November 19, 2014

California Trade Secrets Law

If you are a business owner in California, you know how important it is to preserve the confidentiality of your special business processes, recipes, formulas, schematics, procedures, and other proprietary material. However, it is important to be aware of exactly what constitutes a trade secret. Some of what you believe to be protected may not actually constitute a trade secret under California law. California?s trade secrets laws are governed by the California Uniform Trade Secrets Act (CUTSA), which is part of the California Civil Code. It has a three-year statute of limitations. We at Beverly Hills Law Corp., PC can guide you through the complexities of this body of law.

The CUTSA prohibits misappropriation of trade secrets and provides certain remedies. To understand the applicable statute, let?s clarify the definitions:

  • ?Improper? means includes theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means. Reverse engineering or independent derivation alone shall not be considered improper means.
  • ?Misappropriation? means:
    • Acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or
    • Disclosure or use of a trade secret of another without express or implied consent by a person who:
      • Used improper means to acquire knowledge of the trade secret; or
      • At the time of disclosure or use, knew or had reason to know that his or her knowledge of the trade secret was:
        • Derived from or through a person who had utilized improper means to acquire it;
        • Acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; or
        • Derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use; or
      • Before a material change of his or her position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake.
  • ?Person? means a natural person, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, government, governmental subdivision or agency, or any other legal or commercial entity.
  • ?Trade Secret? means information, including a formula, pattern, compilation, program, device, method, technique, or process, that:
    • Derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use; and
    • Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
  • The ?remedies? provided by CUTSA included attorney?s fees, injunctive relief, and damages.

As can you can see from the wording of the statute, there is some ambiguity, leaving room for interpretation. If you are unsure of whether something is a trade secret and whether you can pursue claims if someone misappropriates it, contact us at Beverly Hills Law Corp., PC for a free consultation. We can also advise as to how to properly protect your trade secrets so as to meet the CTUSA requirement that the trade secret not be generally known throughout your company.

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