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Digitalization of trade secrets makes them less secure

At our law firm, we help clients in different industries to protect their trade secrets, meaning private commercial information that can be key to a company’s success. For example, trade secrets may include formulas, manufacturing processes, research, recipes, ingredients, customer lists and similar valuable information. 

For some businesses, disclosure of key trade secrets to potential competitors may threaten the very continuation of the businesses owning the secrets. As we have written before, it is crucially important that companies and entrepreneurs put into place trade-secret security practices such as isolating trade secrets to key employees on a need-to-know-basis and investing in sophisticated computer security systems.

Computerization of commercial operations 

Computers hold virtually all important information in most businesses today. As we all know, computer systems are subject to hacking. Another issue is the ease with which a trusted employee or contractor could transfer data to a thumb drive or similar device and walk out of the office with it or attach a file to an outgoing email. 

For example, in August an engineer who worked for General Electric was arrested and charged with stealing trade secrets, which can also bring federal criminal liability in certain circumstances. In this case, the government alleged that the defendant had used steganography, a method allowing him to allegedly hide trade secret data regarding turbine design in a picture of a sunset, which he emailed to himself. 

Trade-secret litigation on the rise 

Bloomberg recently published a blog about the increase in litigation over trade secret theft in this age of digitalization. Since 2016, trade secret owners have had a private federal right of action for trade secret misappropriation with the passage of the Defend Trade Secrets Act (“DTSA”), in addition to legal remedies available in state courts. 

Plaintiffs in trade secret suits under the federal DTSA are increasingly combining trade-secret claims with patent violation claims in appropriate cases, according to opinions expressed in the blog.

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