Protecting Your Trade Secrets from Thieves
Employees and former employees can steal trade secrets, such as secret recipes, secret business processes, custom business software, custom business forms, private business records, private computer files, or client lists. They can then use those trade secrets to help themselves or other businesses realize profits or other benefits. Employee raiding and corporate espionage involving the theft of trade secrets can give rise to viable trade secret misappropriation claims. Oftentimes, trade secret theft problems require fast action, such as requesting emergency injunction hearings to try to stop businesses or individuals from using or disclosing trade secrets before they do irreparable damage.
A trade secrets claim may be brought along with claims for breach of contract or breach of confidentiality when a former employee breached a non-compete or confidentiality provision in his employment contract. It may be brought with an unfair competition claim when the former employee used the stolen trade secrets to launch a new business that competes against his former employer or to help his former employer’s competitor. A trade secret claim may also be brought with tortious interference, conspiracy, aiding and abetting, or negligent hiring or supervision claims if a competitor encouraged the former employee to steal trade secrets or a competitor knowingly profited or benefitted from trade secrets that it knew were unlawfully or illegally obtained. Though it rarely occurs, a competitor can also use illegal means to obtain another business’s or an individual’s trade secrets. When competitors break the law and violate state or federal statutes prohibiting wiretapping, computer fraud, computer theft, hacking, or other forms of unauthorized computer system access, plaintiffs can bring conversion, negligence per se, statutory tort, or trespass to chattels claims with their trade secrets claims.
Our firm litigates trade secrets claims and related claims (e.g. breach of contract, breach of confidentiality, conversion, negligence, tortious interference, trespass to chattels, unfair competition) for Arizona and Colorado plaintiffs. We do not litigate patent or copyright infringement claims.
Arizona Trade Secret Claims
Arizona trade secret claims are governed by the Arizona Uniform Trade Secrets Act, A.R.S. §§ 44-401 through 44-407. These statutes allow individuals or businesses to seek injunctive relief if they can prove their trade secrets have been or will be unlawfully used. See A.R.S. § 44-402. In addition to actual losses resulting from the trade secret misappropriation, Arizona courts may disgorge the defendants of the profits they realized by using the trade secrets and order the defendants to pay those profits to the plaintiffs. See A.R.S. § 44-403(A). Alternatively, Arizona courts may order defendants to pay reasonable royalties. Id. In addition to those damages, Arizona courts may award reasonable attorneys’ fees to plaintiffs who win their trade secrets lawsuits. The statute of limitations for Arizona trade secretsclaims is three years. See A.R.S. § 44-406.
Arizona defines “trade secret” as information, including a formula, pattern, compilation, program, device, method, technique or process, that both: (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. (b) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. A.R.S. § 44-401(4).
Colorado Trade Secret Claims
Colorado trade secret claims are governed by the Colorado Uniform Trade Secrets Act, C.R.S. §§ 7-74-101 through 7-74-110. These statutes allow individuals or businesses to seek injunctive relief if they can prove their trade secrets have been or will be unlawfully used. See C.R.S. § 7-74-103. In addition to actual losses resulting from the trade secret misappropriation, Colorado courts may disgorge the defendants of the profits they realized by using the trade secrets and order the defendants to pay those profits to the plaintiffs. See C.R.S. § 7-74-104. Alternatively, Colorado courts may order defendants to pay reasonable royalties. Id. In addition to those damages, Colorado courts may award reasonable attorneys’ fees to plaintiffs who win their trade secrets lawsuits. The statute of limitations for Colorado trade secret claims is three years. See C.R.S. § 7-74-107.
Colorado defines “trade secret” as the whole or any portion or phase of any scientific or technical information, design, process, procedure, formula, improvement, confidential business or financial information, listing of names, addresses, or telephone numbers, or other information relating to any business or profession which is secret and of value. C.R.S. § 7-74-101(4). To be a “trade secret” the owner thereof must have taken measures to prevent the secret from becoming available to persons other than those selected by the owner to have access thereto for limited purposes. Id.
Contact us to schedule a paid telephone consultation or an office consultation with an attorney who litigates trade secrets cases.