In part 1 of this post, we talked about the importance of trade secrets as a type of intellectual property that can be a key component of a successful Kentucky business of any type or size, in any industry. There are many steps a business can take to keep trade secrets just that – secret – but if circumstances evolve that indicate a trade secret may be in the hands of a current or future competitor, legal action may be a wise decision.
Kentucky commercial enterprises may file suits under the Kentucky Uniform Trade Secrets Act (KUTSA) or the Defend Trade Secrets Act (DTSA), a newer federal law. In part 1, we explained that it can be important to seek a preliminary injunction or temporary restraining order (TRO) in which the court will order the defendant company to take actions that will protect the secrets pending resolution of the lawsuit.
Remedies in a trade secret misappropriation suit may include a permanent injunction ordering the defendant to take certain final actions like giving back or destroying all records that contain misappropriated trade secret information or returning physical evidence of the secrets. The court may also order nondisclosure of the information or other appropriate action.
The court may also award court costs, legal fees and money damages.
Considerations in calculating robust damages for trade secret misappropriation
To prevent undervaluation of the financial damage from trade secret misappropriation in a settlement or at trial, it is likely important to consult with valuation experts like economic impact analysts or other financial professionals experienced in unique asset valuation, including those able to accurately project lost future earnings from the secret theft and other losses.
Projections may be tricky if the trade secret has not yet been used as a component of a product in the marketplace, but the owner had planned to do so. With no sales history, an experienced expert in the particular market is better suited to make such projections.
A recent article in Lawyer Monthly by a financial economist provides interesting insights into the unique damages a trade secret owner can incur from misappropriation. The author describes what he looks at in evaluating financial damage from trade secret theft as well as the kinds of damages he finds in such cases such as money lost in developing a trade secret that has lost value through misappropriation; future lost profits, sales or licensing fees; loss of profits from the market impact of competing products developed from stolen secrets; or disgorgement of profits earned by the defendant from use of the secret at issue.
Takeaway
Take early and ongoing action to protect trade secrets. Should misappropriation occur, a lawyer can provide advice about and representation in potential legal proceedings
