Business Law for engineering Case study

Losing Trade Secret Protection

and

Misappropriation

Public disclosure of a trade secret destroys trade secret status under the law. This is the

case whether the disclosure is made through improper misappropriation or through legal

channels, such as reverse engineering and independent discovery. Either way, once the

secret is known, it can no longer be protected as a trade secret.

Thus, even in situations where proper means have been taken to sufficiently protect the

secret, trade secret protection can be lost if the information is disclosed to the public.

When information is made public through improper or wrongful actions, it is known as

misappropriation. In cases of misappropriation, the trade secret owner may have a cause of

action against the person(s) who illegally disclosed the secret. Let's look at the kind of

situations that would be considered actionable misappropriation.

Misappropriation will be found under the following circumstances;

1. When a person obtains trade secret information through improper means and knows

the information is in fact a trade secret.

2. When a person who obtains trade secret information by improper means, discloses or

uses the trade secret information without permission.

3. When a third party, who has reason to know that the trade secret information was

improperly obtained, discloses or uses the trade secret information without

permission.

Acquiring trade secret information through improper means can take many forms. In one

well known case, an individual flew airplanes over DuPont’s new construction site and took

aerial photographs and then sold the photos to a third party. This was held to be an

improper means of gaining trade secret information and DuPont was able to enforce their

trade secret, successfully suing for an injunction and the recovery of damages.

When an individual discloses or uses trade secret information in breach of an agreement,

like a non-disclosure agreement, this too would constitute misappropriation.