The Basics of a Trade Secret Claim

Uber and Waymo, a self-driving car business owned by Google’s parent company Alphabet, are currently embroiled in a lawsuit over a major trade secret claim. Waymo alleges that one of their former employees, Anthony Levandowski, stole over 14,000 confidential files and used them to start his own self-driving car company, Otto, which Uber acquired in 2016. Uber is accused of using these confidential documents to create a digital imaging device used by autonomous vehicles to map out their surroundings, based on Waymo’s patent.

For this reason, many states have adopted some form of the Uniform Trade Secrets Act (UTSA) to protect trade secrets. The UTSA defines a trade secret as information, including a formula, pattern, program, device, method, technique or process, that:

  • Derives independent economic value from not being generally known to the public; and
  • Is the subject of efforts that are reasonable to maintain its secrecy.

A simpler definition of a trade secret is (1) information, (2) that derives economic value, (3) is not generally known (4) and is the subject of reasonable efforts to maintain its secrecy.

Examples of Trade Secrets

In Waymo’s case, their trade secrets were in the form of thousands of documents that contained patents and other information associated with their digital imaging device. A trade secret can include plans, supplier lists, financial data, physical devices, computer software and more. Trade secrets fall under two broad categories: technical and business information.

Technical Information:

  • Plans, designs and patterns, such as those for specialized equipment
  • Engineering notebooks
  • Negative information (designs that didn’t work)
  • Computer software (programs or source codes)

Business Information:

  • Cost and pricing lists
  • Internal market analyses
  • Manufacturing information
  • Customer lists
  • Marketing and advertising plans
  • Personnel information

Misappropriating Trade Secrets

If a trade secret is misappropriated, you may be able to file a trade secret claim against a plaintiff. A misappropriated trade secret is defined as:

  • A trade secret acquired by improper means, which includes theft, fraud, bribery or breach of contract.
  • A trade secret published with the knowledge that it was acquired through improper means or under suspicious circumstances.

Trade Secret Misappropriation Damages

If a plaintiff can successfully prove that their trade secret was misappropriated, they may be able to collect damages. The three types of damage claims a business litigation lawyer may help you file include:

  • Actual Damages: The plaintiff’s lost profits, the defendant’s own profits, product price drop, marketing costs, investment value and more.
  • Reasonable Royalty: If the plaintiff and defendant are not direct competitors, a reasonable royalty structure can be used to provide adequate compensation to the plaintiff. Factors include the term of license, the owner’s royalties for licensing the trade secret and expert opinion testimony, among other things.
  • Unjust Enrichment: This seeks to return the benefits a defendant received from misappropriation and includes the plaintiff’s costs to develop the trade secret, the time and costs saved by the defendant from not having to develop their own method and diminished stock value.

Contact Lyons & Simmons, LLP Today!

If you have been the victim of trade secret misappropriation, contact our Dallas business litigation attorneys at Lyons & Simmons, LLP. We have a proven track record in business litigation, including breach of contract, deceptive trade practices act violations and unfair competition claims. Our team of talented lawyers can provide aggressive representation to help you resolve these matters.

Give us a call at (844) 297-8898 or contact us online if you have any questions.
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