Trade Secrets

Although non-compete agreements are unenforceable in California, an employer may prevent current and former employees from disclosing its trade secrets.

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What is a Trade Secret?

What exactly is a trade secret? Most people have heard about the CocaCola formula, the recipe for Mrs. Fields Chocolate Chip Cookies, the Twinkie recipe, and the ingredients for WD-40. These are all famous trade secrets that are easy to understand. But what most people don’t know is that a trade secret can include customer information, plans and designs for future products, financial information, source code for computer programs, technical data for servicing products, and supplier information.

California law defines a trade secret as: “information, including a formula, pattern, compilation, program, device, method, technique, or process, that: (1) 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 (2) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.”

As a general principle, the more difficult secret information is to obtain, and the more time, money, effort, and resources an employer uses to protect that information, the more likely a court will find such information a trade secret.

Legal protection for trade secrets, unlike the protection granted to patent and copyright holders, is not exclusive and potentially infinite in duration. Multiple people may be entitled to trade secret protection over the same information at the same time. A trade secret owner may enforce his rights against those who breach a confidential relationship and misappropriate trade secret information (such as an employee who takes the information for future use) or against those otherwise acquire his secret through improper means (such as a competing company who hires an ex-employee specifically to learn the trade secret), yet he has no rights against competitors who obtain his secret through independent research or discovery.  Trade secret protection can continue indefinitely. However, “[o]nce the secret is disclosed…all trade secrets rights are extinguished.”

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If you are an employee who left one company for another and are now being accused of stealing trade secrets, give us a call. We defend employees to retain their right to unrestrained employment.