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| Home - Industry Article - Apr 05 Issue |
Trade Secret Litigation: Are You Asking the Right Questions?
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10. What is the applicable law in available alternative venues? Trade secret law can be more inclusive or exclusive depending on the state, as each state may rely on a different interpretation of trade secret protection. Are there some advantages to filing in an alternative venue? What is the likelihood of transfer to a more convenient forum? Is there a common forum? What is the history of previous trade secret cases before the assigned law and motion judge? In state court, the trial judge may differ from the law and motion judge and discovery judge. What is the history of previous trade secret cases before the trial judge?
11. What is the level of trade secret misappropriation claimed? A cause of action for trade secret misappropriation can take several forms: (a) improper acquisition and (b) disclosure or use. Is there a criminal action to pursue? Courts have enjoined defendants for threatened misappropriation. Is there an issue between the parties of intent to use a trade secret? This often becomes a concern in ex-employee cases where an employee leaves one company to work for another and there is a threat of trade secret misappropriation. Does a potential defendant have safeguards to protect itself from a claim of threatened trade secret misappropriation?
12. What kind of evidence exists? What evidence exists as to misappropriation? Should a potential plaintiff investigate the alleged misappropriation before filing suit? Should the Plaintiff engage in discovery in conjunction with an ex parte motion for a temporary restraining order? Should the Plaintiff engage in motion practice to preserve any and all evidence of misappropriation? Can the Plaintiff meet its obligations to establish the existence of a trade secret? Can the Defendants demonstrate independent development? What demonstrative evidence can the Plaintiff employ? What demonstrative evidence can the Defendants employ? Should the Plaintiff pursue expedited discovery? Should Defendants?
13. What is the Plaintiff’s trade secret protection plan? A plaintiff must show that the trade secrets are secret and that the company has a policy in which it maintains that secrecy. A plaintiff will also bear the burden of showing that its efforts to preserve its trade secrets are reasonable. What is considered reasonable, particularly in the industry? Has the Plaintiff disclosed any trade secrets on its website? Did the parties enter into a Non-Disclosure Agreement to protect the exchange of trade secrets?
14. What competitive advantage does the Plaintiff garner from the trade secret information? The Plaintiff must show not only that the information is secret, but also that from the information the Plaintiff “derives an independent economic value from [the trade secret] not being generally known to the public.” What head-starts does this trade secret information give to the Plaintiff? What advantages does this it give to the Plaintiff? How can those advantages be quantified?
15. Who and where are the third party witnesses, if any? Are they going to make a difference? Will they testify voluntarily? Have they already been interviewed? Are there any risk factors, such as hostile former employees, customers, or business partners? Do the parties know how they will testify? Will they testify as to the secrecy of Plaintiff’s trade secret information or as to free disclosure of the trade secrets by the Plaintiff? Should an investigator be hired? Who are the preeminent expert witnesses?
16. Who are the key experts and what are their opinions? Where are they located? Will they voluntarily agree to be retained? Are they knowledgeable as to the parties’ industry? Do they understand what constitutes general knowledge in the industry?
17. What additional claims, if any, can be pursued? Is there also false or unfair advertising? Is there unfair competition? Conversion? Unjust enrichment? Are there possible antitrust or other counterclaims? Are there possible Lanham Act Section 43(a) claims for trademark infringement? Are there other claims under other applicable federal or state law?
18. Should a demand letter be sent in advance of the filing of the suit? If so, what must be considered in the demand? What is the likelihood of declaratory or other relief where a defendant becomes a plaintiff and the plaintiff becomes a defendant? What should the response be to a demand letter that has been received from a potential trade secret plaintiff? What are the advantages and disadvantages of filing a complaint and moving for a temporary restraining order rather than sending a demand letter? Would the Defendants destroy or otherwise abscond with any evidence?
19. What are some possible resolution scenarios? How can litigation be avoided? Would the parties agree to enter into negotiations? Would a neutral evaluation or opinion by outside counsel be beneficial? What are the potential compromises? Acquisition? Licensing of the trade secrets? Can some business resolution occur?
20. What are the company’s resources? Is the company prepared to bring a trade secret case? Can its personnel divert their attention from the company’s business purposes to support the action? Is the company prepared to have its own trade secrets scrutinized and potentially disclosed during the course of the litigation?
Conclusion
Trade secret litigation is often costly, both in time and resources, but trade secret litigation also serves to protect a company’s fundamental business advantage. By understanding the key questions that must be asked before and after litigation commences, executives and their board of directors will be better prepared to ask their legal counsel the right questions to answer as part of the overall strategy for the case.
Jack Russo is a frequent speaker on computer law issues and has given presentations to the American Bar Association, the Practicing Law Institute and the Computer Law Association. Jack serves as an arbitrator and mediator for the U.S. District Court (N.D. California), the Santa Clara County Superior Court, and the American Arbitration Association, as well as a Judge Pro Temporare of the Santa Clara County Superior Court. Jack can be reached for article feedback at jrusso@computerlaw.com.
 
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