What Are Trade Secrets?

Trade secrets are a form of intellectual property that differs from patents, trademarks, and copyrights. Unlike these publicly registered protections, trade secrets remain confidential and are only protected as long as businesses take active steps to maintain their secrecy. Because trade secrets provide a competitive advantage, their misappropriation can cause significant financial harm, making strong legal protections essential. Examples of trade secrets include:

• Customer lists
• Manufacturing processes
• Proprietary formulas
• Business strategies
• Software code

To qualify as a trade secret, the information must be commercially valuable and subject to reasonable efforts to maintain secrecy. If a company fails to protect its trade secrets, it risks losing legal protection.

Federal Laws Protecting Trade Secrets

Federal law provides legal protection for trade secrets through the Defend Trade Secrets Act (DTSA) and the Economic Espionage Act (EEA). These laws criminalize the theft of trade secrets and provide businesses with civil remedies.

The DTSA, enacted in 2016, allows businesses to file civil lawsuits for trade secret misappropriation in federal court. It also provides whistleblower protections and the ability to seek injunctions to prevent further misuse of stolen information.

The EEA criminalizes trade secret theft for the benefit of foreign governments or businesses. Violations can result in heavy fines and prison sentences.

Georgia Trade Secret Laws

In addition to federal protections, Georgia has its own trade secret law: the Georgia Trade Secrets Act (GTSA). This law defines trade secrets and provides civil remedies for misappropriation.

Under the GTSA, businesses can seek:

• Injunctive relief to stop the unauthorized use of trade secrets
• Monetary damages for financial losses caused by misappropriation
• Attorney’s fees in cases of willful and malicious trade secret theft

Unlike patents or copyrights, trade secret protection does not expire as long as the information remains confidential. However, businesses must take reasonable steps to safeguard their trade secrets.

The Defend Trade Secrets Act (DTSA)

The Defend Trade Secrets Act (DTSA) is a key federal law that strengthens trade secret protections. It allows companies to file lawsuits in federal court, offering broader jurisdiction and stronger legal remedies.

Key Provisions of the DTSA:

• Civil lawsuits can be filed in federal court for trade secret theft.
• Seizure orders allow courts to seize stolen trade secrets before they are disclosed.
• Injunctions prevent further misuse of misappropriated trade secrets.
• Damages include actual losses, attorneys’ fees, unjust enrichment, and in some cases, double damages for willful misconduct.

The DTSA also protects whistleblowers who disclose trade secrets when reporting illegal activity. Employers must include this protection in employee confidentiality agreements to ensure compliance.

When Is Trade Secret Litigation Necessary?

Trade secret litigation becomes necessary when a company’s confidential information is stolen, misused, or improperly disclosed. Common situations that lead to litigation include:

• Former employees taking trade secrets to a competitor
• Business partners misusing confidential information
• Hackers or cybercriminals stealing proprietary data
• Vendors or contractors violating non-disclosure agreements

To succeed in a trade secret lawsuit, businesses must prove that:

1. The information qualifies as a trade secret.
2. Reasonable steps were taken to protect its secrecy.
3. The defendant misappropriated or unlawfully disclosed the information.