A Trade Secret is business information which gives its proprietor a commercial advantage over competitors. Of course the information needs to be secret, not to be disclosed in public, and must be kept in such a manner that others cannot discover it easily.

GKDM’s professional guidance in the field of Trade and Industrial Secrets includes identifying the business information which constitutes a Trade Secret, creating a proper scope of protection, prevention of competition by employees and suppliers, drafting non-disclosure and non-compete agreements, and litigating in civil and labor courts in lawsuits for Misappropriation of Trade Secrets.

What does Misappropriation of a Trade Secret mean?

Many times Trade Secrets are the business’ primary assets which differentiates it from others and constitutes a central factor in its commercial success. A situation in which a Trade Secret is publicly disclosed or used without permission is likely to be every business’ “nightmare”.

The Commercial Torts Law views Misappropriation of a Trade Secret as a physical and unauthorized taking of materials in which the secret is contained, or as an unauthorized use of information or data contrary to a contract or in breach of a fiduciary relationship (for example – an employment relationship).

So too, receipt or use of a Trade Secret by a third party can constitute a Misappropriation of a Trade Secret, provided that the third party knows or it is readily apparent that the secret was obtained in a prohibited manner.

What is the monetary compensation for Misappropriation of a Trade Secret?

A person whose Trade Secrets are misappropriated is entitled to compensation without proof of damages (statutory damages) of up to NIS 100,000 for every such tort. Of course, if the actual damages are higher, a higher amount of compensation can be claimed.

How to protect your Trade Secrets?

A business can procure a competitor’s Trade Secrets by means of industrial espionage, but this is not so simple from a technical standpoint. Moreover, the means and methods of industrial espionage are not always legal.

A far simpler way is to recruit employees from the competition. By the nature of things, employees have a wide access to internal business information. This often includes Trade Secrets which they can take with them and switch to the competitor.

The difficulty is that not everything which the business views as his Trade Secret which grants him an advantage over others, does indeed fall into the legal definition of a Trade Secret. For that same reason, non-disclosure or non-compete agreements which are signed by employees and suppliers do not always receive legal validity. Many times the agreements are drafted in a mistaken and sweeping manner, to the point of “ending up with nothing” since the civil and labor courts hold that they are illegal and invalid.

Under these circumstances, there is great importance in receiving professional legal counsel to make certain that a business’ Trade Secrets are properly protected, and that one in fact effectively prevent them from being leaked to competitors, or that no injurious competition by employees or suppliers occurs.

If you have any questions regarding Trade Secrets and Industrial Secrets, please contact us.

The above is an overview and does not constitute a legal advice. Professional legal advice requires individual examination of the specific circumstances.

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