Frequently Asked Questions about Trade Secrets Allegations
Philadelphia trade secrets lawyer Steve Harvey has represented hundreds 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 questions about trade secrets following the 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 let you know right away once they know, particularly if the if the employer has contacted them through a lawyer and anything, 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 have you not, you know. 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 having, if you’re getting questions following that and you the employee 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 cause 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.
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 don’t want to 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: Yeah, the more serious the allegation, the more important this becomes.
Steve Harvey: Yes. Just remember the the, you know, 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 but sometimes if they can be made to look as if they’re not innocent. 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 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 a 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: So, 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 that and resolve 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.
Usually there are breaches of confidentiality agreements involved.
And trade secrets claims 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: Right. And 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.