What are Defenses to a Trade Secret Misappropriation Claim?
Common defenses to a trade secret misappropriation claim include: refuting the trade secret status of the information for various reasons, such as claiming the information was publicly available; (2) claiming the defendant independently developed the secret; and (3) claiming the defendant acquired the information through lawful means, like reverse engineering.
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Refuting Trade Secret Status
One of the elements a plaintiff must prove in a misappropriation action is that the information was in fact a trade secret. This requires the plaintiff show it took reasonable measures to keep the information secret and that the information derives independent economic value from being not generally known or readily ascertainable.
A defendant to a misappropriation claim can therefore refute the trade secret status of the information by showing that the information was not kept secret—that it was publicly available. The defendant must be careful, however, because just because the information is readily available does not necessarily mean it was publicly available under the law. Courts inquire into the difficulty required for the defendant to obtain this “public” information.
Independent Development
Another element a plaintiff must prove in a misappropriation claim is that the defendant actually used the plaintiff’s trade secret. This makes independent development a powerful defense because it undermines the use requirement. Regardless of the result, if the defendant did not in fact use the plaintiffs work in whatever action allegedly amounted to the misappropriation, then the plaintiff will have no claim.
Further, at varying stages of litigation, plaintiffs are required to define what their trade secrets are in a misappropriation case. This can make things difficult for a defendant if the plaintiff is allowed to define its trade secrets late in the game. However, if a defendant can show it did not use any of the plaintiff’s information at all, then this definition will not matter.
Reverse Engineering
Another way a defendant can refute a misappropriation claim is to show they lawfully acquired the plaintiff’s end product and reverse engineered the secret. This defense somewhat overlaps with claiming the information is publicly available in that the information is within the product available for purchase. However, courts tend to analyze these defenses separately.
The danger with this defense is that reverse engineering may be actional under other theories of liability. For example, software may prohibit the end-user from reverse engineering the information in the licensing agreement, which could lead to a breach of contract claim.
Any business or individual charged with misappropriation of a trade secret should be aware of what defenses are available and the relative strengths and weaknesses of each.
For more information on trade secrets and intellectual property in general, see our trade secret services practice page.
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This article is provided for informational purposes only and does not constitute legal advice. For guidance on specific legal matters under federal, state, or local laws, please consult with our IP Lawyers.
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