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Proactive Steps to Protect Trade Secrets

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James Irving
BKK Business Law Newsletter
September 2013

The Virginia Trade Secrets Act protects the critical business secrets of a person or individual provided three pre-conditions are met:

  1. the information to be protected must fit the definition of a trade secret;
  2. the owner of the trade secret must have taken reasonable steps to maintain it securely; and
  3. the outsider making use of it must know or have reason to know that the trade secret was obtained by improper means.

Daniel Glenn was an employee of BMX Technologies, Inc. working on BMX’s Lockheed Martin/Bechtel contract.  BMX reacted quickly when Glenn left BMX and took a USB containing trade secret material with him.  Concerned that Glenn would use this material to compete for the Lockheed work on behalf of a competitor, BMX obtained an injunction from the Lynchburg Circuit Court prohibiting the former employee from “using, disclosing, divulging or otherwise disseminating in any way, directly or indirectly, any trade secret or proprietary or confidential information of plaintiffs obtained during or after his employment.”

A trade secret is defined under Virginia law as information that “derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use.” Even if the material at issue is a trade secret, it cannot be protected under the act unless the owner undertakes “efforts that are reasonable under the circumstances to maintain its secrecy.”

The court found that the materials taken constituted trade secrets and that they had been adequately protected by BMX.  Since Glenn took the USB without permission, the court was persuaded that if Glenn made any use of the trade secret material, he would be doing so through “improper means.” The court also found that only an injunction could prevent the likelihood of irreparable harm. Once the trade secret material was used or disclosed to a third party, stopping the damage would be like putting the toothpaste back in the tube.  

Having fulfilled the prerequisites for relief, the court entered a broad and onerous injunction against possible conduct by Glenn that could damage BMX.  In particular, the court’s order required Glenn to:

It is sometimes said that the fight over the preliminary injunction defines the ultimate winner of the case.  Because they so effectively tied Glenn’s use of information he may have wrongfully taken from his former employer, BMX may have won this war in the first battle.