Illinois and Federal Trade Secret Law
Intellectual property, and also trade secrets - a cousin to intellectual property - are sometimes the most valuable of a business’s assets. Illinois and federal law both contain established protections for trade secrets.
In 1995, Illinois enacted the Illinois Trade Secrets Act, 765 ILCS 1065/1, et seq. Before 1995, in Illinois there was only common law protection for trade secrets based on courts’ interpretations of the Restatement of Torts. While the Trade Secrets Act is the starting point, because it expressly displaces all common law theories of trade secret misappropriation, Illinois courts continue to recognize and retain the Restatement of Torts as authority that informs courts’ application of the Illinois Trade Secrets Act.
The fundamental and operative concept for protection and liability under the Trade Secret act is to protect against misappropriation of a trade secret. A cause of action for misappropriation requires a plaintiff to plead and prove three elements: (1) the existence of a trade secret; (2) misappropriation of a trade secret; and (3) damages.
To constitute a trade secret, its owner must have taken - and the plaintiff must prove - reasonable precautions or efforts to protect the secrecy of the information or process from which the plaintiff derives economic value from the secrecy. Otherwise, there is no trade secret. Also, it is important to understand that trade secrets are protected only from unlawful or improper misappropriation. Our related discussions of ethical hacking and reverse engineering are here.
Assuming a trade secret owner has in fact taken reasonable steps to protect the confidentiality of its business’s secret information, the Illinois Trade Secrets Act provides business owners and sole proprietorships strong protection. In practice, the Illinois Trade Secrets Act offers protections for what are often predictable scenarios that tend to follow certain fact patterns, and defines a “trade secret” as:
— information, including but not limited to, technical or non-technical data, a formula, pattern, compilation, program, device, method, technique, drawing, process, financial data, or list of actual or potential customers or suppliers, that:
- is sufficiently secret to derive economic value, actual or potential, from not being generally known to other persons who can obtain economic value from its disclosure or use; and
- is the subject of efforts that are reasonable under the circumstances to maintain secrecy or confidentiality.
The fact patterns that tend to define trade secret disputes and litigation are when:
- Without authority an employee takes confidential information, proprietary information and/or trade secrets and related hard copy files when leaving the company to work for a competitor or to start a competing business; or
- To develop a competing or similar product, a person or his or her business uses confidential information that violates a written non-disclosure or confidentiality agreement.
Our related discussions of litigation involving non-competition and non-solicitation agreements are here, and emergency protections are [here].
While the Illinois Trade Secret Act contains a five-year statute of limitations, and provides for the award of attorneys’ fees in certain circumstances, we do not recommend ever waiting very long at all to enforce misappropriation claims, because doing so undermines the assertion that the information is secret, and that secrecy gives the misappropriated information value. In other words, the liberal five-year limitations period is to preserve claims for later discovered misappropriation, but should never be used as a license not to seek immediate protection upon discovery.
In 2016, state law trade secret protection was enhanced by Congress with passage of the Federal Defend Trade Secrets Act, which is modeled on the Uniform Trade Secrets Act, from which the Illinois Trade Secrets Act is also derived (though different in some respects). The Defend Trade Secrets Act enhances the protection afforded by the Illinois Trade Secrets Act, primarily because it guarantees access [subject matter jurisdiction] in the federal courts with the option of an ex-parte process to recover a misappropriated trade secret.
Legal liability for misappropriation and protection from it is an ever-evolving, highly fact-specific area of law. Trade secret attorneys for people accused of misappropriation, and attorneys for the commercial enterprises who need protection from misappropriation of trade secrets, must have extensive knowledge of trade secret law to defend or advance the rights of our clients. Our trade secret attorneys have over thirty years of experience generally, and cutting edge experience that has evolved with this ever developing legal field. Our trade secret attorneys are committed to protecting our clients’ personal or commercial interests. Located in Chicago and Elmhurst, Illinois, we have won judgments or settlements for our clients in disputes or suits throughout the Chicago area. To arrange for a consultation with one of our attorneys, contact us online or call at 630-333-0333.
The attorneys at Lubin Austermuehle have over thirty years of experience defending and prosecuting non-compete, trade secret and restrictive covenant lawsuits. We are committed to fighting for our clients' rights in the courtroom and at the negotiating table. Conveniently located in Chicago and Elmhurst, Illinois, we have successfully litigated non-compete and trade secret and covenant not to compete cases for clients all over the Chicago area. To schedule a consultation with one of our skilled attorneys, you can contact us online or give us a call at 630-333-0333.