How Businesses Protect Trade Secrets in Pennsylvania

What qualifies as a trade secret, and what damages can you seek for unauthorized disclosure?

By S.M. Oliva

Businesses produce an enormous amount of information—and much of it has competitive value. In order to protect a company’s valuable information from improper disclosure or acquisition, Pennsylvania is one of many states that have adopted the Uniform Trade Secrets Act (UTSA).

What Is a Trade Secret?

The Pennsylvania UTSA defines a trade secret as any information that has actual or potential economic value due to the fact it is “not generally known.” Among other things, a trade secret can be:

●a formula

●a drawing

●a pattern

●a customer list

●a method or technique used in the business

Misappropriation of Trade Secrets

It is against the law to misappropriate a trade secret, which means acquiring or disclosing it by improper means. For example, if a former employee of a company takes a copy of her customer lists without permission and gives it to her new employer, that would be an illegal misappropriation of a trade secret.

But misappropriation is not always so blatant. In fact, the Pennsylvania UTSA does not require actual knowledge of misappropriation—as long as a person or business “had reason to know” the information was a trade secret, they may be liable for constructive knowledge of misappropriation.

Penalties for Stolen Trade Secrets

The Pennsylvania UTSA offers a number of remedies for businesses that can prove there has been a misappropriation of their trade secrets:

●A judge may issue an injunction to prevent further disclosure of the trade secret.

●Damages may be awarded to the victim based on losses caused by the misappropriation.

●If there is evidence that the misappropriation was “willful and malicious,” the victim may also be entitled to punitive damages equal to twice the damages.

●In exceptional cases, a judge may attach royalty payments to future use of the trade secret.

Protecting Your Trade Secrets

Many businesses ask their key employees to sign a non-disclosure agreement, which obligates them not to disclose any trade secrets or proprietary information, even after they no longer work for the business. While an NDA is not required to enforce a company’s rights under the Pennsylvania UTSA, it can be helpful in proving a violation. The business may also have a separate breach of contract claim against the employee for violating the NDA.

If you suspect someone has misappropriated a trade secret from your business, you should act promptly to enforce your rights. The Pennsylvania UTSA has a three-year statute of limitations. And the longer a business waits to file, the less valuable the trade secret may become.

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