The Basics of a Trade Secret Claim

The Basics of a Trade Secret Claim

A trade secret may consist of any formula, idea, pattern, or information which provides the owner of the information with a competitive advantage in the marketplace and is treated in such a fashion which prevents the competitors or public from learning about it—absent improper acquisition or theft. So how does South Carolina law help protect trade secrets?

Nondisclosure Agreements (NDAs)

NDAs are basically private contracts in which the employee promises not to disclose specific information learned while working for the current (or past) employer to any future employer. If you believe that an employee has violated the rules described in the contract, you can sue for breach.

Uniform Trade Secrets Act (UTSA)

South Carolina is one of several states that have adopted the UTSA. The state’s version of the UTSA refers to the theft of trade secrets as “misappropriation,” referring to the acquisition of trade secrets by someone who knows or has reason to know that the trade secret was obtained by improper means, including theft, bribery, breach of duty, or misrepresentation. It also includes the disclosure or use of a trade secret without consent by someone who used improper means to acquire knowledge of the trade secret.

Additionally, South Carolina forbids the use of trade secrets by a company that has “reason to know” that the material is considered a trade secret—this is known as constructive knowledge. So if a company in the state was unaware it possessed stolen trade secrets, it can still be prosecuted under South Carolina law that it should have known.

Economic Espionage Act of 1996

In addition to South Carolina laws related to trade secrets, there are certain federal rules which also apply in the state. The Economic Espionage Act of 1996 makes the theft of trade secrets a federal offense. Furthermore, this law also makes it a federal offense to obtain, purchase, or possess trade secret information knowing it to have been purloined. The penalties for violating this law includes a prison sentence of up to 15 years and a maximum fine of $5 million.

For more information, contact our Charleston business litigation attorneys at PHSW today.

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