Here is a nightmare scenario for many businesses.\u00a0 A person with access to a business\u2019 trade secrets posts them on the internet.\u00a0 The posting could be by mistake or \u2013 worse \u2013 out of spite (revenge for being passed over for a promotion or firing).\u00a0 After stating the expletive of choice, what is the business to do?<\/p>\n
First, remember that all is not necessarily lost.\u00a0 A single publication of business information does not necessarily cause the information to lose its status as a trade secret.\u00a0 Whether that happens depends upon whether the information has become \u201cgenerally known\u201d and \u201creadily ascertainable by\u201d competitors.\u00a0 This comes from the definition of a trade secret under The Texas Uniform Trade Secrets Act (\u201cTUTSA\u201d).\u00a0 Tex. Civ. Prac. & Rem. Code Ann. 134A.002(6)<\/a>.<\/p>\n If the trade secret was posted on an obscure website that is not generally known or visited by members of the relevant industry (for example, an internet forum or an employee\u2019s Facebook page), then the publication should not strip the information of trade secret status if the trade secret owner takes remedial action as suggested below.\u00a0 However, if the trade secret was posted on a prominent website and has already been downloaded many times, it likely no longer qualifies as a trade secret.\u00a0 The business may still be able to recover damages on a theft of trade secrets claim against the author of the internet publication, but may have lost the ability to protect its information as a trade secret against other parties.<\/p>\n Regardless of the prominence of the website at issue, the usual first step in responding to an internet publication of trade secrets is to send a demand that the publication be taken down.\u00a0 This demand letter goes to both the author of the publication and the owner of the website.\u00a0 How to learn the identity of those recipients when they are not known is beyond the scope of this post.\u00a0 The big picture is that the trade secret owner may have to use (i) resources like Register.com\u2019s \u201cwhois lookup\u201d <\/a>to get the name of the website\u2019s registered owner and (ii) litigation discovery to learn the author\u2019s identity if the web host will not voluntarily disclose the author\u2019s name.<\/p>\n If demand letters don\u2019t get the offending website publication taken down, the trade secret owner\u2019s next recourse is to seek an injunction requiring that action to be taken.\u00a0 The named defendants in the case would be the author and the owner of the website.\u00a0 Even if the demand letter was successful, the trade secret owner may need to seek an injunction against the author prohibiting further publication if that is a concern.<\/p>\n The trade secret owner can find itself in a tough spot if both the author and owner of the website are outside of the United States and not subject to personal jurisdiction in U.S. federal or state courts.\u00a0 If so, an injunction will not be available.<\/p>\n The current leading court decisions addressing whether an internet publication strips information of trade secret status come from states other than Texas.\u00a0 Good examples are Syncsort Incorporated v. Innovative Routines, Int\u2019l<\/em><\/a>, 2011 WL 3651331, No. 04-3623 (D.N.J. August 18, 2011) and DVD Copy Control Assoc., Inc. v. Bunner<\/em><\/a>, 10 Cal. Rptr. 3d 185 (Cal. App. 6th<\/sup> Dist. 2004).\u00a0 The take away from these cases is that business information still qualifies as a trade secret despite publication on the internet if (i) the publication was \u201ctransient or obscure\u201d and (ii) the trade secret owner took reasonable efforts to maintain the secrecy of its information upon learning about the publication.<\/p>\n I will end with one practical word of caution.\u00a0 Demand letters and litigation may be the best and necessary course of action.\u00a0 However, a trade secret owner should pause a moment before acting to think about whether its remedial efforts will do more harm than good.\u00a0 If a trade secret has been posted on an obscure website that no one visits, consider whether demand letters or litigation could incite media attention to the website or internet users to visit the site and republish the trade secrets.\u00a0 This is the \u201cStreisand effect\u201d<\/a> \u2013 a term coined after Barbara Streisand\u2019s lawsuit to require a web site to take down aerial photographs of her house caused more than 420,000 people to visit the web site.<\/p>\n