We’ve all heard the phrase “knowledge is power.” Businesses and individuals often endeavor to keep certain types of knowledge private. For example, employment records, financial records, and health histories are strictly regulated and businesses take steps to guard access to that information.
Even if this type of information were not regulated, its’s still possible to keep knowledge confidential. While the mechanics may vary in intensity depending on how valuable the information may be, it generally follows the same pattern (1) limit access to that information on a need to know basis and put it under lock and key (2) design policies and/or execute contracts that require any user of that information to use it for very limited purposes and (3) reinforce the policies and use technology to limit any inadvertent disclosure of that information.
Information is only confidential when not publicly known or disclosed and this is how it maintains its value. But what if the confidential information is stolen? What can be done? It all depends on whether the information is considered “confidential” or falls into a more important category called “trade secrets.”
Confidential information is usually information whose access is restricted, usually with the intention of being kept private. It is usually information with limited distribution and that may or may not have commercial value. An example of confidential information in a commercial setting might be a conversation between the HR department and an employee’s options related to available insurance plans.
On the other hand, trade secret information is a special type of confidential information. It has a strict definition and special requirements to maintain confidentiality. It is easiest to think of trade secrets as confidential information that gives a business a competitive advantage. Another question to ask is if the information were made available to a competitor, would it cause significant economic harm to the business if those trade secrets were disclosed?
Trade Secrets by their very nature have a greater impact on a business than a release of general confidential information. To illustrate this point, we list some of the more commonly recognized types of trade secrets:
If someone were to misuse confidential information a business might have a claim for “breach of confidences” and/or “breach of contract,” depending on whether the obligation is express or implied in the relationship. Breach of confidences may be claimed in relationships involving business partners, board of directors, employer/employees, and in some principal/agent relationships. Other relationships require a written contract and money damages are the customary remedy.
On the other hand, misappropriating trade secrets has significantly greater “teeth.” Under some circumstances, a court can act more swiftly and issue injunctions, designed to have the bad actors go out of their way to protect the trade secrets. In addition to regular damages, punitive damages can be awarded against the bad actors (punitive damages can be up to 10x regular damages) and a court can award legal fees and costs as well.
The attorneys at Nexio Law Firm are committed to helping our clients achieve their objectives. We can be reached at (949) 478-6830 or complete the contact form below and we’ll be in touch soon.