Business Litigation in Florida: Is it a Trade Secret Violation – or Reverse Engineering?
The Defend Trade Secrets Act and similar state statutes create a civil cause of action for misappropriating another’s trade secrets if the trade secret relates to a product (or service) used in interstate or foreign commerce or intended for use in interstate or foreign commerce. 18 USC § 1836 specifies that, under such circumstances, the owner of the trade secret may bring civil action.
A trade secret owner desiring to file a civil lawsuit for misappropriation of a trade secret must plead (and be able to prove) both that the party filing the suit owns the trade secret and that the defendant in the suit misappropriated that particular trade secret. (See dmarcian, Inc. v. dmarcian Europe BV, 60 F. 4th 119 (4th Cir. 2023).
It is important for trade secret owners to understand that not every instance of one party acquiring another’s trade secret will constitute a misappropriation. There are cases where, for example, a good is sold on the public market and purchased by an individual who subsequently reverse engineers the goods components. This kind of reverse engineering would not – usually – qualify as trade secret misappropriation.
So, when does an act relating to acquiring another party’s trade secret qualify as actual, actionable trade secret misappropriation? This article will help readers become familiar with some of the basics. For expert legal advice and formal counsel in your own case, contact an esteemed business litigation attorney at Suncoast Civil Law.
Public Knowledge
As stated above, simply acquiring another party’s trade secret does not necessarily qualify as misappropriation under the statute. As the 6th circuit court opined in ECIMOS, LLC v. Carrier Corp., trade secrets cannot be matters of general or public knowledge in the given industry, or ideas that are well-known and/or easily attainable. In the example given above, for instance, a good is sold on the public market, taken apart and its parts assessed, and recreated. This acquisition of the trade secret would not be deemed “misappropriation” because the “trade secret” was acquired by a means that is not deemed improper. The good was on the public market and a party figured out the components.
Misappropriation
So when is acquiring a trade secret “misappropriating” the trade secret? The act of misappropriation has been defined as a party knowing, or having reason to know, that the trade secret was acquired via improper means. The courts have found various actions to be “improper means” to include instances of theft, bribery, espionage, and breach of a duty to maintain secrecy.
It is important to note that while there are many actions included in the definition of what quantifies as misappropriation: reverse engineering is not included. Nor are the acts of independent derivation, nor any other lawful means of acquisition.
The court opined in E. I. duPont deNemours & Co. v. Christopher that a party can use a competitor’s secret process if that process is discovered via reverse engineering, or through independent research. But if the secret process is taken without the owner’s permission at a time when that owner is taking reasonable precautions to maintain the processes’ secrecy then it is an improper gain.
The line between reverse engineering and misappropriation can be fuzzy and quickly blur. The nuance in these cases make it important to consult legal counsel.
Contact Suncoast Civil Law
The Sarasota business litigation attorneys at Suncoast Civil Law can help advise in many areas of business litigation – contact our office today to begin discussing your own set of circumstances with our experienced team of legal experts.
Sources:
law.justia.com/cases/federal/appellate-courts/F2/431/1012/140093/
casetext.com/case/dmarcian-inc-v-dmarcian-eur-bv