Thursday, May 31, 2012

What is an example of a trade secret?

I have introduced you to the legal definitions and criteria relied on by courts when determining whether information is a trade secret. I have not yet given you a real world example to which to compare the legal criteria.

In 1995, the Seventh Circuit enjoined an employee with confidential information about pricing, marketing and distribution from working with a competing company for a period of time. The employee learned this information and his job skills while in his previous employ and could not help but rely on confidential information in his prospective job. While the employee was eventually allowed to go work for the competing company, the court prevented him from doing so for a reasonable period of time. The court also prohibited the employee from ever divulging any of his previous company's trade secrets. [1]

In determining for how long to grant an injunction, courts never exceed what is "reasonable" under the circumstances. The goal is not to punish wrongdoers, because in many cases there are none. Unless there is a person misappropriating trade secrets in bad faith, both parties may very well believe they are in the right and have legitimate arguments in their favor.

A company will not automatically get an injunction when a former employee with confidential information goes to a competitor. It is not always inevitable that a former employee will divulge trade secrets and rely on them when performing his or her new job.

Trade secrets do not have to be written down, which this example illustrates. While just one example in a body of law, it does help illustrate the sort of information that can be considered a trade secret. In this case: confidential marketing, distribution and pricing information.

PepsiCo, Inc. v. Redmond, 54 F. 3d 1262 (7th Cir. 1995).

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