Is reverse engineering misappropriation of a trade secret?

Despite the fact that trade secrets don’t have a formal registration process, they are protected.

You’d think if a company had a trade secret they wanted to hold close to their chest, they’d have a process where they could register that secret to keep it undisclosed. There is no such process. Despite that, trade secrets are protected – at least that is the intent of the Uniform Trade Secret Act.

What happens when trade secrets are stolen or misappropriated? There are any number of ways in which a trade secret can be swiped. The best legal jargon used to describe one method is referred to as a “defendant using improper means of acquisition.” In slightly less polite terms, someone may have ripped off a trade secret from the place they were working, as a means of retaliation or making money by selling it to the competition. This type of information misappropriation can be completed via bribery, theft, spying (yes, spying is quite common in many industries) or misrepresentation.

There are several ways in which one could acquire a trade secret “properly.” These would include independent invention, licensing from the owner, acquiring it in a public forum if it is displayed or sold or through reverse engineering. Reverse engineering is an interesting process, as it means taking apart the original item or product and discovering how it is made.

It is quite the process and you need to be fairly determined to find out what makes something the success that it is. Think the secret recipe for Kentucky Fried Chicken; a trade secret people have been trying to reverse engineer for years, usually without a great deal of success. There have been some near hits, but apparently, the secret is still safe.

When it comes to trade secret disputes, most of them tend to be between an employer and employee. While that may sound pretty straightforward, it usually isn’t, as there are a great number of gray areas in these kinds of relationships. Most often the main problem is the fact that the agreement to keep the “secret” a secret is not as clear as it should be or there is no agreement dealing with keeping trade secrets. Obviously, this would create some difficulties when such a dispute came to a head, hence the need for a well seasoned Dallas business lawyer.

Let’s take a quick look at an example dealing with trade secrets that a company develops and a trade secret that an employee develops. John Doe works for a company that develops drugs. His job is to create them by working with various chemical formulas. He gets fed up with his current job and leaves to go to the competition. He will most likely be told he has to protect the first company’s trade secrets and not reveal them to his new employer.

On the other hand, if that same employee was not originally hired to do product development or product research, and during his tenure of employment developed a trade secret on his own using his own skills and knowledge base, there may be some dispute as to who owns it. This is yet another situation where hiring the services of a skilled Dallas business lawyer makes sense.

In situations like this, it’s usually best if the parties execute an employee agreement that specifically addresses the issue of confidentiality with regard to trade secrets and non-compete agreements.

Ty Gomez writes for the Gomez Law Group, a Dallas employment lawyer and Dallas business lawyer. To learn more, visit Gomezlawyers.com.

,