Building a Successful Trade Secrets Misappropriation Case

Image this scenario: a trusted employee leaves to work for a competitor and shares a coveted trade secret with that competitor. The effects of such a disclosure can have devastating effects and result in lost business that can be hard to recover from. Understandably, an employer finding itself in this position may want to file a trade secret misappropriation lawsuit against the former employee and competitor to stop the use of its proprietary information and receive compensation for the harm it has suffered. The initial and ultimate success of such a case will depend on the strength of the case that the employer builds against the former employee and competitor.

One type of relief that the employer may pursue at the outset of the case is a temporary restraining order (TRO) or a preliminary injunction. Obtaining such relief can be expensive but the expense can often be reduced and chances for success increased by retaining an experienced emergency litigation attorney at the earliest possible point in the dispute.

Typically, obtaining a TRO or preliminary injunction requires the employer to present evidence that it will suffer irreparable harm if the former employee and competitor are able to use (or continue to use) the trade secret. Irreparable harm is defined by courts generally as harm that cannot be remedied with money damages. Beyond a showing of irreparable harm, the employer is also required to present sufficient evidence to show a likelihood of success on the merits of its claims against the former employee and competitor.

The initial question that must be asked and answered is: what makes this information a “trade secret”? Another way of formulating this question is: what information that is not generally known to the public (or the industry) does the employer use to derive economic benefit? Once the employer or its attorneys have formulated the answer to this question, the employer has a better picture of what evidence it will need to gather to prove its case.

Typical evidence an employer will need to collect to successfully build its case involves evidence that the information is in fact secret and not generally accessible from public sources, that the employer made reasonable attempts to protect the secrecy of the information, that the former employee took the information without authority, and that the former employee is actually making use of the trade secret or has disclosed it to third parties who are using the information.

One element of the case that employers often struggle with is establishing that they took reasonable steps to protect the information from disclosure. In theory, this should be the easiest element to prove as the evidence needed to prove it is entirely within the possession of the employer. Common evidence used to establish this element includes written policies and procedures concerning protecting the secrecy of the information and confidentiality and non-disclosure agreements signed by the former employee (or confidentiality and non-disclosure provisions in an employee handbook and a signed acknowledgement that the former employee received a copy of or access to the handbook). Best practice is to have the policies and procedures in written form that is provided to employees or management. Such policies and procedures include policies requiring password protection of digital files or storing physical files in a location whose access is restricted to only those who need access.

Proving that the former employee took the valuable information and is using it (or has disclosed it) is often the most difficult element to prove. Establishing that the former employee took the information can often be proven using forensic computer evidence that the former employee accessed the information prior to leaving or copied the information to an external source (e.g. a USB drive or emailing the information to a personal email account).

A well-prepared case backed up by solid evidence at the outset can boost the odds of successfully obtaining a TRO or preliminary injunctive relief, which, in turn, can precipitate an early resolution to the case. An ill-prepared case that lacks evidentiary support can have an opposite effect. If the former employee and competitor succeed in avoiding a TRO or preliminary injunction, they may feel emboldened and convinced that they have a right to use the information. It is always advisable to seek the assistance of experienced trade secrets and business litigation attorney.

Super Lawyers named Illinois commercial law trial attorney Peter Lubin a Super Lawyer and Illinois business dispute attorney Patrick Austermuehle a Rising Star in the Categories of Class Action, Business Litigation, and Consumer Rights Litigation. Lubin Austermuehle’s Illinois business trial lawyers have over thirty years of experience in litigating complex class action, copyright, noncompete agreement, trademark and libel suits, consumer rights and many different types of business and commercial litigation disputes. Our Lake Bluff and Elgin business dispute lawyers, civil litigation lawyers and copyright attorneys handle emergency business lawsuits involving copyrights, trademarks, injunctions, and TROS, covenant not to compete, franchise, distributor and dealer wrongful termination and trade secret lawsuits and many different kinds of business disputes involving shareholders, partnerships, closely-held businesses and employee breaches of fiduciary duty. We also assist Chicago and Oak Brook area businesses and business owners who are victims of fraud. You can contact us by calling 630-333-0333. You can also contact us online here.