Tuesday, August 30, 2011
How Do You Create a Trade Secret?
Dear Rich: How are trade secrets made official? Do you have someone sign a NDA? Here's how you create a trade secret: (1) you think something up that will give your business an advantage (2) you keep it to yourself and hide it from others, and (3) if you need to tell someone you make sure that person is bound not to disclose it under the terms of an enforceable agreement (or under a law--for example, most states bar employees from disclosing an employer's trade secrets). There are a few other common sense requirements but that's basically it. The real test of your trade secret program occurs if someone steals your secrets or violates an NDA. For more info, check out this website we created about trade secrets.
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The general rule is you own it the moment you think it up, or put pen to paper. Trace your communications. With e-mails it's easy, and I don't know what happened. However, look back at the communications. If you mentioned the secret first, then they use it, then you win.
ReplyDeleteHere's an example. I have a computer idea, I want started. I need money, and a computer company. I can divulge to the computer companies my secrets, free of worry as I'm seeking a service from them, to help me build it. Therefore, clearly I said/wrote it first, the idea is mine. So there's a record. Good solid evidence.
Secondly, I'd start right hooking them with fraud in the enducement claims. As but for their position as a computer company, themselves holding themselves as having capabilities and resources I do not possess, and divulged my secret in hopes of precuring a paid for service. Well, I have a pretty strong case.
Point blank, if they weren't a computer company, offering to sell a service, I wouldn't be sharing ideas with them now, would I? There's two counts. We're only at common law.
Then check the statutes, As for venue, that's easy. If you purposely availed yourself to the protections, goods, services, right to do business, or other wise made use of the laws of California for your own benefits. Long arm grab. CA will have personal jurisdiction over you. Active web sites count, but not passive. Moreover, if you sign a non-adhesive "X State Laws shall control the contract," then freedom to contract prevails. They just can't hide it on page number 6, in small letters. However, if you're aware you can be bound.
Either party can file in their home state, then make a special appearance to quash. But if you lose, you're in their Court. Also it depends where the damage took place. If it's over $75,000 in damages it's going to a Federal Court any way, and they'll determine which law to use. It may be a Federal Court in CA, administering Missiori laws.
It all turns on percedural verses substitantive law, and which State has a greater interest in enforcing it's perticular laws.
This is not legal advice. This is an opinion on a legal matter, and this advice should in no way be used or substituted for the advice of a Licensed Legal Attorney.
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