What Happens If a Trade Secret Is Disclosed Inadvertently?

Trade secrets are the lifeblood of many businesses, safeguarding the confidential information that gives them a competitive edge. Trade secrets are protected under both state law and the federal Defend Trade Secrets Act (DTSA). But what happens when a trade secret is disclosed unintentionally? This scenario can leave businesses vulnerable and uncertain about their legal recourse. Read this article and reach out to a skilled New Orleans, Louisiana trade secrets lawyer from Lemler IP to learn about what to do if your trade secret has been disclosed inadvertently. Here are some of the questions you may have:

What Constitutes a Trade Secret Under the Law?

Before diving into what happens after disclosure, it’s important to understand what qualifies as a trade secret. A trade secret is any information that:

• Derives economic value from not being generally known or readily ascertainable by others who can gain value from its disclosure or use.
• Is subject to reasonable efforts to maintain its secrecy.

This could include anything from manufacturing processes and formulas to client lists and marketing strategies. The key factor is that the information must be actively protected. If a company fails to take reasonable measures to safeguard its trade secrets, courts may be less inclined to protect them, even after inadvertent disclosure.

How Do Courts View Inadvertent Disclosure?

When a trade secret is disclosed inadvertently—perhaps due to an employee’s mistake, a hacked email, or a misplaced document—the situation becomes complex. Courts will typically evaluate whether the owner of the trade secret took reasonable steps to prevent such a disclosure in the first place. The following factors often come into play:

• Preventive Measures: Did the company use confidentiality agreements, secure file storage, or employee training to protect its secrets?
• Prompt Action: How quickly did the company act to mitigate the effects of the disclosure? For example, did they seek an injunction to stop further dissemination of the information?

If the court determines that the company did everything reasonably possible to maintain secrecy, the information may still qualify as a trade secret, even after the inadvertent disclosure. However, if the disclosure was due to negligence, it could lose protection under trade secret laws.

What Steps Can You Take After Inadvertent Disclosure?

If a trade secret has been disclosed unintentionally, swift and strategic action is crucial to minimizing the damage and protecting your rights. Some of the steps you should take are as follows:

• Assess the Extent of the Disclosure: Identify what was disclosed, how it happened, and who has access to the information. This will help you gauge the potential impact and craft an effective response.
• Secure Legal Counsel: An intellectual property lawyer can guide you through the complex process of protecting your trade secret after disclosure. They can help you determine whether you can seek damages, an injunction, or other remedies under applicable laws.
• Notify Affected Parties: If necessary, communicate with those who received the information, reminding them of their legal obligations. For instance, if a confidentiality agreement was in place, you may demand compliance or pursue enforcement.
• Seek Legal Remedies: Depending on the circumstances, you might file a lawsuit under the DTSA or Louisiana’s Uniform Trade Secrets Act. Courts can issue injunctions to prevent further dissemination or award damages if the trade secret has been misused.
• Strengthen Protections: Use the incident as an opportunity to bolster your trade secret protection policies. This may include updating contracts, enhancing digital security, and providing additional training for employees.

Inadvertent trade secret disclosures can be stressful and potentially damaging, but they don’t have to spell disaster. If you need help addressing a trade secret issue or improving your protection strategies, please don’t hesitate to contact Lemler IP today.