Trade Secrets & Confidential Information

3. Defenses to Allegations of Unauthorized Taking or Use of a Trade Secret

There are numerous defenses to a cause of action alleging unauthorized taking or use of a trade secret, although unconscious copying is not one of them. A number of the defenses depend on the characterization of the information received and utilized. If the information is not a secret or is not protectable subject matter or if there is a combination of mixed public/private information it can be argued that whatever was disclosed was not subject to protection. Other defenses rely on the employee's personal skill, knowledge and experience whereby, the employee would have had the means to obtain or know the information without reference to the plaintiff's information. A related defense would allege the independent development of the idea at issue. There can be no cause of action if the information was obtained through reverse engineering, or if there was no obligation of confidence, or if there was no improper use or disclosure, or if any covenant restraining disclosure would be an improper restraint of trade. If the facts support the defense, the defendant may also be able to avail itself to a limitation defense (statutory time period for the action has expired), laches or acquiescence or argue that it was not a fiduciary to the plaintiff, or if it was in a fiduciary position, it did not breach its fiduciary duty. In order for a plaintiff to pursue an action for unauthorized taking or use of a trade secret, it will need to establish that it is the owner of the trade secret and that it suffered a loss or damages as a consequences of the defendant's unauthorized or unlawful use or disclosure of the information. If the defendant can establish that the plaintiff suffered no detriment, the defendant will significantly reduce its exposure to liability. If the recipient is an innocent third party, the plaintiff will not have a contractual basis to pursue a breach of confidence action.