Protection of trade secrets is a critical component of business success, especially in the technology sector. Software and other tech companies have long known that they must guard their developing work against competitors, but a recent study has shown that they may face a greater risk from their own employees. The federal government launched a new strategy earlier this year geared towards protecting U.S. companies against trade secret theft. While the strategy primarily targets foreign governments and businesses, it offers useful guidance for California tech companies in preventing, and responding to, theft of trade secrets.
Theft of Trade Secrets
"Trade secret" refers to any proprietary or confidential information used by a company in the course of running its business. This includes client lists, designs or formulas for existing products, and designs or notes from products still under development. Information does not need to have copyright, trademark, or patent registration to be considered a trade secret, but individuals who have access to the information must be aware of its secret nature. Companies often require employees, contractors, and others to sign non-disclosure agreements, which identify trade secrets, prohibit unauthorized disclosure of the information, and define penalties for breach. Intentional theft of trade secret is a criminal offense under federal law, 18 U.S.C. § 1831 et seq., and California State Law, Cal. Civ. Code § 3426 et seq.