Trade Secrets And 3rd Parties: Litigation Traps To Avoid

Orrick - Trade Secrets Group
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Many companies have developed trade secrets policies to protect their valuable information, but even forward-thinking companies may not have internal controls to avoid liability as third parties to alleged trade secret misappropriation. While recently hired employees are one obvious source of potential liability if they bring to the job information obtained from their prior employer, in recent years companies have also increasingly faced suits based on relationships with contractors and vendors. In any of these situations, a company can find itself charged both directly for misappropriation of trade secrets derived from others, and vicariously based on agency principles.

This article explores recent cases involving both theories of third-party liability for trade secret misappropriation, considers several hypothetical third-party liability scenarios, and concludes with some practical considerations for companies to mitigate potential liability in the first instance.

Originally published on Law360 - January 8, 2015.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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