THEFT AND MISAPPROPRIATION OF TRADE SECRETS AND INTELLECTUAL PROPERTY
A key area of concern to our clients is the theft or misappropriation of their trade secrets and intellectual property. This is a fundamental problem for startups and even established companies which can lead to business failure. The treachery involved can be heartbreaking as the theft is often committed by the employees or even partners you trust the most. As the saying goes – “No Good Deed Goes Unpunished”. I’ve seen this happen repeatedly over 36 years in the law business.
WHAT ARE TRADE SECRETS?
This in the proprietary information which is the lifeblood of your company. Typical items are your business method, sales and training materials, financials, identity of your clients, identity of your vendors, software, and anything unique to your business which is not publicly available.
What is the difference between you Intellectual Property (IP) and trade secret?
Very little! Your IP is also a trade secret but more specific in nature as often includes rights secured under federal law including copyrights, patents, trademarks, and other forms of legal protection.
WHAT IS MISAPPROPRIATION?
Theft, plain and simple. It is the outright theft of anything that is not nailed down and also fixtures! Here are some typical examples:
- Ex-employee opens up a business targeting your clients.
- Ex-employee is hired by competitor and takes your clients and sales training materials with him/her.
- Ex-employee recruits your current employees for a new business.
- Third party steals your website content for its own business.
- Third party reverse engineers your software and sells it on Amazon or another online platform.
- Third party uses your online photographs for its own business.
- Third party steals your company name or some derivation of same to promote its own operations.
- Third party launches a product or service which violates your existing patent.
WHAT ARE YOUR REMEDIES WHEN THEFT OR MISAPPROPRIATION OCCUR?
You have substantial and effective remedies under Texas and Federal Law. A major and relatively new weapon is known as the Texas Uniform Trade Secrets Act or TUTSA which provides statutory protections to the owners of trade secrets and intellectual property (IP) including injunctive relief which is available if only a threatened misappropriation is involved. You heard that right! To get an injunction, you don’t have to prove the elements that damage has already occurred, only that a possible injunction may occur! And that is just the beginning of remedies available under TUTSA.
` You can also file for immediate relief to get a Temporary Restraining Order or TRO to stop the bad conduct immediately in Texas state courts. TRO’s are relatively easy to get under Texas law and are followed by hearings on the Preliminary Injunction which are more complex.
There are a variety of legal claims also available which will provide for substantial damages under Texas state law for trade secrets and intellectual property (IP) theft and misappropriation including actions for conversion, fraud, misappropriation, and deceptive trade practices.
Federal laws allow for an array of claims under the trademark act (Lanham Act) and Copyright laws of the United States. Injunctive relief and the full range of damages are available.
WHAT SHOULD I DO?
Hire an experienced lawyer and do it right away if you suspect that theft or misappropriation of trade secrets or intellectual property has occurred. If you don’t act quickly, it will get worse and fast. That is our experience.
What can I do to safeguard against future theft or misappropriation of trade secrets and IP?
That’s where you need to focus once the immediate problem is addressed. The best place to start is making sure you have enforceable noncompetition clauses in employee contracts which are enforceable if written correctly. Unfortunately, most of the contracts we deal with include provisions which violate existing law.
You also need to make sure that any IP is protected under state and federal law which starts with proper trademarks and copyrights which cover your brand, company name, photographs, website content, and other items.
Give us a call for a complementary consultation. We are here to help.