Three Urgent Questions to Ask When Trade Secrets Migrate Across Borders

by Kobre & Kim

Today’s employees can quickly become tomorrow’s trade rivals. Seamless information-sharing among an increasingly global workforce is great — until key knowledge lands in competitors’ hands. It may be tempting for teams and individuals who switch allegiance to a new employer to transfer valuable confidential information, often across borders. When trade secrets move, they move quickly, and the victims must have a coordinated cross-border, rapid-response litigation strategy to quell the threat to the company’s Crown Jewels.

A combination of remedies may be available under the U.S. Defend Trade Secrets Act (DTSA), the EU’s Trade Secrets Directive and UK common law. Deployed correctly and with appropriate timing, these remedies can help answer some of the urgent questions that may arise when trade secrets migrate across borders:

1. Can I stop my competitor from removing wrongly obtained trade secrets from the jurisdiction? The DTSA includes an ex parte seizure provision, whereby a claimant can seize property to prevent trade secret “propagation or dissemination.” Although there is a high threshold — and the U.S. courts have yet to find the right case to order this relief — this “last chance” remedy can be very useful if trade secrets, for example those stored on a hard drive, are about to be removed from the jurisdiction. In England, even if the confidential information moves out of the jurisdiction, the court may impose an injunction to restrict the use of that information.

2. Will the courts assist me if the other side could re-create my secret formula anyway? In England, there is an unusual and powerful deterrent remedy to strip any unlawful advantage from the wrongdoer. The courts will generally impose a springboard injunction if the claimant can show that the trade secret would give an opponent a head start, even if the defendant would be able to re-create the trade secret in the future. This empowers courts to issue orders preventing the defendant from obtaining an unfair advantage, restraining an individual from discussing certain matters for a period of time, or even preventing individuals from joining a new employer for a short period.

3. Won’t bringing proceedings publicize my confidential information? Under the EU directive, member states were required to implement confidential proceedings for trade secrets. Unlike some other E.U. jurisdictions, English courts already met this requirement through “confidentiality clubs” before the directive came into place and, if necessary, by holding hearings in private. Under a court-imposed confidentiality club, only specific individuals can access the confidential material, and the court can specify the means of disseminating information. In the U.S., similar protections are available, including filing proceedings “under seal,” which allows a claimant to avoid the substance of, or specific documents relevant to, the dispute being made public.

Losing control of trade secrets can threaten a company’s very existence. But by executing an effective strategy across borders swiftly and strategically, companies can mitigate their losses.

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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