Laws in Illinois and on Federal Level Protect Trade Secrets

Trade secrets can be among the most valuable assets of any business. Laws in Illinois and on the federal level have long protected trade secrets.

Before 1995, the protection of trade secrets was based on the common law as defined by the Restatement of Torts. Illinois has adopted the Illinois Trade Secrets Act, 765 ILCS 1065/1, et seq.

The Illinois Trade Secrets Act is modeled on the Uniform Trade Secrets Act. There are many instances in which the Illinois Trade Secrets Act could be utilized.

For example, an employee who has taken without authority confidential information, proprietary information and/or trade secrets and related hard copy files before exiting the company to perhaps start a competing business may certainly be violating trade secret law.

In many instances in which Kreisman Law Offices has been engaged in assisting, counseling or litigating trade secret protection, an entity or an individual has violated a written non-disclosure agreement and has used that information to develop a competing or similar product or business enterprise.

In practice, the Illinois Trade Secrets Act is only part of the analysis. Illinois common law should also be applied and considered when analyzing a trade secret violation. The Illinois Trade Secrets Act 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:

(1) 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

(2) is the subject of efforts that are reasonable under the circumstances to maintain secrecy or confidentiality.

In 2016, trade secrets were provided with greater protection by the enactment of the Federal Defend Trade Secrets Act. This act was modeled on the Uniform Trade Secrets Act. The Defend Trade Secrets Act enhances the protection afforded by the Illinois Trade Secrets Act.

When the adoption of the federal Defend Trade Secrets Act was implemented, it was credited as being one of the most significant expansions a federal intellectual property jurisdiction since the passage of the Lanham Act, which was passed in 1946.

In some ways the Illinois Trade Secrets Act differs from the Uniform Trade Secrets Act in that Illinois altered the definition of “trade secret” to include “technical or non-technical data.” The Uniform Trade Secrets Act has a three-year statute of limitations; the Illinois act has adopted a five-year statute of limitations. Illinois also adopted Section 4 of the Uniform Trade Secrets Act, which provides for the award of attorneys’ fees in certain circumstances.

By adopting its own trade secrets law, the state of Illinois has explicitly displaced all common law theories of trade secret misappropriation. Composite Marine Propellers, Inc. v. Van Der Woude, 962 F.2d 1263, 1265 (7th Cir. 1992).  However, Illinois courts do recognize and retain the Restatement of Torts, which in effect supplements the Illinois law on trade secrets.

The courts in Illinois and other places have regularly considered the existence of a trade secret as a question of fact. In Illinois, it does not matter whether the trade secret at issue was used by the owner.

Trade secret misappropriation contains elements found in the Illinois act, which include: (1) the existence of a trade secret; (2) misappropriation of a trade secret; and (3) damages.

In order to qualify as a trade secret, an owner must reasonably take steps to protect the secrecy of the process and derive economic value from the fact of the secrecy. In addition, trade secrets are protected only from unlawful misappropriation by improper means.

The Illinois Trade Secrets Act gives business owners and proprietorships strong protection of its trade secrets where steps are taken, reasonable under the circumstances, to protect the confidentiality of the business’s information.

This protection has been enhanced by the federal Defend Trade Secrets Act, which gives the trade secret owner guaranteed access to federal court, the option of an ex parte process to recover a misappropriated trade secret and an award of attorneys’ fees. Both the Illinois and federal law provide a strong basis for protection of trade secrets in Illinois.

Kreisman Law Offices has been handling non-compete litigation, business litigation, commercial litigation and probate litigation for individuals, families and loved ones for more than 40 years, in and around Chicago, Cook County and its surrounding areas, including Bensenville, Long Grove, Lincolnshire, Lincolnwood, Lemont, Lansing, Maywood, Naperville, Waukegan, Joliet, Aurora, St. Charles, Arlington Heights, Chicago (Rogers Park, Albany Park, Bronzeville, Hyde Park, Jackson Park, South Shore, Hegewisch), Glenview, Northfield, Glencoe and Evanston, Ill.

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