Partner
The Michigan Uniform Trade Secrets Act (MUTSA) provides the statutory authority for businesses to prevent, or put a stop to, the unlawful use of their trade secrets. While other causes of action may be included, this situation calls for an action for “misappropriation of trade secrets.”
The test to establish the misappropriation of trade secrets contains three elements:
The MUSTA defines a trade secret as: information, including a formula, pattern, compilation, program, device, method, technique, or process, that is both of the following:
(i) 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.
(ii) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
In other words, the information must be a secret, meaning evidence has be presented that sufficient means were taken to guard its secrecy. This element, whether the information is a protectable trade secret, is typically subject to considerable litigation and often presents a turning point in trade secret litigation.
Consistent with the definition of trade secret, there must be an indication between the parties that the information being shared is being shared in confidence. Often this is accomplished through the execution of a non-disclosure or confidentiality agreement. In rare circumstances, courts can imply a duty to hold information in confidence.
The final prong requires the plaintiff to present enough evidence to substantiate not only that the defendant used the information, but that the defendant was not authorized to use that information.
This prong can involve a heavily fact intensive analysis regarding the information at issue, the proper use of the information, and the limits, either express or implied, on the permissible use of the information.
Trade secret plaintiffs must overcome a number of hurdles to prove their claims. Revision Legal attorneys have experience both prosecuting and defending trade secret cases.
If you require a Michigan trade secrets attorney, contact Revision Legal today, by completing the contact form on this page or by calling us at the number above.
The existence element is often where Michigan trade secret cases are won or lost. Courts do not accept a plaintiff’s bare assertion that its information is proprietary. The plaintiff must introduce specific evidence demonstrating what the information is, why it has independent economic value from its secrecy, and what steps were taken to keep it secret. General testimony that information is “confidential” or “proprietary” is not sufficient. Courts look for documented security measures, limited access protocols, confidentiality agreements, and evidence that employees were specifically told the information was secret.
Michigan courts have recognized that customer lists, pricing information, proprietary software, manufacturing processes, and business strategies can all constitute trade secrets — but only when the plaintiff can demonstrate that they actually treated the information as secret. In Wysong Corp. v. M.I. Industries, 412 F. Supp. 2d 612 (E.D. Mich. 2005), the court held that customer lists developed by a former employee did not constitute trade secrets under the MUTSA absent a confidentiality agreement binding the employee. This is a critical holding: the presence or absence of a confidentiality agreement can be dispositive on the first element of the misappropriation test.
The second element — that the defendant acquired the trade secret under circumstances giving rise to a duty to maintain secrecy — is typically established by showing that the defendant was an employee or contractor of the plaintiff, or was a party to a non-disclosure or confidentiality agreement. The duty of confidence can also arise implicitly from the nature of the business relationship, though courts are reluctant to impose an implied duty absent clear evidence that both parties understood the information was confidential.
For businesses seeking to protect their trade secrets, this element reinforces the importance of having robust confidentiality agreements in place with all employees, contractors, and business partners who have access to sensitive information. An agreement that clearly defines what information is confidential and expressly prohibits disclosure or use following termination of the relationship dramatically strengthens the second element of a future misappropriation claim.
Proving unauthorized use requires the plaintiff to show not only that the defendant used the trade secret, but that the use was outside the scope of any authorization granted. This element often requires forensic evidence — emails, computer access logs, copied files, or witness testimony — to establish what the defendant actually did with the information. In employee departure cases, this frequently requires a forensic examination of the departing employee’s devices and accounts to determine what data was taken and when.
Circumstantial evidence can support the unauthorized use element. Courts recognize that a plaintiff rarely has direct evidence of the defendant’s misuse of proprietary information. Evidence that a former employee quickly replicated a business process or secured a suspiciously specific set of clients shortly after departure can support an inference of unauthorized use. However, courts guard against allowing plaintiffs to use trade secret claims as a back-door way to prevent all competition by former employees.
Michigan defendants facing trade secret claims have several available defenses. The most powerful is challenging the first element — arguing that the information at issue does not constitute a protectable trade secret because it was publicly available, not actively protected, or not the type of information covered by the MUTSA’s definition. Defendants can also argue independent development: the MUTSA specifically excludes reverse engineering and independent derivation from the definition of misappropriation. A defendant who can demonstrate that they developed the information independently, without access to the plaintiff’s confidential materials, has a complete defense.
Other defenses include arguing that the plaintiff consented to the use, that the information had already lost its trade secret status through public disclosure, or that the statute of limitations under MCL 445.1907 — three years from the date the misappropriation was discovered or should have been discovered — has expired.
In many trade secret misappropriation cases, the most important step is obtaining immediate injunctive relief. Under MCL 445.1903, courts may grant an injunction to prevent actual or threatened misappropriation. A temporary restraining order (TRO) can be obtained on an emergency basis — sometimes within hours — to stop a former employee or competitor from using or disclosing stolen information before the harm becomes irreparable. The plaintiff must demonstrate a likelihood of success on the merits, irreparable harm, that the balance of hardships favors the injunction, and that the public interest is not disserved. Once a TRO is entered, the parties proceed to a preliminary injunction hearing where the court evaluates the same factors on a more developed record.
If you believe your trade secrets have been misappropriated — or if you are facing a misappropriation claim — contact Revision Legal’s trade secret attorneys immediately. Time is a critical factor in trade secret litigation, and delay can affect both your legal rights and the remedies available. Contact us today at (855) 473-8474 or complete the contact form on this page.
Employees who steal trade secrets, client lists, or proprietary information create serious legal exposure. Here’s how to protect your intellectual property from employee misappropriation.
Read more about Protecting IP from Employee Theft
Revision Legal’s Chicago trademark attorneys help Illinois businesses register and protect their trademarks in federal court and at the USPTO. Contact us for a consultation.
Read more about Chicago Trademark Attorney
Defendants in trademark infringement cases have several affirmative defenses available. Here’s an overview of the most common defenses, from fair use to laches to acquiescence.
Read more about Affirmative Defenses in Trademark Infringement