California’s Trade Secrets Law protects intellectual property

| Nov 23, 2020 | intellectual property & trade secrets

Businesses struggle every day to remain competitive in their industry. With rapid advancements in technology and a constant pressure to innovate, a company’s trade secrets are vital to maintaining an edge. Protecting these trade secrets is typically crucial to your business’s survival.

California helps businesses protect this information with the Universal Trade Secrets Act (UTSA).

PROTECTED INFORMATION

Lawmakers designed the UTSA with companies in mind. The law recognizes the importance of patented designs, logistical strategy and even inventory management. Data does not have to reach a certain value threshold before receiving protections under the law. Specifically, the UTSA covers information if a company takes a reasonable measure to protect it and if the information’s value is dependent upon its secrecy.

The law does not limit “trade secrets” to those stolen via electronic heist or cracking the boss’ safe. In fact, more than 80% of information theft happens internally. A company’s employees are the primary perpetrators of data theft, or as the UTSA calls it, “misappropriation.” Intellectual property law is in a constant state of adaptation, so the UTSA has taken some hardline measures to define infractions. The legal definition of “misappropriation” covers two forms of violation:

  1. Acquisition by improper means: The law further defines “improper means” as theft, bribery, misrepresentation, breach or inducement of a breach of duty to maintain secrecy, or espionage through electronic or other means.
  2. The use or disclosure of trade secrets: The UTSA prohibits the use or disclosure of trade secrets, whether an employee uses information gathered from one job to another or informs a competitor, client, business partner or anyone else.

CLARIFYING AMENDMENTS OF THE UTSA

The UTSA does not just protect information physically stolen. The law also extends to the memories of former employees. If an employer can prove than an employee used or disclosed the contents of their memory regarding a trade secret, that employee may be subject to punitive measures under the UTSA.

The law does stop short of prosecuting former employees for using “general business know-how” and skills learned in a previous job. However, legislators did reject an “inevitable disclosure doctrine” that would have introduced time limits to how long an employee must protect the trade secrets in their memory.

CONSIDER A LEGAL REVIEW

Companies must take care when protecting their information. A key tenet of the UTSA is that companies must take reasonable measures to keep secret information secret. Business owners with questions about their security can contact a local lawyer familiar with intellectual property law.