How to Protect Your Company’s Valuable Trade Secrets – Part 2

Hot to Protect Trade Secrets

Trade secret law protects the owner in two ways.  First, it enforces confidential relationships, and second it prevents disclosure of trade secrets by those who have obtained them by improper means.  Confidential relationships take many forms, and include: employer-employee, purchaser-supplier, and prospective licensees and licensors.  A confidential relationship arises any time the disclosure of a trade secret is made to promote a specific relationship. 

For example, in the case of the foundation subcontractor mentioned in Part 1, the court concluded that a confidential relationship existed between the general contractor and subcontractor because the foundation design was disclosed so the general contractor could assess the viability of the design, and determine whether it would save money.  Also, when the foundation design was disclosed, the subcontractor specifically instructed the general contractor not to share the design with third parties, and labeled the design as “CONFIDENTIAL”.   

Parties can also protect trade secrets through the use of confidentiality agreements, employment agreements, and non-compete agreements.  While a signed agreement is not necessary, it is certainly easier to prevail in a misappropriation suit when the parties’ duties are in writing.

 Enforcement and Damage Actions

Nevada’s Uniform Trade Secrets Act (UTSA), Nevada Revised Statute (NRS) 600A.035, prohibits the theft or misappropriation of trade secrets.  Misappropriation means acquiring a trade secret through improper means, or disclosing a trade secret without the owner’s permission.  NRS 600A.035 prohibits, among other things, stealing, copying, duplicating, photographing, altering, replicating, conveying, or buying trade secrets.

 A.             Injunctive Relief

Courts consider injunctive relief to be extraordinary.  It is only granted in the rarest circumstances.  Because inventions, innovations and novel processes are valuable and unique, NRS 600A.040(1) allows the court to enjoin actual or threatened misappropriation of trade secrets.  An injunction is a powerful tool and carries with it the possibility of imprisonment for its violation.  Injunctions under NRS 600A.040 are unique because they can require the party who misappropriates a trade secret to pay a reasonable royalty for its future use, and can also require the party who misappropriates a trade secret to remove it from the Internet if it is published.   

 B.             Money Damages

In addition to injunctive relief, a plaintiff is entitled to collect money damage for trade secret misappropriation.  NRS 600A.050.  Damages include the value of the loss caused by the misappropriation, and punitive damages when the misappropriation is willful, wanton or reckless.  The statute also includes the payment of a reasonable royalty in lieu of actual damages.    

For example, in the case of the foundation subcontractor mentioned in Part 1, the loss was calculated at $7 million, which included the time, and the cost of concrete and rebar that would be saved by using Morris-Shea’s foundation design. 

Your trade secrets are valuable property.  Davis|Stibor is highly experienced in helping clients protect their trade secrets, and will enforce your rights if your trade secrets are misappropriated. 

Disclaimer: The information contained in this website is provided for informational purposes only, and should not be construed as legal advice on any subject matter. No recipients of content from this site, clients or otherwise, should act or refrain from acting on the basis of any content included in the site without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from an attorney licensed in the state of Nevada.

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