Trade Secret Disclosure: Legal Protections and Remedies

Trade secrets encompass a broad range of business information, including manufacturing processes, customer lists, pricing strategies, business plans, technical data, and formulas. For information to qualify as a trade secret under New York law, it must meet specific criteria: the information must not be generally known or readily ascertainable, it must derive economic value from its confidential nature, and the owner must take reasonable measures to protect it. Companies that fail to implement reasonable security measures may find their trade secret protection weakened in litigation. The scope of what constitutes a trade secret continues to expand as technology evolves, including digital files, databases, algorithms, and software code.

New York provides multiple layers of legal protection for trade secrets through the Uniform Trade Secrets Act (UTSA), which has been adopted in the state. Additionally, New York common law recognizes causes of action for breach of fiduciary duty, breach of contract, and tortious interference when trade secret disclosure occurs. Federal law, including the Defend Trade Secrets Act (DTSA), provides additional protections and remedies available to companies whose trade secrets are misappropriated. Employers and businesses can enforce non-compete agreements, non-disclosure agreements, and confidentiality provisions to prevent unauthorized trade secret disclosure and establish legal grounds for damages and injunctive relief.

Employees with access to sensitive information represent one of the most significant sources of trade secret disclosure. Departing employees may disclose confidential information to competitors, sell trade secrets to third parties, or use proprietary knowledge to start competing businesses. Insider threats include both intentional misconduct and negligent disclosure through inadequate security practices. New York courts have consistently held that employees owe a duty of loyalty to their employers and cannot use or disclose trade secrets obtained during employment. Companies can pursue claims for trade secret misappropriation against former employees who breach their confidentiality obligations.

Trade secret disclosure may also result from unauthorized access by competitors, hackers, or other malicious actors. Corporate espionage, including the use of improper means to obtain confidential information, constitutes misappropriation under New York law. Cyberattacks, social engineering, and physical theft of documents or devices containing trade secrets all fall within the scope of actionable misappropriation. Companies that discover unauthorized access to their confidential information should immediately document the breach, preserve evidence, and consult with legal counsel to pursue appropriate remedies and prevent further disclosure.

Injunctive relief is often the primary remedy sought in trade secret disclosure cases, as it prevents the defendant from using or disclosing the confidential information. New York courts may issue temporary restraining orders, preliminary injunctions, and permanent injunctions to protect trade secrets from further misuse. To obtain injunctive relief, a company must demonstrate that it is likely to succeed on the merits, that irreparable harm will result from continued disclosure, and that the balance of equities favors the injunction. Courts carefully consider whether the trade secret has already been publicly disclosed, as this may limit the availability of injunctive relief. Preventive measures may include requiring the defendant to return or destroy all copies of the trade secret and implementing monitoring mechanisms to ensure compliance.

Trade secret litigation in New York requires careful management of confidential information throughout the discovery and trial process. Courts issue protective orders to restrict access to trade secrets during litigation, limiting disclosure to authorized attorneys and expert witnesses. Companies must balance the need to prove their case with the risk of further exposing confidential information through court filings and testimony. Strategic considerations include whether to pursue litigation in New York state court or federal court, whether to seek emergency injunctive relief before trial, and how to quantify damages from the disclosure. Early consultation with experienced counsel helps companies evaluate the strength of their claims and develop an effective litigation strategy that protects their interests.

Effective trade secret protection requires implementing multiple layers of security and legal safeguards. Companies should establish clear policies identifying what information qualifies as a trade secret and implement reasonable security measures including physical access controls, digital encryption, and employee training. Confidentiality and non-disclosure agreements should be executed with all employees and contractors who have access to sensitive information. Regular audits of access to trade secrets, secure document destruction procedures, and monitoring of employee activities help prevent unauthorized disclosure. By combining strong contractual protections with practical security measures, companies can significantly reduce the risk of trade secret disclosure and strengthen their legal position if misappropriation occurs.