Whether a business is a sole proprietorship operating out of one’s home or a Fortune 100 company, those businesses will have trade secrets and other proprietary information upon which that business depends. Recognizing the great value that intellectual property gives a business, Virginia, along with the majority of states, has adopted the Uniform Trade Secrets Act prohibiting the theft, or misappropriation, of trade secrets. Companies that enact proper safeguards under the Act can take proactive steps to safeguard their trade secrets from improper use by former employees, former contractors, former teaming partners, and competitors. Contact us today to schedule a free consultation with our Virginia civil litigation lawyers.
Virginia law defines trade secrets to include a wide variety of information, many forms of which are compiled and used by businesses of every size. For instance, protectable trade secrets often consist of customer lists, sensitive marketing information, unpatented inventions, software, formulas and recipes, patterns, processes, techniques, and other business information that provides a company with a business edge.
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For something to be considered a trade secret, it must have more than just commercial substance. To be a trade secret, the information must derive 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. In addition, information will qualify as a protectable trade secret if it is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
That means, to be considered a protectable trade secret, the information must have value and the owner of the trade secret must take reasonable efforts to safeguard its secrecy. Secrecy is an objective test, but it focuses as much on the efforts to maintain secrecy as on complete success in achieving the desired results. Stated simply, intent to maintain secrecy is not enough: information is not a trade secret unless it is maintained as a secret.
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Under Virginia law, “misappropriation” refers to the acquisition of trade secrets by someone who either knows or has reason to know that the trade secret in question was obtained by improper means, which include theft, bribery, misrepresentation, breach or inducement of breach to maintain secrecy. Misappropriation is not limited to the person who wrongfully took the information in question; it also includes the disclosure or use of a trade secret without consent by someone who should have known it should not be disclosed.
In other words, Virginia prohibits the use of trade secrets by a company that “has reason to know” that the material constitutes a trade secret. That means it is not necessary that the company actually knew it possessed stolen trade secrets if the evidence shows the company should have known. These types of violations most commonly occur when a company hires an employee who possesses and discloses trade secrets from their former employer.
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Virginia Trade Secrets Act claims are not limited to marketplace competitors alone. Instead, to prove liability, a party must show only that (1) trade secrets were acquired by another, (2) the acquiring party knew or had reason to know that the trade secrets were acquired by improper means, and (3) the owner of the trade secrets suffered compensable damages or is otherwise entitled to relief. Collelo v. Graphic Services, Inc., 263 Va. 56 (2012).
Virginia courts may prevent a trade secret thief from disclosure or prevent further disclosure by granting an injunction or other equitable relief. Additionally, a victim of trade secret theft can seek financial compensation that measures the actual loss attributed to the theft or the profits acquired by the trade secret thief. In certain situations, Virginia courts can also award punitive damages and attorneys’ fees.
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To determine how to proceed if your company or business has experienced a theft of trade secrets, the Virginia Trade Secrets attorneys at MartinWren, P.C. can help. We have experience handling these highly sensitive issues and can help you minimize harm and evaluate remedies available to you or your business. Contact MartinWren, P.C. at 434-817-3100 and ask for Robert E. Byrne, Jr. or John B. Simpson.
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