Protecting your Business Part IV: The Misappropriation of Trade Secrets

If your business possesses or has been accused of using information that constitutes a trade secret under the Virginia Uniform Trade Secrets Act, Va. Code Ann. §§ 59.1-336 through 59.1-343 (the “VUTSA”) and applicable law, you may find yourself prosecuting a misappropriation claim or defending against allegations of misappropriation.

The VUTSA defines “misappropriation” as follows:

  1. Acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or
  2. Disclosure or use of a trade secret of another without express or implied consent by a person who
    1. Used improper means to acquire knowledge of the trade secret; or
    2. At the time of disclosure or use, knew or had reason to know that his knowledge of the trade secret was
      • Derived from or through a person who had utilized improper means to acquire it;
      • Acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use;
      • Derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use; or
      • Acquired by accident or mistake.

Va. Code Ann. § 59.1-336. The VUTSA further defines “improper means” as including “theft, bribery, misrepresentation, use of a computer or computer network without authority, breach of a duty or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means.” Id. The VUTSA does not require a plaintiff seeking to recover for a misappropriation of trade secrets to prove that the defendant competes with it. Collelo v. Geographic Servs., Inc., 727 S.E.2d 55, 62 (2012).

If the plaintiff establishes that the defendant has misappropriated a trade secret, the VUTSA the plaintiff may obtain damages. The VUTSA provides that such damages include “‘both the actual loss caused by misappropriation and the unjust enrichment caused by misappropriation that is not taken into account in computing actual loss.’” Id. (quoting Va. Code Ann. § 59.1-338. Section 59.1-338 of the VUTSA further provides that if the plaintiff “‘is unable to prove a greater amount of damages by other methods of measurement, the damages caused by misappropriation can be measured exclusively by the imposition of liability for a reasonable royalty for a misappropriator’s unauthorized disclosure or use of a trade secret.” Id.

Pursuant to Section 59.1-337 of the VUTSA, a court may also issue an injunction for the misappropriation, or threatened misappropriation of trade secrets. Va Code Ann. 59.1-337. A following blog post will discuss the factors that courts review when determining whether to issue an injunction and the scope of injunctions issued by courts as they pertain to trade secrets.

If you’re ready to file a case, or just want advice on the matter, Contact Keithley Law, PLLC today by calling (703) 454-5147 and schedule an initial consultation in our Fairfax law office with one of our attorneys. We can walk you through the steps to get the most out of your case.