Injunctive Relief
Courts recognize that once a trade secret gets out, it’s impossible for the person who acquired it to simply forget the information. But that doesn’t allow the defendant to keep using it or to further misuse it (for example, by selling it to someone else). Injunctive relief is essentially an order that the defendant stop using the misappropriated trade secret. Moreover, an injunction can require that the party who misappropriated it take steps to keep it secret.
Attorney’s Fees
The court can award the plaintiff’s attorney’s fees if there was willful and malicious misappropriation. However, the defendant can demand attorney’s fees if the plaintiff’s lawsuit was filed in bad faith. This is designed to discourage frivolous litigation.
Federal Civil and Criminal Laws Protecting Trade Secrets
There are a number of different federal laws, both civil and criminal, that protect trade secrets and punish misappropriation of them. Included are the Defend Trade Secrets Act, the Economic Espionage Act, and the Computer Fraud and Abuse Act. You may therefore have alternative means for seeking civil damages or criminal charges against the party that stole your trade secrets, and we can discuss these forms of relief with you.
Contact Our Illinois Trade Secret Litigation Attorney at The Keleher Appellate Law Group
On the defense side, we can help refute claims that you misappropriated a trade secret. We can also represent you during mediation, which may be used to settle the trade secret dispute outside of court.
To get started or to learn more about our trade secret litigation practice, connect with The Keleher Appellate Law Group today.
The Keleher Appellate Group, LLC, serves clients in Chicago, Denver, St. Louis, and the surrounding areas in Illinois, Indianapolis, Indiana, Missouri, Wisconsin, and Colorado. We also provide our services nationwide and internationally.