Intellectual property is the most important asset that many companies possess – especially in California with its world-leading tech industry. Trade secrets are particularly vulnerable because they lack the comprehensive legal protections that are intrinsic to more established forms of intellectual property protection. If you suspect a former employee if misappropriating your company’s trade secrets, you are going to have to act quickly and decisively.

How Trade Secrets Work

Trade secrets are designed primarily to protect intellectual property that cannot be protected under patent, trademark, or copyright law, or information that a company would like to avoid ever disclosing – such as the formula for Coca-Cola, which has been kept secret for far longer than the period of validity of a patent. It can protect customer lists, corporate minutes, and even business plans.

To qualify as a trade secret, the information must be:

  • Economically valuable, at least in part, because it is kept secret; and

  • The subject of reasonable company efforts to keep it a secret.

What You Should Not Do: Rely on a Restrictive Covenant or Non-Compete Agreement

California courts typically take a dim view of restrictive covenants and non-compete agreements that restrict a former employee’s future employment options by preventing him from working for competitors even after the termination of the employment relationship. This is a reflection of a strong California policy of encouraging employee mobility. California is unique; no state is it more difficult to enforce a restrictive covenant than it is here.

Your Legal Weapons

If you suspect a former employee of misappropriating your trade secrets, the primary weapons in your legal arsenal include (but are not limited to) the Federal Defend Trade Secrets Act and the California Uniform Trade Secrets Act. You may be entitled to an emergency injunction, a permanent injunction, civil damages, and even double or triple damages for malicious misappropriation of trade secrets. In extreme cases even criminal sanctions might be available.

Third-Party Liability

Of course, an award of money damages against a rogue former employee might be of little use to your company if the employee lacks the financial resources to pay a judgment. Nevertheless, there is a realistic possibility that you could win damages against a competitor company that knew or should have known of the proprietary nature of the information that your former employee shared with it.

Gathering Evidence

Gathering persuasive evidence is the most important part of your company’s response to suspected misappropriation of trade secrets by a former employee. It is critical that you gather sufficient admissible evidence before you make any allegations since you could render your company vulnerable to a malicious prosecution lawsuit if your accusations appear to be frivolous or baseless.

Two of the most time-tested ways of gathering evidence are:

  • Hiring an outside examiner to investigate your suspicions and gather evidence. There are experienced professionals available for this purpose.

  • Once you have enough evidence to maintain a credible lawsuit, submit a formal complaint to court and use discovery procedures to compel the disclosure of further evidence.

Now Is No Time to Hesitate

If you suspect that your former employee is misappropriating your company’s trade secrets, every day that you delay responding could cause additional damage. Call CKB Vienna immediately or contact us online to schedule a consultation. We serve clients in Rancho Cucamonga, San Bernardino County, Los Angeles County, Orange County, and Riverside County.