Essentials of the violation of a trade secret

 

It is clear that the definition of ‘misappropriation’ as given in the United States and the European Union,[1] It is similar in nature in that the European Union Directive was meant to comply with Article 39 of the TRIPS Agreement, which was largely based on the principles of US law. Article 4 of the Directives on the European Union describes misappropriation as the unauthorized acquisition, use or disclosure of trade secrets.

The possession, use or misappropriation of a trade secret without the permission of the owner of the trade secret holder shall be considered not to be genuine and, thus, unlawful if it is impeded by unauthorized users, the theft or copying of any data items, products, substances or electronic files containing the trade secret and legitimately subject to active and direct control

The use or disclosure of a trade secret is said to be invalid when:

a. The trade secret was obtained invalidly, or

b. This conduct constitutes breach of a contractual or other duty not to reveal or restrict the use of trade secrets, and occurs without the permission of the trade secret holder.

Under the original draft by the European Union Commission,[2]  intention whether mala fide, bona-fide or negligence are not required an essential element of any misuse of a trade secret.

This means the true owner of the legal trade secret can effectively secure an injunction order against the person who caused damage to the true owner's property, irrespective of the rule. The acquisition of a trade secret and its use obtained from a third party and the manufacture or putting on the open market or for importation of infringing products shall be deemed invalid under the Directives if the individual concerned knew or ought to have known that the trade secret has been misused.[3]

Any cases relating to negligence allow the infringer to know it or could easily have known that it was misusing a trade secret.[4] In the U.S., the statute relating to the unauthorized acquisition of trade secrets is defined in terms of illicit means, a definition which the court has provided broader and more flexible scope and which can be understood as the equivalent of conduct that is contrary to faithful economic transactions.

This may include hacking and all other espionage techniques which do not include effective means such as independent exploration or reverse engineering. Suppose if someone in possession of a trade secret suspects they were obtained through illegal means or are subject to an active trust duty, then any unauthorized release or use is an act of misuse.

For this example, implicit trade secret knowledge may be inferred from the facts and circumstances in each individual event, such that the necessity for the disclosure in trade secret information is not explicitly understood.

The problem of unintentional or unintended assault or release is treated differently according to US law, but must be consistent with the guidelines. The liability extends prospectively until the individual receives notice that the information is a trade secret belonging to another person while no liability may be applied to it in the absence of any actual or implied knowledge.

Nevertheless, in extraordinary circumstances, the court can refuse the issuance of an injunction order in favor of the plaintiff and, instead, enforce a continuing royalty payable to the trade secret holder if the individual accused of misuse of trade secrets can show that the knowledge has been integrated in good faith into a business process such that it would be unreasonable to instruct us to continue.[5]

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[1]UTSA 1(2); DTSA.

[2]Clause 3, para. 2 Proposal for a Directive of the European Parliament provides the same.

[3]Directives Art. 4, Paras. 4 &5.

[4]Directives, Art. 14.

[5]UTSA Art.2(b).