Iowa Trade Secret Violations Under Iowa’s Uniform Trade Secrets Act

In this article, we discuss Iowa’s Uniform Trade Secrets Act and answer the following questions:

• What Constitutes a Trade Secret In Iowa?
• What Constitutes a Trade Secret Violation in Iowa?
• What Kind of Damages Are Awarded In a Trade Secrets Misappropriation Lawsuit?
• What Should I Do If An Employee Has Disclosed Company Trade Secrets?

What Constitutes a Trade Secret In Iowa?

The Iowa Uniform Trade Secrets Act was created from the uniform trade secrets act drafted and approved by the Uniform Law Commission. This means that most, if not all, of the other states in the U.S. will have the same or similar general law regarding trade secrets. The Iowa Uniform Trade Secrets Act defines a trade secret as any “information, included but not limited to a formula, pattern, compilation, program, device, method, technique, or process.” Generally, just about anything from inside a company could be considered a trade secret if it’s not already in use by another company or considered common knowledge. More specifically, to constitute a trade secret the information, device, etc, must have independent economic value from not being a generally known thing and must not be readily ascertainable by someone else, even within the same field of work. Further, the individual or company claiming a trade secret must have in place measures to maintain its secrecy, preferably in writing.

What Constitutes a Trade Secret Violation in Iowa?

Most people think of a trade secret violation being limited to one employee or ex-employee taking information from the company and selling to another, or using it to create a new product. While those would definitely be examples of trade secret violation, there are a number of other scenarios that would constitute trade secret misappropriation:

• Disclosure or use of a trade secret by a person who gains the information improperly;
• Acquisition of a trade secret by a third party that knows they are receiving a trade secret;
• Disclosure of use of a trade secret by a third party that knew at the time of receiving the information that it was acquired improperly and given unlawfully;
• Improper disclosure or use of a trade secret by a person who knew that when receiving the information they were tasked with the duty of maintaining its secrecy;
• Disclosure or use of a trade secret received from an individual tasked with maintaining the secrecy of the trade secret; and
• Improper disclosure or use of a trade secret by a person who acquired the trade secret through honest accident or mistake.

What Kind of Damages Are Awarded in an Iowa Trade Secrets Misappropriation Lawsuit?

Under the Iowa trade secrets act, the injured party can seek injunctive relief and monetary damages for misappropriation of trade secrets. Damages can encompass the actual loss from the misappropriation of the trade secrets as well as any monetary gain of the party who acquired and unlawfully utilized the trade secrets. Damages can also be awarded in the form of royalties from the defendant to the plaintiff. Willful and malicious misappropriation of trade secrets can also lead to punitive damages up to twice the amount of compensatory damages.

What Should I Do If I Feel an Employee Has Disclosed Company Trade Secrets?

If you’re not a business owner, typically you would notify Human Resources. When filing a lawsuit for misappropriation of trade secrets understand that the main argument in the case will be over how the information was received, transferred, used, etc, and whether an actual misappropriation of trade secrets occurred. Furthermore, much debate will be made over damages, especially if the plaintiff cannot prove actual damages occurred and only seeks to profit unjustly or gain royalties. The Iowa Uniform Trade Secrets Act has a three-year statute of limitations on all claims, so be sure to take into account when the knowledge of the trade secret misappropriation first occurred and how long it’s been going on. Lastly, having an experienced business law attorney in your corner can make the difference between winning and losing a trade secret misappropriation lawsuit. If you have any questions about trade secret violation and Iowa trade secret law, don’t hesitate to give us a call at (563) 503-6910.