Philadelphia Trade Secrets Lawyers

Trade Secrets Law in Pennsylvania

When an employee takes, uses, or discloses an employer’s trade secrets to benefit themselves or anyone other than the employer, the employer may have a legal claim against the employee for trade secret misappropriation. This can be a very serious claim, as there is a cause of action for it under the law of most states, and the remedies can be onerous. Since 2016, there has also been a federal statute, the Defend Trade Secrets Act (“DTSA”), which provides a federal cause of action for trade secret misappropriation. Prior to the DTSA, plaintiffs seeking to enforce trade secrets rights relied exclusively on state law. Most states have adopted the Uniform Trade Secrets Act (“UTSA”).

The UTSA defines a “trade secret” as:

Information, including a formula, pattern, compilation, program, device, method, technique, or process that:

(a) Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and

(b) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

A trade secret does not necessarily have to consist of highly technical and sensitive information, such as the secret to Coca Cola, as virtually any type of information could possibly qualify as a trade secret if it meets the very broad UTSA (or other applicable state or DTSA) definition. At Steve Harvey Law we have litigated trade secret cases involving computer programs, customer and supplier lists, business plans, financial information, cost data, budgets, internal marketing data, and products in research and/or development.

The following judicial observations (from a Pennsylvania court) can be applied universally under the DTSA and the UTSA:

• “The crucial indicia for determining whether certain information constitutes a trade secret are ‘substantial secrecy and competitive value to the owner.’”
• The question of whether information is a trade secret is determined on a case-by-case basis.
• A trade secret can involve “a compilation of information which is used in one’s business” that gives one “an opportunity to obtain an advantage over competitors.”
• “A trade secret does not include an employee’s aptitude, skill, dexterity, manual and mental ability, or other subjective knowledge.”

With limited exceptions, the rights granted under the DTSA are the same as under the UTSA. The basis for liability is the same. Both statutes authorize injunctive relief.

The damages under the DTSA and UTSA are the same. The plaintiff can recover their actual loss or the amount that the defendant was unjustly enriched. These damages concepts are well established in the case law. If the plaintiff cannot prove actual loss or unjust enrichment, it can seek to recover a reasonable royalty, although there is scant case law defining what this means and how it would be established in any case.

Both the UTSA and the DTSA permits the recovery of enhanced double damages and attorneys’ fees for willful misappropriation of trade secrets, which can greatly increase the financial exposure of someone accused of wrongfully appropriating a trade secret.

One difference between the DTSA and the UTSA is that the DTSA provides immunity to whistleblowers who disclose trade secrets to law enforcement officials, or to an attorney, for the sole purpose of reporting or investigating a suspected violation of law. The DTSA further provides immunity to parties who disclose a trade secret in a lawsuit, if the disclosure is made in a filing made under seal. The DTSA also requires employers to provide notice of this immunity in a contract or agreement with an employee that governs the use of trade secrets. Employers who fail to provide such notice are barred from recovering enhanced damages and attorneys’ fees.

Why a trade secrets misappropriation claim can be and often is much more threatening than a claim for breach of a non-compete agreement:

1. A trade secret claim can be brought in federal court.
2. Damages for trade secret claim misappropriation can include exemplary damages, i.e., twice the compensatory damages, if the violation was willful.
3. Also if the violation was willful, the defendant can be liable for the attorney’s fees of the plaintiff.

 

Contact Steve Harvey Law to Schedule A Free Consultation About Your Case

Trade secret claims are a serious affair. If you are either bringing or defending a claim of trade secret misappropriation, you should seek counsel that can best represent you in a high stakes lawsuit. At Steve Harvey Law we represent both plaintiffs and defendants in trade secrets litigation, in wide range of industries, from pharmaceutical companies to real estate to construction. Call us at (215) 907-7313 to meet with an attorney and get a free consultation about your case.

Frequently Asked Questions about Trade Secrets Allegations

Philadelphia trade secrets lawyer Steve Harvey has represented hundreds of clients in trade secrets matters. Both of individuals accused of theft of trade secrets, and companies seeking recovery for damages due to the theft of company secrets.

Q: Say that there’s an employee. They received a letter from their previous employer about a trade secret misappropriation claim. What are their next steps?

Steve Harvey: OK, an employee who receives a letter from their prior employer claiming that they have breached duties, including, for example, taking trade secrets, should proceed very carefully. They should get legal help. They should speak in confidence to a lawyer and the first thing the lawyer’s going to want to do is understand the facts of the case. So, they’d be really smart to talk in confidence to a lawyer and make sure they understand their rights and make sure the lawyer understands the facts. And then the lawyer can give them the best possible advice to help.

If there was a problem, oftentimes you can still fix the problem. Maybe they took something unintentionally and they didn’t do anything with it. And we can get the problem fixed and resolved so that nobody gets in trouble and there’s no harm. And if it’s more than that, well, then they need to start thinking about how they’re going to defend the case.

These matters can be very serious because there’s a federal statute that provides serious penalties for taking trade secrets, and so anybody who is facing a question about trade secrets following leaving their employment should really be talking to a good lawyer.

Q:  Should they prepare anything before speaking with a lawyer? A timeline of events or pieces of evidence or anything?

Steve Harvey: They should have their facts together. They should be prepared to review the facts with the lawyer, but I wouldn’t waste time preparing anything. I would contact the lawyer and let them know right away, particularly if the employer has contacted them through a lawyer or anything beyond a routine. I mean, it is very common upon leaving to be asked to return all your data and return your laptop and what not. And so, you don’t need a lawyer for the run-of-the-mill routine exit interview, where you just turning in your materials.

But if you’re getting questions following that and you have any questions at all, you’d be really smart to get in touch with a lawyer to make sure that you understand what’s going on and that no one can claim that you did anything wrong, because your reputation and your career are just too important to you.

Q: Do you recommend clients also speak with the legal department of their current employer?

Steve Harvey: I do not recommend that employees first contact the legal department of their former employer. That’s speaking with a lawyer and no client should be speaking with a lawyer for your prior employer, or for anybody who might be averse to you legally without having spoken to your own attorney, I don’t think that’s a good idea.

[In terms of your current employer’s legal department] You should first of all, if you’re employed by anyone and they want you to speak with their attorneys. You don’t have to do it, but you’re not going to have a good relationship with your employer if you don’t cooperate with their attorneys. Now, if you have any reason to think that there’s zeroing in on you, that they may think you’ve done something wrong. Even mistakenly think you’ve done something wrong. Or maybe you did do something, but it was innocent, and you didn’t mean to do anything wrong. Then you should touch base with your own personal attorney before you speak with the attorneys for either your own employer or your prior employer.

Because what you don’t want to do is you say something that’s wrong because it could be portrayed as you lying. The first thing attorneys going to try to do is get the facts straight. So, make sure that you’re providing accurate information. Because oftentimes you may not have done anything wrong, but if you if you don’t provide inaccurate information, you’re going to create a a bad impression and you could end up in trouble with your own employer. For that, you could end up losing your job. So as I said, routine inquiries are not a problem, but for anything beyond routine inquiries you’d be well advised to speak with an attorney representing you.

Q: The more serious the allegation, the more important this becomes?

Steve Harvey: Yes. Just remember that the highways are littered with people who didn’t think it was a serious allegation. You may think “I was innocent”. Your current employer doesn’t see it that way. I don’t want to make anybody paranoid. But your career is very important to you, and you just want to make sure that you’re protecting yourself at all times

Q:  If I ever received a letter about a trade secret misappropriation, I would speak with a lawyer. What are maybe typical legal defenses that I should be aware of, or how do you would approach the defense of my case?

Steve Harvey: The first thing I do when somebody comes to me, and they’ve got a a letter suggesting that they misappropriated trade secrets is I’m going to want to know everything about what it is that the other side is claiming that the employee did. And then I’m going to want to know all the details of what the parties did and which information they took and what they did with it.

And oftentimes things are perhaps innocent, and they can be resolved. In other words, let’s say somebody downloaded a list of customers that can be really problematic, and then it’s a question of minimizing the harm and and oftentimes it’s it’s cooperating and one of the best things you can do with the help of a lawyer is to say “I made a mistake. I want to make good on it and to do this sooner.” If you can do that the better off you can be right now.

It’s also possible that what they talk to you about is not actually even a trade secret or that they don’t have any rights with respect to that trade secret because they made it a matter of public record. However, it’s very hard for a lay person to understand those issues and deal with those on their own, which is, of course, is why they they’re best-off speaking to an experienced attorney

Q: Following that, you know, say there’s a case, you know, if I’m found guilty in terms of a trade secret allegation, what happens, what are kind of the typical penalties that come with that

Steve Harvey: But you know the the question was if you are found guilty of taking a trade secret. Well, guilty is a criminal law context

Q: Found civilly liable?

Steve Harvey: Well, actually, trade secrets can have a criminal aspect to them. There are cases where the where the Department of Justice, and particularly in relation to foreign net foreign governments infiltrating companies to get trade secrets, this has become a very hot area of the law. There was a news report in the New York Times just the other day about the extent to which the Chinese government uses intelligence. How the Chinese intelligence agencies steal trade secrets from American companies. So, it’s a real thing. And the people who cooperate with the Chinese governments and turnover information usually or sometimes, you know, they begin innocently and then they get, they get drawn into it. That can be a very serious criminal matter.

Trade secrets can give rise to criminal liability even at the state level too. But many times, it’s a civil matter. It’s often not going to turn into a criminal matter. It’s going to be your former employer, or your current employer is going to be looking to to hold someone civilly. Well, except they’re looking to hold you civilly liable. They’re probably not your current employer anymore. They’re looking to hold you liable for it instead and punish you and send you fines and penalties and civil penalties for taking trade secrets. So it can be a criminal matter can also be a civil liability matter.

Q: And then the penalty would be, you know, repaying the damages of what you’re liable for.

Steve Harvey: The the penalties in the civil context can be compensatory damages for the harm that was caused. Any profit that was made on that trade secret on the use of that trade secrets can be discouraged, and there’s also the possibility of having to pay multiples of that and under the Federal Trade Secrets Act, which has a provision for a multiplier in addition, and perhaps most importantly, attorneys fees.

If you’re under the Federal Trade Secrets Act, if you are found liable for misappropriating a trade secret, you can pay the attorney’s fees. You can be forced to pay the attorney’s fees for the other side. That can become a very large number $50,000, $100,000 or or maybe even more.

Which is another reason why you’d be wise to figure things out early on and get it under control. Because if you’re going to have to be in a position where you’re acknowledging liability, you’re trying to stop it or put the genie back in the bottle, so to speak. The sooner you do it, the less the penalties are going to be.

Q: When when it comes to these trade secret cases on average, if there is one, you know how how long do these will this case take? How long will I have to be involved with this?

Steve Harvey: Well, the answer to how long someone would be involved in a trade secrets claim that’s brought against them is, like many things, is the answer is it depends. The goal would typically be to try to resolve it early without a lot of expense, and then if so, hopefully that could be done in a matter of days, if not weeks.

If it can’t be done in days or weeks and and somebody’s bringing a suit against you, you’re going to defend that could be a lawsuit in federal court, which could last many months, couple years even, maybe longer.

Uh, typical litigation in federal court takes about a year and a half to two years to get it to conclusion, sometimes faster, sometimes slower.

So if it’s not a matter that can be resolved easily, which is, and this is of course why matters resolved easily, you know quickly because people don’t want to spend all that time and money in court. But if it can’t be resolved. You could be looking at some litigation.

Q: Obviously the first option is preferable. And yeah, it seems that’s where having a lawyer on my side to advocate for me to find a quick solution would be the better one.

Steve Harvey: I have litigated. Many of these matters. And I would say I couldn’t even give you a number. There’s a lot. But whatever that number is, I’ve negotiated 100 times more than what I have litigated and resolved them without litigation. So avoiding litigation is always the better way to go for both sides. Usually in most cases it can be resolved without litigation and that’s often preferable.

I’ve certainly resolved hundreds of them now to be clear.

Trade secrets claims often also allege breaches of confidentiality agreements, alleged trade secrets, and then oftentimes that’s with some kind of non-compete clause. It’s all wrapped in there. So usually, those 3 come together.

Sometimes there’s no noncompete. It’s only trade secrets. Or breaching confidentiality agreements. And many people who work in this area are predicting that non competes are going to become illegal within the next year because of new rules in the Federal Trade Commission. That means that in the future, we won’t be seeing those noncompete claims. That’s just a prediction of what the Federal Trade Commission is going to do, but it seems like a fairly reasonable assumption.

Q: Are there any other questions that are often asked by clients to you that you you you find yourself talking about a lot?

Steve Harvey: I oftentimes have people asking me about the cost of a claim and they want to know how long and how we expensive it’s going to be. And that’s always difficult because I don’t know how long it’s going to be. It depends. But what I have found is is that if we’re bringing a claim and there’s not going to be any counterclaims, we can oftentimes start with a letter. And start to engage the other side.

That can take a lot less than actually full-blown litigation. And then after we’ve sent done the homework of preparing a letter, reviewing the facts, reviewing the law, communicating with the other side and trying to resolve the matter at that point the client can make a decision about whether they want to go further with the litigation. They know a lot more. It’s only a fraction of the entire cost to get to that point and that’s oftentimes the smart way to go.

Q: Any other questions that you want to go over?

Steve Harvey: Yeah, I’ll just say this one other thing I I tell clients who are interested in bringing litigation is that litigation is complicated, it’s treacherous, expensive and the best money that anyone can spend in litigation is the money they spend up front because what you want to do is you want to figure out based on the facts and the law how strong your claim is or your defense is and what the other side is going to be able to poke holes in.

And once you understand that you can make therefore a very good judgment about whether to settle on either side. If you’re the plaintiff or defendant, how much to pay, and in the end, that’s just going to benefit you a lot. So the work that’s done up front is the most important work in the process.

Contact Steve Harvey Law to Schedule A Free Consultation About Your Case

Trade secret claims are a serious affair. If you are either bringing or defending a claim of trade secret misappropriation, you should seek counsel that can best represent you in a high stakes lawsuit. At Steve Harvey Law we represent both plaintiffs and defendants in trade secrets litigation, in wide range of industries, from pharmaceutical companies to real estate to construction. Call us at (215) 907-7313 to meet with an attorney and get a free consultation about your case.