In New York, as in most jurisdictions, misappropriation of trade secrets creates civil liability for the misappropriator. Trade secrets are generally defined as any formula, pattern, device or compilation of information which is used in one’s business, and which gives him an opportunity to obtain an advantage over competitors who do not know it or use it. Common trade secrets include computer source code (e.g., Google’s proprietary search algorithm), recipes (ranging from soft drinks to FDA approved drug chemistry formation), and in some instances, customer lists and public data complied in a particular way that gives rise to trade secret protection. Where a defendant has accessed or retained trade secreted information without authorization, the plaintiff has a strong misappropriation argument so long as the plaintiff can show that the defendant used the trade secret in breach of an agreement, confidence or duty, or as a result of discovery by improper means. In other words, once the information is out, if the defendant did not breach an agreement or duty to the holder of the trade secret, or did not acquire it through unlawful means, the argument against the defendant will fail. For these reasons, a most critical element of showing that information should be treated as a trade secret is that the holder of the information take extreme care to keep the information secret.
Damages resulting from theft of trade secrets is generally limited to lost profits in New York. Other jurisdictions have precedents allowing for disgorgement of the misappropriator’s profits that flowed from its use of the stolen trade secret, including federal courts applying New York law. Injunctions, preliminary and permanent are routinely sought.