What Happens if My Trade Secret Is Publicly Disclosed?

The answer depends on how the trade secret became publicly disclosed.

As defined legally, a trade secret is any sort of information that has commercial value from the fact that the information is secret. The law protects trade secrets. However, if the information becomes known publicly through disclosure, then, generally, the status of the information as a “trade secret” is lost. The trade secret is no longer secret, and no longer has legal protection as a trade secret.

Thus, if the information was voluntarily disclosed to the public, then the information is no longer a trade secret and has no legal protection. The same is generally true if a trade secret becomes public through inadvertence or accident. As noted, the general rule is that, upon disclosure, even if inadvertent or accidental, information disclosed ceases to be a trade secret and will no longer have legal protection.

However, accidental disclosure does not always result in the loss of the trade secret. In most cases, this is a fact question. This is because, as a specific requirement for legal protection, the owner of a trade secret must take “reasonable measures” to protect the secrecy of the information. Obviously, voluntary disclosure of the information vitiates and nullifies any “reasonable measure” to protect the secrecy of the information. And, often, the same is true for inadvertent or accidental disclosure. If security measures are “reasonable,” then those measures should protect against inadvertence or accident. If the security measures do not protect against inadvertence or accident, then the security measures can be deemed to be “unreasonable.” This is what happened in the case of Defiance Button Machine Co. v. C & C Metal Prod. Corp., 759 F.2d 1053 (2d Cir. 1985). In that case, customer lists were contained on a computer and the computer was sold. The owner did not erase the computer memory/hard-drive before the sale. The customer lists became public and the owner claimed that its trade secrets had been misappropriated. However, the court held that, even if the disclosure was accidental, by failing to erase the computer memory, the owner had not used “reasonable measures” to keep the customer lists secret. As such, the customer lists lost their status as trade secrets.

However, in a different case, customer lists did NOT lose their status as trade secrets even though they were found in the trash. The owner made a factual demonstration that it had procedures in place requiring the shredding and destruction of customer list information before being placed in the trash. This was sufficient for the court to deem the customer lists to be still deemed to be trade secrets. In short, even an inadvertent disclosure may not result in the loss of trade secret status if the owner can demonstrate that reasonable security procedures were in place and the disclosure was truly accidental.

When a Competitor Intentionally Causes the Disclosure

A critically different scenario arises when a trade secret is publicly disclosed not through the owner’s accident or neglect, but through a competitor’s wrongful act — such as hacking into systems, bribing an employee, or reverse engineering through improper means. In this situation, the disclosure does not necessarily destroy the owner’s legal rights. Under both the federal Defend Trade Secrets Act (18 U.S.C. § 1836) and most state trade secret laws based on the Uniform Trade Secrets Act, misappropriation through improper means is actionable even if the trade secret was later disclosed publicly. The owner can still recover damages measured from the time of misappropriation through the time the information became publicly known, and courts may issue injunctive relief preventing the misappropriating party from continuing to use the information even after public disclosure.

The rationale is straightforward: a wrongdoer should not be able to use their own wrongful disclosure as a shield against liability. If a competitor steals trade secrets and then publishes them on the internet to make them public, courts can still award damages for the period of harm caused by the misappropriation and can impose disgorgement of any profits the competitor derived from the stolen information.

What Constitutes “Reasonable Measures” to Protect Secrecy

Because “reasonable measures” is the legal standard for maintaining trade secret status, courts examine a business’s specific security practices closely when a disclosure event occurs. Courts have found the following practices relevant to whether reasonable measures were in place:

Confidentiality agreements — Requiring employees, contractors, vendors, and partners to sign non-disclosure agreements (NDAs) before accessing confidential information is a baseline reasonable measure. Failure to use NDAs with parties who had access to the disclosed information significantly weakens a trade secret claim.
Access controls — Restricting access to trade secret information to those who need it — and logging who accesses it and when — demonstrates reasonable measures. Allowing unrestricted access to sensitive information within an organization is a significant vulnerability.
Physical security — Keeping confidential documents in locked areas, shredding sensitive documents rather than discarding them in accessible trash, and securing facilities where trade secret activities occur
Digital security — Encrypting sensitive digital files, using password protection, implementing audit logs for sensitive systems, and wiping data from devices before disposing of or selling them, as illustrated by the Defiance Button Machine case
Employee training and policies — Written policies notifying employees that specific information is confidential, training employees on confidentiality obligations, and consistently enforcing those policies against violations

Remedies When Trade Secrets Are Improperly Disclosed

When a trade secret has been improperly disclosed — whether by a competitor’s wrongful act or by a former employee in breach of their confidentiality obligations — the following remedies may be available:

Injunctive relief — Courts can issue orders prohibiting the defendant from using or further disclosing the trade secret. Even after public disclosure, an injunction may prevent the specific wrongdoer from using the information for a period designed to eliminate the “head start” advantage they gained from the misappropriation.
Damages — The owner may recover actual damages, which can include both the economic harm caused by the disclosure and the unjust enrichment the wrongdoer obtained from using the trade secrets. In exceptional cases — particularly where the misappropriation was willful — courts may double the damages award.
Attorneys’ fees — The DTSA allows courts to award attorneys’ fees in cases of willful misappropriation or bad faith claims.

Contact Revision Legal

Revision Legal’s trade secret attorneys represent business owners in disputes involving theft, unauthorized disclosure, and misappropriation of confidential business information. If your trade secrets have been compromised, contact us today to discuss your options.