Many small businesses use Google, Microsoft 360, Dropbox or some other similar systems to maintain and manage company records. All of those systems allow the administrator to (1) set restrictions on which employees can access which information within the company; (2) track what the employees do with that information; (3) set restrictions on whether the employees can print, download, copy or share the information with other employees or people outside the company; (4) periodically change passwords to access the system; and (5) many other features that can help business owners prevent their information being shared outside the company.
Credit card data (including cardholder names, credit or debit card numbers, and corresponding CVVs) were akin to passwords and usernames that provided access to something of value,” i.e. an individual’s line of credit with a financial institution or money in an account with a financial institution, and were not “trade secrets” under the Defend Trade Secrets Act.
Trade secrets only have value as long as they stay secret, so once they come into a competitor’s hands or become publicly available, their value is often destroyed.
Few employees realize that when they take their employers’ trade secrets with them prior to leaving their job they may be exposing themselves to criminal liability under the Economic Espionage Act, which makes it a crime to steal trade secrets when (1) the information relates to a product in interstate or foreign commerce (which is virtually any product now days) or (2) the intended beneficiary is a foreign power.
A court order prohibiting defendant from using trade secrets must be broad enough to cover all possible circumstances while narrow enough to include only the illegal activities. Where that line lies depends on the circumstances of each particular case.
What a lot of companies do not realize, however, is that if they wait too long to ask for an injunction after finding out about the employee’s competitive activities, a court may deny their request simply because they waited too long
The business world is littered with the carcasses of companies which, after they shared their confidential information and trade secrets with a non-competitor, such as their client, supplier, or vendor, were undercut by that party, who all of a sudden realized that they could profit from the information by cutting out the middle-man.
The Fifth Circuit recently considered whether the federal copyright and patent laws preempt (trump) Texas common law claim of unfair competition by misappropriation.
A lot of times a company rushes to court asking the judge to stop a former employee or his new employer from using the company’s confidential information or soliciting its customers based on the agreements that the former employee had signed with the company.
A “list of actual or potential customers or suppliers” of a company qualifies as a trade secret as long as: (1) its owner, i.e. the company, took reasonable measures to keep it secret and (2) the list has an economic value because it is not generally known and cannot be easily determined by another person.
Before pleading a Texas Theft Liability Act claim against an employee for stealing the company’s data, information, documents, or other property, the company should make sure that there is at least some evidence of the employee’s intent to deprive the company of its property.
In my practice, I see this scenario all the time: an employee leaves to work for a competitor, the employer realizes that its non-disclosure (NDA) or non-compete agreement was inadequate to protect it from what just happened, so the company rolls out a new…