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Should I consider litigation to protect my trade secrets?

On Behalf of | Jun 12, 2024 | Trademarks & Trade Secrets

Trade secrets are legal tools that serve as valuable assets giving businesses a competitive edge. Trade secret protections are only useful if we exercise these protections through litigation when necessary — and this need may increase in coming years. Experts predict that the Biden Administration’s move to reduce the power of noncompete agreements will result in an increase in trade secret litigation.

But is litigation worth it? Savvy business leaders know that any type of litigation is time consuming and costly. With this in mind, it is important to consider whether it is worth pursuing a trademark infringement claim. The answer will vary depending on the details of each situation. Business leaders will need to weigh the benefits and risks to these claims.

Those making these decisions are wise to consider the role of trade secret protections. Use of litigation to protect trade secrets helps to meet three important goals:

  1. Deterrence: When companies know that misappropriation can lead to litigation and substantial damages, they are less likely to engage in unethical practices.
  2. Preserving innovation: Litigation protects inventors and creators, encouraging them to continue developing new technologies and processes.
  3. Market stability: Trade secret litigation maintains market stability by preventing unfair competition. It ensures a level playing field for businesses.

If successful, in addition to meeting these three goals the claim can also result in direct benefits to the business bringing the claim, namely an award of damages. Two of the most common include the following.

#1: Injunctive relief

Injunctive relief is a powerful legal remedy in trade secret litigation. It allows the court to issue an order that prevents the defendant from using or disclosing the trade secret. This remedy plays an important role in protecting the confidentiality and competitive advantage of the trade secret owner. This is generally achieved when the court issues a preliminary injunction during the litigation process to maintain the status quo until a final decision is reached.

Injunctive relief helps to better ensure that the trade secret remains confidential and prevents irreparable harm.

#2: Monetary damages

Monetary damages compensate the trade secret owner for the losses suffered due to misappropriation. These damages can include:

  • Actual damages: Calculated based on the actual financial harm caused by the misappropriation. This may include lost profits, reduced market share, or increased costs.
  • Reasonable royalties: If the plaintiff cannot prove actual damages, the court may award reasonable royalties. This compensates the owner for the value of the trade secret that was misappropriated.

Monetary damages serve as a deterrent and compensate the trade secret owner for the harm suffered. While not always easy to quantify, monetary damages can play an important role in trade secret litigation.

Trade secret litigation involves complex legal issues, but injunctive relief and monetary damages can help protect trade secrets and maintain a competitive edge.