Misappropriation trade secret is the unlawful access and/or use of proprietary information to gain a profit. The Uniform Trade Secrets Act (UTSA) of 1979 and 1985 defines a "trade secret" as information that:

  1. Is not readily accessible and derives value from being unaccessible
  2. Was developed or discovered under some form of a non-disclosure agreement that has not yet expired

Before the UTSA, trade secrets were governed by a common law doctrine in the Restatement of Torts of 1939. In that document, a trade secret was defined under the following six parameters as information that:

  1. Is not generally known outside of a business
  2. Only a controlled number of people within a business know
  3. Is safeguarded within the business
  4. Is valuable to the business and potentially valuable to competitor businesses
  5. Was substantially costly to develop or discover
  6. Is not easy to duplicate, development, or acquire outside of the business

The claimant must demonstrate that the alleged trade secret satisfies the elements of one or more of the UTSA or the Restatement of Torts, depending on the requirements of the presiding court of law.

Elements of a Misappropriation Trade Secret Claim

In most courts of law, the claimant must prove that:

  1. The claimed information satisfies the requirements of a trade secret
  2. The secrecy of the claimed information was reasonably protected
  3. The information was unlawfully accessed or used

Importantly, misapproriation of a trade secret does not include lawful access to information, such as via independent discovery, public disclosures, or reverse engineering.

Examples of Trade Secrets

Trade secrets may include:

  1. Customer lists and information that cannot be readily ascertained from public sources
  2. Business pricing guidelines
  3. Historical purchasing information
  4. Customer business needs/preferences


Remedies to misappropriation of trade secrets vary depending upon the jurisduction involved and the seriousness of the claim. In some instances, misappropriation of trade secrets is a federal crime, punishable with fines and imprisonment. In other cases, claimants may be awarded damages, including:

  1. Monetary relief
  2. Equitable relief
  3. Costs associated with litigating a claim

Monetary relief may include the award of damages to replace losses from the improper use of propriatary information. In addition, courts may award the claimant royalties for the defendant's use of the trade secret as well as punitive damages to punish the defendant for the unlawful accessing and/or use of the trade secret.

Equitable relief may include preliminary and permanent injunctions to inhibit an individual or business from accessing or using trade secrets. For example, in Texas, under the UTSA, a claimant need only demonstrate that the defendant possesses proprietary information and is in a position to utilize that information in order to obtain a preliminary injunction against the defendant.

Finally, when successful in litigating a misappropriation lawsuit, a plaintiff may recover attorney's fees in addition to other legal expenses, such as court fees.

Defenses to a Trade Secret Misappropriation Claim

There are several legal lines of defense that can be used to defend against a trade secret misappropriation claim. These include:

  1. Independent development
  2. Reverse engineering
  3. Arguing that the claimant did not sufficiently ensure the secrecy of the information
  4. Arguing that the information was previously in the public record

Independent Development

Often, the best response to a misappropriation trade secret claim is to demonstrate that you developed the information independently. For example, you could provide laboratory notebooks, computer code, or experimental research result that demonstrate the independent process that you used to discover or develop the trade secret information. You simply need to demonstrate that you conducted your research before the date of misappropriation claimed by the plaintiff.

Reverse Engineering

In some states, reverse engineering is also a common defense argument. For example, proving that you independently reverse engineered a publicly available product to determine how it was constructed is a complete defense in some states. Importantly, you would need to demonstrate that this reverse engineering occured before the claimed date of misappropriation.

However, the use of reverse engineered information may still be misappropration in some instances.

Breach of Secrecy

A third strong defense is to demonstrate that the plaintiff did not take sufficient precautions to maintain the secrecy of the trade secret.

Public Information

If the trade secret was publicly available before the claimed date of misappropriation, then you can argue that the trade secret was actually public information.

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