In a prior blog post, I discussed the ways in which a business can protect its trade secrets in Virginia, using the benefit of both the Virginia Uniform Trade Secrets Act and the newly enacted federal Defend Trade Secrets Act. In this post, I review the strategic considerations and the remedies a trade secret owner can obtain for trade secret theft–called “misappropriation”–from both state and federal courts in Virginia.
Trade secret misappropriation is a powerful claim to bring in part because it gives you the ability to go after actors beyond those with whom your business has a nondisclosure agreement. If an employee breaches a nondisclosure agreement by telling a trade secret to another person–perhaps a new employer–the trade secret owner may be able to pursue an action not just against the employee, with whom the owner has a contract, but also against the other person. To preserve this right, a Virginia trade secret lawyer may provide appropriate notice to the other person or take other steps to preserve the owner’s trade secret rights upon unlawful disclosure.
For a contract breach, a remedy is always confined to making the person whole. This is true even if the contract includes a clause awarding a specific dollar figure upon a breach, called a “liquidated damages” clause. Even when such clauses are enforceable, they must always aim always to make the non-breaching party whole, and not provide that contracting party a windfall. In contrast, trade secret misappropriation entitles the owner to triple their actual damages. This kind of recovery is permitted under both the Virginia Uniform Trade Secrets Act and the federal Defend Trade Secret Act.
The law in Virginia normally requires each side in litigation to pay their own attorneys fees. A narrow exception exists when a statute or contract provides otherwise. In this case, both the Virginia Uniform Trade Secrets Act and the federal Defend Trade Secrets Act provide for the recovery of attorney’s fees to the trade secret owner if he prevails. A plaintiff should be careful, however, since it is possible for a defendant to recover attorneys fees for any frivolous claim of trade secret misappropriation.
Like the law of other states, the law in Virginia generally requires you to enforce a trade secret violation of which you are aware to maintain the trade secret. This is because a trade secret, by definition, must be subject to reasonable means employed to maintain its secrecy. An owner that takes no action to determine the extent of and to stop a known disclosure is probably not satisfying this requirement. Moreover, although the initial disclosure might be “unlawful”–a required element of trade secret misappropriation—those that learn of the secret down a vague chain of disclosures may be completely blameless (or their legal culpability may be difficult to prove). This only elevates the need for a proper response to maintain a trade secret in Virginia.
Connors Law believes the best intellectual property planning and protection considers what may happen if litigation arises. In the case of trade secrets, a good attorney should create a strong written record to demonstrate to would-be infringers (or a court) that ownership rights exist in the trade secret.