Business Law · Haute Lawyer Network
What Is Trade Secret Misappropriation?
Last reviewed: June 2026
Trade secret misappropriation is the theft or unauthorized use of confidential business information that provides a competitive advantage. The Defend Trade Secrets Act (DTSA) creates a federal civil cause of action for trade secret misappropriation, and virtually all states have enacted the Uniform Trade Secrets Act (UTSA) or similar state law.
A trade secret can be any formula, pattern, compilation, program, device, method, technique, or process that derives economic value from not being generally known or readily ascertainable, and that the owner takes reasonable steps to keep secret.
Common misappropriation scenarios include an employee leaving to join a competitor and taking proprietary customer lists, a contractor copying source code for use in a competing product, a business partner disclosing confidential information to a competitor, and corporate espionage.
Frequently Asked Questions
What must I prove to win a trade secret case?
That the information qualifies as a trade secret — it was secret, had commercial value, and was protected by reasonable security measures. That the defendant misappropriated it — through theft, breach of a confidentiality agreement, or improper use after acquiring it through proper means.
What remedies are available for trade secret misappropriation?
Injunctive relief to stop the misappropriation, compensatory damages for lost profits or unjust enrichment, and in cases of willful misappropriation, exemplary damages up to two times compensatory damages and attorney fees under the DTSA.
Can I get an emergency court order to stop a competitor from using my trade secrets?
Yes. A temporary restraining order and preliminary injunction can be obtained on an emergency basis to stop a competitor from using misappropriated trade secrets while the case is litigated.
What is the inevitable disclosure doctrine?
A legal theory — accepted in some states and rejected in others — allowing an employer to prevent a former employee from working for a competitor when it is inevitable that the employee will disclose trade secrets in the new role, even without any specific evidence of disclosure.
How can I protect my trade secrets?
Through NDA agreements with employees, contractors, and partners; access controls limiting who can access sensitive information; employee training on confidentiality obligations; and clear policies marking confidential information as such.
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