between the parties. In Utah, for ex-
ample, the Muna opinion recognized that
trade secrets are property having intrinsic
value. But the court also noted that the
trade secret arose out of a confidential
relationship,
lawyers must be on their toes because
they don't want to guess wrong.
The limitations question becomes
less clear when there are "continuing
misappropriations" or multiple misap-
propriators. California's courts have dealt
with these questions in recent years. In
Cadence Design Systems, Inc.v. Avant!
Corporation, 57 P.3d 647 (Cal. 2002)
under the UTSA, continued improper use
of a trade secret by a single defendant
is part of a single claim of continuing
misappropriation accruing at the time
of the initial misappropriation.
The UTSA does not define "continu-
ing misappropriation." But the Cadence
court defined it as "the continuing use
or disclosure of a trade secret after that
secret was acquired by improper means
or as otherwise specified in [the statute]."
Id. at 651. Thus, California considers a
continuing misappropriation as a single
claim for the purpose of the statute of
limitations. See id.
The Cadence court also distinguished
between continuing misappropriation by
a single defendant, and multiple claims
of misappropriation against multiple
defendants. Id. The court observed, that
continuing misappropriation may consti-
tute more than one claim, each with its
own limitations period, when multiple
misappropriators are involved. See id.
at 652. See also PMC, Inc. v. Kadisha,
78 Cal.App. 4th 1368 (Cal. App. 2000);
Global Compliance, Inc. v. Am. Labor
Law Co., 2006 WL 1314171, *12-13
(Cal. Ct. App. 2nd, May 15, 2006)
(Unpublished); HiRel Connectors, Inc. v.
United States, 2005 WL 4942595, *3,
(C.D. Cal., Jan 4, 2005) ("[T]here may be
separate claims of continuing misap-
with differing dates of accrual and types
of tortuous conduct some defendants
liable for initial misappropriation of the
trade secret, others only for later con-
tinuing use.").
Here are some recommendations:
trary, assume trade secrets are based
on a "confidential relationship" theory.
This will guide your response when your
client calls to say his ex manager just
opened a competing business with the
owner's confidential information.
ments, conscientious lawyers often
include clauses to "forever release and
discharge the wrongdoer for, among other
things, past and/or future known and
unsuspected damages, claims, or causes
of action, without limitation," or similar
provisions. But if the trade secrets owner
releases the wrongdoer for past and
"future" misappropriations and damages,
the owner may unintentionally release
the misappropriator from claims of future
misappropriations of the very same trade
secrets.
recipes, renewal dates, salaries, pric-
ing, contacts, and a host of other things
can be trade secrets. Even compila-
tions of publicly-available information
gathered for a proprietary purpose can
be protected as trade secrets. Employers
must alert, and frequently remind, their
employees of what they consider to be
trade secrets. They should be marked on
each page with something like this:
secrets. Lock them up. Employees have
a common law duty in many states not to
misappropriate trade secrets. But many
employees may not know that they have
such a duty or even that they are privy to
their employer's trade secrets, and will
not hesitate to walk out the door with
them. Use appropriate non disclosure
and properly tailored non competition
agreements as part of your defenses to
guard against trade secret theft.
justification, and rationalization among
employees. The temptation to steal trade
secrets for personal gain can be great.
Trade secret thieves will use a business
owner's trade secrets again and again
unless they are stopped. Business owners
must be vigilant. If they are not, their
trade secrets, earned with time, sweat,
and money, may end up lining someone
else's pockets.
Like sandcastles on the beach with a
rising tide, the stakes in today's economy
for business owners are high. With
modest planning, documentation, and a
willingness to act promptly, lawyers can
strengthen their clients' positions and
prevent the liquidation of vital assets
trade secrets.
the U.S. Virgin Islands).
13-24-7.
4 The case was rendered moot when the parties settled,
public.