How Should You React When You've Been Accused of Trade Secret Theft?

September 28, 2016

“The greatest victory is that which requires no battle.”

           — Sun Tzu

Recently I got a call from a client who had just received a letter from a competitor, complaining about an executive the client had hired, and threatening to sue. My client was a young company that had never experienced this sort of threat. But they were less worried than they were angry, and viewed the competitor with more scorn than respect. They wanted to know if we could strike first with our own lawsuit and how long it would take to prevail, as they were sure they would.

Indeed, emotions were running very high on both sides, mostly due to assumptions fueled by an absence of information. The former employer suspected that the executive, who had been evasive about his plans during his exit interview, was working on similar projects. The client believed that the threat was made in bad faith to slow them down, and that an aggressive response would force the other company to relent.

Unlike patent cases, trade secret disputes hinge on issues of fault. Emotional themes frequently dominate the background: breach of trust, treachery, revenge, resentment. But emotions shouldn’t drive decision-making. This is particularly important for a defendant, for whom there is usually no upside, since even “winning” is an expensive distraction. So maintaining objectivity and detachment is critical to the defendant’s primary strategic goal: get out and get on.

Happily in this circumstance, we were able to get the parties in front of a skilled mediator, who helped each understand the other’s perspective, correct some mistaken assumptions, and find a way forward that even left the door open for future collaboration. How different things would have been if the sword had been unsheathed . . . .

For more on this topic, please read my white paper, titled "How to Respond to a Claim of Trade Secret Misappropriation".

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