Most businesses in today’s competitive climate rely on the talents of its employees. Employees are often undervalued as a company’s asset – that is, until they leave to join a competitor or start their own business, at which time their value is more realistically assessed. There is no doubt former employees retain information in their brains related to their former employer’s business. But is this information a trade secret?
To answer this question and other related questions, it can be beneficial to have a South Carolina trade secrets attorney, who has actually tried a trade secrets case in court, discuss the matter to you. The litigation team at the Horton Law Firm fits the bill. We represent employees, entrepreneurs and small businesses who need a business lawyer’s experience.
WHAT IS A TRADE SECRET?
The South Carolina Trade Secrets Act provides that a “trade secret means:
(a) information including, but not limited to, a formula, pattern, compilation, program, device, method, technique, product, system, or process, design, prototype, procedure, or code that:
(i) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by the public or any other person who can obtain economic value from its disclosure or use, and
(ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
(b) A trade secret may consist of a simple fact, item, or procedure, or a series or sequence of items or procedures which, although individually could be perceived as relatively minor or simple, collectively can make a substantial difference in the efficiency of a process or the production of a product, or may be the basis of a marketing or commercial strategy. The collective effect of the items and procedures must be considered in any analysis of whether a trade secret exists and not the general knowledge of each individual item or procedure.
If this information is shared or used without authorization (a “misappropriation”) an aggrieved company can bring a claim seeking injunctive relief to prevent additional use or disclosure, threatened use or disclosure of its trade secrets. If a company successfully sues under this law, it can recover damages caused by the disclosure and use, including the possibility of liquidated (or doubled) damages and attorneys’ fees.
Moreover, there is now a federal law on this point. On May 11, 2016, President Obama signed The Defend Trade Secrets Act of 2016 (DTSA). The DTSA became immediately effective and applied to all claims arising after May 11, 2016. This law, like the myriad state trade secrets law currently in place, creates a federal cause of action for any unlawful use or disclosure of a “trade secret.” The DTSA does not preempt existing state laws, which will allow businesses the option of whether to file state or federal claims. Importantly, the DTSA prohibits injunctive relief based upon the inevitable disclosure doctrine, which has been adopted by at least on federal court under South Carolina’s Trade Secret Act.
TRADE SECRETS AND NON-COMPETE AGREEMENTS
Many companies will incorporate non-disclosure and non-compete agreements into their contracts with employees to protect their documents as well as other “Confidential Information.” Properly written non-compete agreements is one way for businesses to protect this type of company information. However, if a company tries to enforce an overly broad non-compete agreement or if it considers what is common industry knowledge as a trade secret, the employee may be able to beat the non-compete agreement.
GREENVILLE TRADE SECRET ATTORNEYS
Greenville litigator Jeremy R. Summerlin has defended claims involving trade secrets and non-compete agreements. Call 864-233-4351 for an initial consultation and review of your matter.