Imagine you are an entrepreneur that has just created an invention that will surely make you millions of dollars. You and your partners establish a business location and prepare to manufacture your product. Your product contains a trade secret that provides you with an independent economic advantage over your competitors. You hire employees and share the secret with them but require the employees to sign confidentiality agreements. One of these employees is perpetually late for work, so you end up firing them. Out for revenge, your disgruntled former employee publishes your trade secret on a blog and shares a hyperlink to the blog on a popular online forum. A competitor of your company stumbles upon the trade secret on the blog and uses it, not knowing the trade secret had been acquired through improper means. What do you do?

Could you sue your competitor for copying your trade secret? That lawsuit would likely fail because the competitor did not have knowledge of the improper disclosure of the trade secret. Do you file a lawsuit against your former employee for breach of contract for violating the confidentiality agreement? Maybe, but what if the employee is indigent? If so, you will not recover any damages. Furthermore, even if you were to recover damages from both your competitor and former disgruntled employee, how do you quantify the loss of value from your trade secret being exposed?

An important ingredient to receiving trade secret protection is a trade secret must not be generally known or readily ascertainable. As Professor Elizabeth Rowe observed in a recent law review article, “many courts assume that a trade secret posted on the Internet is generally known and consequently has lost its trade secret status.” In large part, this notion is based on the fact when trade secret law was established advanced technology was not prevalent. Prior to the Internet, a disgruntled employee could not disseminate a trade secret with a click of the mouse. Now, former employees can easily publish a trade secret through popular social media websites like Twitter, Facebook, and MySpace. In these tough economic times, courts need to recognize the importance of not rewarding disgruntled employees for their bad acts because their actions are not only immoral but also because these acts can have serious financial ramifications for businesses in America.

Further, the general assumption that once a trade secret is placed online then it is readily ascertainable and generally known is faulty. Do we know for sure that others know where to find the secret? Can courts force the removal of the trade secret from the online blog before it has become generally known? This may not be a workable solution however because postings on the Internet are easily replicated and potentially viewed quickly by thousands of people.

Moreover, could the Government establish a database that posts the names of employees that have been held liable for trade secret misappropriation? This would allow employers to access the database to obtain information about prospective employees’ involvement in prior litigation involving trade secrets. More importantly, employers would be put on notice of potential problematic prospective employees. Instead, Congress enacted the Uniform Trade Secrets Act, with seemingly no recognition of the dangers of technology to employers’ trade secrets.

Technology, in particular the Internet, has placed employers in peculiar situations forcing them to not share trade secrets with their employees for fear the employee will publish the trade secret. This concern not only damages harmony and morale within the workplace but also hinders businesses ability to grow because employees that could help enhance or implement the trade secret do not have the chance because they are unaware of the trade secret. Courts and Congress should address this growing concern as technology gets more advanced and thus information becomes more readily accessible.

– Joe Matera
J.D. Candidate, University of Florida Levin College of Law, 2012

Image Source

One Response to Trade Secret Owners Beware of the Internet!

  1. Kevin Audsley says:

    Excellent content,
    informative and relevant.