---
title: Trade Secret Misappropriation
description: An overview of the legal standards and remedies for the misappropriation of trade secrets.
keywords: [trade secrets, misappropriation, confidential information, unfair competition, civil claims]
category: law
---

## Introduction to Trade Secret Misappropriation

Trade secrets are a form of intellectual property protected under state and federal law. The unauthorized acquisition, use, or disclosure of a trade secret is known as "trade secret misappropriation." This doctrine aims to protect the commercial value of confidential information that provides a business with a competitive advantage. Misappropriation claims are typically brought in civil litigation, and successful plaintiffs may be entitled to injunctive relief, monetary damages, and other remedies. 

The legal standards for trade secret misappropriation are governed by a patchwork of state laws, with the Uniform Trade Secrets Act (UTSA) serving as a model adopted by the majority of states. At the federal level, the Defend Trade Secrets Act (DTSA) provides a civil cause of action in federal court. This reference guide outlines the key elements, burdens of proof, and available remedies under these laws.

## Elements of a Trade Secret Misappropriation Claim

To prevail on a claim of trade secret misappropriation, a plaintiff must establish the following elements:

1. The existence of a valid trade secret. A trade secret is information that (a) derives independent economic value from not being generally known and (b) is subject to reasonable efforts to maintain its secrecy. See UTSA § 1(4); 18 U.S.C. § 1839(3). Examples of trade secrets include customer lists, manufacturing processes, pricing information, and formulas. The plaintiff bears the burden of proving the trade secret's existence.

2. Misappropriation by the defendant. Misappropriation occurs when the defendant (a) acquires the trade secret through improper means, such as theft or breach of a confidentiality agreement, or (b) discloses or uses the trade secret without the owner's consent. See UTSA § 1(2); 18 U.S.C. § 1839(5). The plaintiff must show the defendant's culpable mental state, such as knowledge or reason to know the information was a trade secret.

3. Causation and damages. The plaintiff must demonstrate that the defendant's misappropriation caused the plaintiff to suffer actual or threatened harm, such as lost profits, unjust enrichment, or diminished commercial value of the trade secret. See UTSA § 3; 18 U.S.C. § 1836(b)(3).

The burden of proof for these elements rests with the plaintiff by a preponderance of the evidence. See, e.g., Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1002 (1984).

## Reasonable Efforts to Maintain Secrecy

A key requirement for establishing a valid trade secret is that the owner took "reasonable efforts" to maintain the secrecy of the information. See UTSA § 1(4)(ii); 18 U.S.C. § 1839(3)(A). The level of secrecy required is not absolute; rather, the owner must take steps appropriate to the circumstances to protect the information from public disclosure.

Reasonable efforts may include physical security measures (e.g., locked facilities, computer access controls), contractual confidentiality agreements with employees and business partners, and limiting access to the information on a need-to-know basis. The specific steps required will depend on the nature of the business, the value of the trade secret, and industry customs. See, e.g., Rockwell Graphic Sys., Inc. v. DEV Indus., Inc., 925 F.2d 174, 180 (7th Cir. 1991).

Importantly, the failure to take all theoretically possible security measures will not necessarily defeat a trade secret claim. The key inquiry is whether the owner's efforts were reasonable under the circumstances. See, e.g., Metallurgical Indus. Inc. v. Fourtek, Inc., 790 F.2d 1195, 1200 (5th Cir. 1986).

## Remedies for Trade Secret Misappropriation

Upon proving a claim of trade secret misappropriation, a plaintiff may be entitled to several forms of relief:

Injunctive relief. A court may issue a temporary restraining order, preliminary injunction, or permanent injunction to prevent the actual or threatened misappropriation of the trade secret. See UTSA § 2; 18 U.S.C. § 1836(b)(3)(A). Injunctions can prohibit the defendant from using or disclosing the trade secret and may require the return or destruction of any materials containing the trade secret.

Monetary damages. A successful plaintiff may recover (1) the actual loss caused by the misappropriation and (2) any unjust enrichment accrued by the defendant that is not accounted for in the actual loss. See UTSA § 3(a); 18 U.S.C. § 1836(b)(3)(B). Damages may also include the reasonable royalty for the defendant's unauthorized use of the trade secret. See, e.g., Univ. Computing Co. v. Lykes-Youngstown Corp., 504 F.2d 518, 536 (5th Cir. 1974).

Exemplary (punitive) damages. If the misappropriation is willful and malicious, the court may award exemplary damages up to twice the amount of the actual damages. See UTSA § 3(b); 18 U.S.C. § 1836(b)(3)(C).

Attorney's fees. A court may order the defendant to pay the plaintiff's reasonable attorney's fees if (1) the misappropriation was willful and malicious or (2) the defendant's claim of trade secret or defense to the claim was made in bad faith. See UTSA § 4; 18 U.S.C. § 1836(b)(3)(D).

## Statute of Limitations and Preemption

Trade secret misappropriation claims are subject to statutes of limitations that vary by jurisdiction. Under the UTSA, an action must be brought within 3 years after the misappropriation is discovered or should have been discovered through reasonable diligence. See UTSA § 6. The DTSA has a 3-year limitations period as well. See 18 U.S.C. § 1836(d).

It is important to note that the UTSA and DTSA may preempt or displace certain other state law claims that are based on the same nucleus of operative facts as a trade secret misappropriation claim. See UTSA § 7; 18 U.S.C. § 1838. For example, a plaintiff generally cannot bring a duplicative claim for breach of an implied contract to maintain secrecy. However, preemption does not extend to claims that are "independent" of the trade secret misappropriation, such as breach of an express confidentiality agreement. See, e.g., Opteum Fin. Servs., LLC v. Spencer, 483 F. Supp. 2d 1179, 1185 (M.D. Fla. 2007).

## Conclusion

Trade secret misappropriation is a significant area of intellectual property law, providing businesses with legal recourse against the unauthorized use or disclosure of their confidential, commercially valuable information. By understanding the key elements, burdens of proof, and available remedies under state and federal law, businesses can better protect their trade secrets and enforce their rights when misappropriation occurs.