By Aya Farhat & Rania Chemli

Trade Secret

Intellectual property rights are the rights given to persons over the creations of their minds.
They usually give the creator an exclusive right over the use of his/her creation for a certain
period of time. It includes various forms of protection, such as patents, trademarks, and trade
secrets1. In the dynamic landscape of business and commerce, certain proprietary information
holds the key to a company's competitive value. These closely guarded secrets are known as
trade secrets. A trade secret is any practice or process of a company that is generally not
known outside of the company. Information considered a trade secret gives the company
a competitive advantage over its competitors and is often a product of internal research and
development2.
There may be some confusion between patents and trade secrets. The key difference between
patents and trade secrets is their approach to protection. Patents include the public disclosure
of an invention in exchange for exclusive rights for a certain period of time, promoting
innovation through shared knowledge. In contrast, trade secrets maintain confidentiality to
gain a competitive advantage without revealing the information publicly. For instance, a
patent might protect the design of a new instrument, while a trade secret could safeguard the
unique manufacturing process used to produce it3.
Examples of trade secrets can range from manufacturing processes and formulas to customer
lists, marketing strategies, and software algorithms. For instance, the secret recipe of a well-
known soft drink such as Coca-Cola closely guarded and known only to a select few,
exemplifies a trade secret that has contributed significantly to the brand's success. Similarly,
the algorithms powering a tech company's search engine like Google or the unique methods
employed in a manufacturing facility can be considered trade secrets4.
Trade secrets that qualify as intellectual property must meet several criteria in order to be
legally protected. The most important of them is the requirement for secrecy—information
must not be publicly known or widely available to qualify. Moreover, the information must
have financial value thanks to its exclusivity, providing a competitive advantage. Also, the
owner must aggressively protect the secret by creating confidentiality agreements and
restricting access. Independence is critical; the information must be genuinely useful and
difficult to copy. While there is no set time limit for protection, the possible period of hiding
is taken into account. Finally, exploring legal alternatives such as nondisclosure agreements
and legal action against breaches provides a further level of security5.
Businesses gain greatly from the protection of trade secrets. For the first time, it gives you a
competitive advantage by keeping exclusive access to valuable information like secret
formulations, manufacturing processes, or client records. This exclusivity has the potential to
improve market position and profits. Second, keeping trade secrets protected avoids the costs
and limitations associated with different kinds of intellectual property registration, such as
1
www.wto.com (Consulted on the 24th of November).
2
www.investopedia.com(Consulted on the 24th of November).
3
www.brownwinick.com(Consulted on the 24th of November).
4
www.investopedia.com (Consulted on the 24th of November).
5
Idem.

1
By Aya Farhat & Rania Chemli

patents. Furthermore, trade secrets have no deadline for use as long as secrecy is maintained,
possibly providing long-lasting protection in contrast to the limited duration of patents or
copyrights. In addition, protecting trade secrets encourages innovation and motivates
businesses to invest in research and development knowing that their efforts would be
protected from rivals. Finally, trade secret protection could improve commercial relationships
by creating greater trust in a company that exhibits a commitment to keeping sensitive
information secure6.
Yet, trade secret protection is often more challenging than other forms of intellectual property,
such as patents or trademarks, since it is based on permanent secrecy, making enforcement
tough. The human factor, the possibility of insider threats, and the absence of public
disclosure all add to the complexity and risk of protecting trade secrets, which leads us to our
question;
How to protect trade secret in the light of possible struggles?
And in order to answer this question, first we need to tackle “the performance of trade secret
protection “(I) to later analyze “the challenges of trade secret protection” (II).

I/ performance of trade secret protection:

To safeguard trade secrets, implementing preventive and effective measures is imperative, and
this can be achieved in various ways. Thus, we will proceed with legal measures (a), followed
by technical measures (b).

A) Legal measures:
To legally protect trade secrets, various approaches can be employed. The first involves
preventive measures based on legal regulations. This entails adhering to laws and statutes
designed to safeguard confidential information. The second approach is associated with pre-
legal agreements and contracts. Finally, in the absence of an explicit agreement, legal
doctrines come into play.

Starting with legal regulations, trade secrets in the United States are primarily protected
through a combination of state and federal laws. At the federal level, The Defend Trade
Secrets Act (DTSA) of 2016, which amended the Economic Espionage Act, empowers the
U.S. Attorney General to prosecute individuals, organizations, or companies intentionally
involved in stealing, copying, or receiving trade secrets. Under the DTSA, a conviction can
result in imprisonment for up to 10 years, with individual fines reaching $500,000 and
corporate fines up to $5 million. Corporate fines may double if the theft is on behalf of a
foreign government or agent, potentially leading to a 15-year prison sentence. In addition, the
government has the authority to seize and sell proceeds derived from the theft, along with
property used in the commission of the theft. Supporters contend that DTSA has improved
protection for trade secret owners by providing easier access to federal courts and authorizing
expedited seizure of property to retrieve stolen trade secrets in some circumstances 7. In
6
www.whglawfirm.com (Consulted on the 24th of November).

7
https://sgp.fas.org (Consulted on the 24th of November).

2
By Aya Farhat & Rania Chemli

addition to the (DTSA), there is the Computer Fraud and Abuse Act (CFAA) a federal
legislation in the United States that criminalizes numerous computer-related actions, including
unauthorized access to computer systems and networks. It was enacted in 1986. While the
CFAA's major focus is on combating computer fraud and abuse, its provisions are frequently
used to safeguard trade secrets. Individuals who intentionally access a computer system
without authority or exceed permitted access may face civil and criminal penalties under the
CFAA. This includes instances in which workers or third parties get unauthorized access as
well as misappropriate trade secrets kept on computer systems 8. In the case of United States v.
Sergey Aleynikov (2010), former Goldman Sachs programmer Sergey Aleynikov was charged
under the Computer Fraud and Abuse Act (CFAA) for possibly stealing the firm's high-
frequency trading code, showing the CFAA's role in addressing trade secret misappropriation
through unauthorized computer access. The case of Aleynikov highlighted the legal
implications of such behavior.
At the state level, the Uniform Trade Secrets Act (UTSA) has been adopted by most states,
providing consistent standards for trade secret protection. To qualify for protection,
businesses must demonstrate that they have taken reasonable measures to maintain the
secrecy of their information. Legal remedies include injunctive relief to prevent further
disclosure or use of trade secrets, as well as compensatory damages for economic harm
resulting from misappropriation. Also, in the context of international trade, trade secret
protection is greatly aided by Section 337 of the Tariff Act of 1930. This provision, which is
enforced by the United States International Trade Commission (USITC), deals with unfair
trade practices and unfair conduct related to the importation of goods into the country.
Though historically connected to patent infringement, Section 337's scope has expanded to
include trade secrets and other types of intellectual property. When items are imported and
there are allegations of misappropriation or unfair competition, including the unauthorized use
of trade secrets, the USITC looks into the accusations. This enables businesses to request
remedies to stop the importation of items that breach trade secrets, such as exclusion orders or
cease-and-desist orders9.

Some companies take secrecy to extreme levels, but this requires great expense and is not
always necessary. One of the simple ways that companies reasonably protect a trade secret is
by requiring anyone to whom they disclose the secret to sign a non-disclosure agreement
(NDA). Often, an employee is required to sign both an NDA and a non-compete agreement in
order to make it easier to enforce a trade secret. First of all, a Non-Disclosure Agreement
(NDA) for trade secret protection is a legal contract between parties aimed at safeguarding
confidential information, particularly trade secrets, from unauthorized disclosure or use. It can
be mutual, in which both parties are exchanging secrets, or it can be a one-way agreement,
such as when you disclose confidential information to an employee in order to grow your
business or develop a product. In addition, it is better for the agreement to be in writing, since
the contents of a written document are easier to prove than the nature of a conversation. The
agreement's main elements begin with clearly defining what information is considered secret

8
www.mcglinchey.com (Consulted on the 24th of November).
9
https://sgp.fas.org (Consulted on the 24th of November).

3
By Aya Farhat & Rania Chemli

and outlining the extent of protection. It describes the responsibilities placed on the person
who receives the information, outlining specific responsibilities to protect the privacy of the
information that has been exposed. Furthermore, the (NDA) includes a timeframe within
which the information must be kept private, providing a limited amount of time for protection.
The agreement also contains exclusions that specify situations in which the confidentiality
duty is not applicable, such as material that is already publicly known. The (NDA) breach can
have severe legal consequences for the party responsible; it typically outlines specific
remedies and consequences, such as monetary damages and injunctive relief. The severity of
these consequences depends on the NDA's language and the nature of the breach. Some
NDAs may also include provisions for attorney's fees, allowing the breaching party to cover
the legal costs incurred by the disclosing party to enforce the agreement. I n some cases, the
(NDA) can be incorporated as a clause within an employment contract10.

In addition to the NDA, we will explore another sort of pre-legal agreement known as a non-
compete agreement. A non-compete agreement (NCA) is one in which an employee promises
not to work for direct competitors of the employer for a limited term after leaving a company.
This means that competitors will not have access to the confidential information you disclose
to an employee for a specific period of time, during which time you can exploit the economic
benefits of your trade secret. In most states, some general rules apply. An employer should
have a good business reason for asking an employee to sign a non-compete agreement.
Usually, the protection of sensitive trade secret information is a good reason. As an employer,
it can be helpful to be selective about which employees sign the agreement. You should only
ask those employees to sign the agreement who are likely to be exposed to trade secrets.
Moreover, it is important for an employer to establish that signing the non-compete agreement
is a prerequisite for receiving the job. The court must consider the non-compete agreement
“reasonable.” Each state has its own nuances when it comes to what courts think is
reasonable. In general, a non-compete agreement should be of limited duration and limited
geographic range, and it should only prohibit the employee from engaging in a limited
number of businesses. Usually, a non-compete agreement that lasts longer than two years is in
danger of running afoul of the reasonableness rule. Too many restrictions on an employee will
seem to the court like the company is trying to punish him or her for leaving the company11.

In light of the previous discussion on Non-Disclosure Agreements (NDAs) and Non-

Compete Agreements, it is important to emphasize that, in the absence of express contractual
requirements; the legal doctrine of Inevitable Disclosure may apply. The Inevitable
Disclosure Doctrine is used when a leaving employee is believed to definitely reveal or use
trade secrets from their previous employer in their new job without a non-compete agreement.
This legal doctrine is frequently claimed when the employee's role requires access to essential
and sensitive information, making it likely that the knowledge obtained in their previous work
would be used in a way that may be detrimental to their former company. This approach is
10
https://www.justia.com/intellectual-property/trade-secrets/nondisclosure-agreements (Consulted on the
24th of November).
11
https://www.justia.com/intellectual-property/trade-secrets/noncompete-agreements (Consulted on the 24th
of November).

4
By Aya Farhat & Rania Chemli

especially significant where the employee's unique and specialized expertise is linked with the
former company's trade secrets, and when the new position is in direct conflict with the
former employer. While the Inevitable Disclosure Doctrine does not have the contractual
foundation of non-compete agreements, it does rely on equitable considerations to handle the
possible danger of trade secret theft in competitive situations. For instance, in the 1995 case
of PepsiCo, Inc. v. Redmond, the U.S. Court of Appeals for the Seventh Circuit affirmed a
preliminary injunction restricting a former PepsiCo general manager from taking a job at a
PepsiCo competitor. The district court had noted that the employee could not possibly
compartmentalize his knowledge of PepsiCo’s trade secrets when making decisions in a
similar position for a competitor. Generally, the inevitable disclosure doctrine has been
applied to very high-level employees who were among a tiny number of employees to whom
the secret was disclosed. In many states, however, the inevitable disclosure doctrine does not
apply because the doctrine unduly restrains employees from changing jobs12.

B) Technical measures:

The significance of technical measures in ensuring full shielding is equal to that of

legal measures. They must coexist together for increased security.

First and foremost, it is critical to have strong rules and processes for remote workers in order
to protect trade secrets and sensitive information. Strict password protection procedures must
be enforced. To provide an extra degree of protection, remote workers should be forced to use
tricky unique passwords and multi-factor authentication. Furthermore, regular password
improvements should be required to reduce the danger of illegal access. Also, encryption is
essential for data security during communication and storage. When accessing firm resources,
remote workers should use encrypted communication methods such as virtual private
networks (VPNs). This guarantees that even if data is intercepted, it is incomprehensible to
unauthorized parties. End-to-end encryption for email and file sharing should also be included
in the existing protocols13.

In addition, it is beneficial to use data loss prevention (DLP) and Cloud Access Security
Broker (CASB) solutions to monitor and retain sensitive information. Furthermore, biometric
solutions, such as fingerprint or face recognition technology, improve physical security by
validating an individual's specific biological characteristics. These systems are used in trade
secret protection to limit access to sensitive places, ensuring that only authorized people with
validated biometric identities may enter14.

12
https://www.justia.com/intellectual-property/trade-secrets/enforcement (Consulted on the 24th of
November).
13
www.virtru.com (Consulted on the 24th of November).

14
www.economictimes.indiatimes.com (Consulted on the 24th of November).

5
By Aya Farhat & Rania Chemli

Moreover, Regular audits are an essential feature of a strong trade secret protection plan,
serving as a means for evaluating the efficiency of present safety measures. Internal process
audits, data access restrictions, and employee compliance with defined standards are all part
of these audits. An audit could, for example, evaluate the security of digital sources where
trade secrets are saved, as well as encryption methods and access permissions for users.

Another measure to be taken is training programs; effective employee training on trade secret
protection involves comprehensive education and clear communication about the importance
of safeguarding sensitive information. For example, during training sessions, employees can
be provided with specific instances of how trade secrets, such as unique manufacturing
processes, client lists, or innovative product designs, contribute significantly to the company's
competitive advantage. Demonstrating real-world examples helps employees understand the
tangible impact of protecting these assets on the company's success and their own job
security. Training should also include the particular guidelines and protocols put in place to
protect trade secrets. This might involve secure filing procedures, standards for exchanging
information with individuals inside or outside the company, and procedures for managing
private papers. Employees may get training on the correct application of encryption software
when transmitting sensitive information online or the value of keeping physical papers
secured in cabinets. These ideas may be reinforced through practical examples and hands-on
exercises, which also increase the training's value to the members' everyday work. As a result,
communicating the consequences of unauthorized disclosure is critical. This might include
setting out possible legal actions that the corporation might take, such as pursuing damages or
injunctions against individuals who break confidentiality agreements. The importance of trade
secret preservation can be emphasized further by highlighting the influence on the company's
reputation and financial stability. Real-life case studies or hypothetical scenarios can be
incorporated into training programs to demonstrate the serious implications of breaching trade
secret confidentiality15.

By the end, it’s noteworthy that one of the techniques to detect possible espionage is by
monitoring your competition. Keep an eye on what they’re doing and how they’re doing it. If
you notice anything suspicious, such as a competitor that’s been hiring more talent than usual,
or that they’ve been asking your employees for far more information about your business
during an interview, or if you see a unique product or technology feature launched by the
competitor which is very similar to yours. Be wary of their intentions. Of course, you can't
read too much into every situation; but if something doesn't seem right, pay attention. It's also
important to keep up with any new innovations in your industry and where your competitors
are focusing their efforts16.

In conclusion, coordination between legal and technical measures plays a key role in
strengthening trade secret protection. Legal frameworks establish the foundation for
clarifying, recognizing, and shaming unlawful use or disclosure of proprietary information.

15
www.findlaw.com (Consulted on the 24th of November).

16
www.economictimes.indiatimes.com (Consulted on the 24th of November).

6
By Aya Farhat & Rania Chemli

Meanwhile, technical measures such as encryption, firewalls, and Data Loss Prevention
(DLP) solutions, alongside training programs, offer the essential defense against possible
invasions. However, despite these attempts, the landscape of trade secret protection is full
of challenges. The strategies and sophistication of individuals seeking illegal access grow
along with technology. The growth of cyber threats, insider dangers, and the complexities of
worldwide corporate operations offer significant hurdles to protecting trade secret
confidentiality.

II/ Challenges of trade secret protection:

A trade secret can be difficult to maintain for information can lose its protected status as a
trade secret if it becomes public knowledge. If the knowledge is readily accessible to
individuals who could commercially exploit it, it can no longer be claimed as a trade secret. 17
The discovery of trade secret information, in other words, the loss of trade secret status can be
done either in a legitimate way (a) or in an illegitimate manner (b).

A) Legitimate loss of trade secret status:

A trade secret cannot be protected against being discovered by fair and honest means.
If a person not having legal access to the trade secret information, deciphers the information
without taking recourse to any illegal means, then such a person cannot be stopped from using
the information so discovered. Under these types of circumstances, the owner of a trade secret
cannot take any legal action against the other person.18
There are several means through which an individual can legally lose its trade secret
protection, these means include:

 Reverse engineering:
A trade secret may be lost by selling or displaying a product, outside of an obligation of
confidentiality, where the “secret” of the product can be discovered upon inspection or by
reverse engineering.19
Reverse engineering is the analysis of a technical product to identify how it has been designed
and how it works. The reverse engineering process is an analysis of the design features of a
software, various usages of reverse engineering exist, some of which are perfectly legitimate,
such as solving compatibility problems, understanding a mechanism, or evaluating security,
but some practices are not.20

17
https://www.legalmatch.com/law-library/article/termination-of-a-trade-secret.html (Consulted on the 24th of
November).
18
https://www.wipo.int/export/sites/www/sme/en/documents/pdf/ip_panorama_4_learning_points.pdf
(Consulted on the 24th of November).
19
https://neustel.com/trade-secrets/ (Consulted on the 24th of November).
20
https://www.quarkslab.com/article-reverse-engineering-threat-to-intellectual-property-innovations/ (Consulted
on the 24th of November).

7
By Aya Farhat & Rania Chemli

It is not a misappropriation (meaning to appropriate wrongly) to discover a trade secret

“properly”, by reverse engineering.21
The United States Supreme Court has ruled that state trade secret laws may not rule out
“discovery by fair and honest means,” such as reverse engineering (Kewanee Oil Co. v.
Bicron Corp., 1971).
The Supreme Court also upheld the legitimacy of reverse engineering in Bonito Boats, Inc. v.
Thunder Craft Boats, Inc., 1989. where it declared that the “public at large remained free to
discover and exploit the trade secret through reverse engineering of products in the public
domain or by independent creation.”
In California, reverse engineering is not a wrongful act in the eyes of law, and similarly, in
Texas, unless reverse engineering is not prohibited, it is considered as a “fair and legal
means” to obtain information. Reverse engineering that violates a non-disclosure agreement
(NDA) or other contractual obligation not to reverse engineer or disclose may be
embezzlement.22

 Negligent disclosure:
Obviously, when an individual publicly discloses their “trade secret” information the
information is no longer a trade secret. Many leaks of trade secret information are the result of
deliberate (but negligently prepared) publications. Many leaks also come about through casual
conversation, loose talk at trade shows and in restaurants, and leaving sensitive documents
where they might be seen by others. The most important way to protect trade secrets against
misappropriation is to educate those to whom the secrets have been entrusted, namely
employees.23
Employees are the biggest risk when it comes to trade secrets.
Employees talk. The talk can be innocent. They talk to their friends and family. They talk to
someone they meet at the bar on a business trip. It is not uncommon for employees to give
over trade secrets in exchange for a job, or personal gain, or to get back at the company.
The task of policing your trade secrets is harder with the advancement of technology and the
Internet. In the past employees had to photocopy documents and sneak them out of the
building, but today anyone with an Internet connection can send and receive stolen
information. It really highlights the need for updated confidentiality agreements and social
media policies.24

 Patents:

21
https://neustel.com/trade-secrets/ (Consulted on the 24th of November).
22
https://ipwatchdog.com/2021/03/27/reverse-engineering-law-understand-restrictions-minimize-risks/
(Consulted on the 24th of November).
23
Idem.
24
https://www.apslaw.com/trade-secrets/ (Consulted on the 24th of November).

8
By Aya Farhat & Rania Chemli

Since patent applications are initially maintained in secrecy, the information stated in the
application is protected as a trade secret until the patent application is publicly disclosed after
18 months from the filing date. After the “trade secret” information is published in an issued
patent or a published patent application, the information is no longer entitled to trade secret
protection. Any “trade secret” information which is not disclosed in the resulting patent is still
protected by its trade secret status. However, the applicant may abandon the patent application
prior to the 18 months of pendency thereby retaining trade secret protection.25

 Invention disclosures:
From the date an inventor conceives his invention to the date a patent issues, the only
protection that he has is trade secret protection. Hence, it is extremely important for an
individual to have confidentiality agreements signed by third parties who receive information
relating to his invention to avoid losing trade secret rights. This is applicable during the
licensing stage also.
In this context, we site also the case of independent invention; if people are out there working
on the same problem and they come up with the same solution as the trade secret owner, with
no help from him or his employees, etc., they can use it.26 A trade secret does not prevent
another individual who independently develops the subject matter of the latter.

B) Illegitimate loss of trade secret status:

When we say illegitimate loss of trade secret protection, we mean misappropriation, by which
we talk about;
(1) Unfair acquisition that is, acquiring a trade secret by theft, fraud, coercion, or other
unlawful or dishonest acts.
(2) Acquiring a trade secret with knowledge of its prior unlawful acquisition, or acquiring
such trade secret without actual knowledge of its unfair acquisition but being grossly
negligent in failing to know of the earlier unfair acquisition and, in either case, using or
disclosing a trade secret so acquired.
(3) Although innocently acquiring a trade secret, using it or disclosing it after learning of
its earlier unfair acquisition by another person.
(4) Using or disclosing the trade secret in breach of a contractual obligation to maintain
the trade secret.27
In this context, trade secrets get misappropriated by industrial espionage; another area of trade
secret loss that is becoming increasingly common. Foreign governments and foreign
companies are waging war against U.S. business. In fact, some foreign governments have
been known to actually send their citizens to work in the United States for the express purpose
25
https://neustel.com/trade-secrets/ (Consulted on the 24th of November).
26
Idem.
27
https://www.wipo.int/export/sites/www/sme/en/documents/pdf/ip_panorama_4_learning_points.pdf
(Consulted on the 24th of November).

9
By Aya Farhat & Rania Chemli

of learning the trade secrets of American companies and passing them over to the foreign
government.
It is known as “industrial espionage” and it is so common that the United States government
actually has declared it a matter of national security. Over a billion dollars in revenue is lost
every month to trade secret theft.
For many foreign companies, it is cheaper and easier to steal your technology than it is to
develop it on their own. Their governments often help them steal what they need.28
Such activities are on the rise due to increasing global competition, shorter product cycles,
thinning profit margins, and declining employee loyalty.
In this sense we also talk about external threats and internal theft:
While external threats include corporate spying with professional criminals targeting specific
technology, initiating network attacks (hacks), laptop computer thefts:
- accessing source code, product designs, marketing plans, customer lists
- approaching employees to reveal company information etc. Businesses strive to protect their
trade secrets by enacting corporate security measures and confidentiality clauses in
employment, technology licensing, distributorship and joint venture agreement.
Internal theft on the other hand, occurs from disgruntled workers or former employees, the
theft here is also intentional. Some of these people allow themselves to be exploited by
competitive intelligence operatives, either for money or merely for spite.
We take the example of a fired or retrenched employee that might go directly to a competitor
and offer, for seeking revenge or for a fee, to disclose your trade secrets, marketing strategies,
or new product plans‐‐often despite signed nondisclosure or confidentiality agreements.
We can also mention, in this manner, the Starbuck case in which, a former Starbucks
employee was terminated from her/his position but decided to reveal the recipes for all the
company's drinks in revenge. This disgruntled ex-employee shared images containing the
ingredients for nearly every beverage on Starbucks' menu.
Starbucks is renowned for offering a wide range of coffee options and being known for its
global presence. Despite its popularity, the coffee giant has never publicly disclosed the
precise ingredients used to create their signature brews. However, this former employee
recently shared images of the ingredients used in crafting Starbucks' complete menu, sparking
a flurry of excitement among “netizens” who expressed their intentions to try these recipes. 29
The coffee industry has always been highly competitive, with each brand holding tightly to its
unique recipes as a part of its intellectual property.
Starbucks, like many companies, maintains strict confidentiality agreements and policies to
protect its proprietary information. This breach of trust and violation of these policies may
have far-reaching consequences for the employee involved.

28
https://www.apslaw.com/trade-secrets/?fbclid (Consulted on the 24th of November).
29
https://timesofindia.indiatimes.com/etimes/trending/ex-starbucks-employee-gets-fired-reveals-every-drinks-
recipe-after-termination/articleshow/104462187.cms?from (Consulted on the 24th of November).

10
By Aya Farhat & Rania Chemli

Leaking confidential information, including trade secrets and recipes, is a serious matter, and
companies are often quick to respond to such breaches. Starbucks, known for its commitment
to protecting its brand and intellectual property, may take legal action against the employee
who leaked the recipes.
Possible legal ramifications that the employee may face include:
- Breach of Contract: The Starbucks employee likely signed a confidentiality agreement
or a non-disclosure agreement (NDA) when hired. Leaking recipes would be a clear
violation of this agreement, potentially leading to legal action by Starbucks.

- Trade Secret Violation: Starbucks could pursue a case for the misappropriation of
trade secrets, seeking damages for any economic harm caused by the leak.30
Sometimes, competitive intelligence operatives may tap phone lines, or regularly sift through
a company's garbage, break into computer systems. They may include seemingly innocent
persons such as research analysts, business analysts, information specialists, and potential
employees or customers, who gain employees' trust for obtaining proprietary information by
inducements, gifts or blackmail.31

We can site in this context, many examples based on actual events including:
 Coca-Cola: In one of the most iconic trade secrets cases, Coca-Cola encountered a
scare in 2006 when several of its employees were accused of attempting to sell trade
secrets to competitor PepsiCo. The secrets included valuable information about
upcoming product launches and marketing strategies. Coca-Cola swiftly informed the
FBI, ultimately leading to several arrests. While the company managed to protect its
secrets, the incident serves as a reminder to all companies to remain vigilant in
safeguarding their intellectual property.

 Google: Renowned for its innovative technologies, Google faced a major trade secrets
lawsuit in 2017. Industry giant Uber was accused of stealing Google’s self-driving car
technology through a former Google engineer, who later joined Uber’s autonomous
vehicle division. The case sent shockwaves through the tech industry, highlighting the
importance of strict non-disclosure agreements and employee loyalty agreements to
protect highly valuable and sensitive information.

 Tesla: In 2020, Tesla sued former employee Martin Tripp for allegedly stealing trade
secrets involving manufacturing processes and data, aiming to supply the information
to third parties. The lawsuit revealed the risks companies face from internal threats.
Tesla’s action emphasizes the need for robust security systems, employee training, and
proper exit protocols to prevent trade secret theft during employment transitions.

 Apple: Recognized for its cutting-edge designs and technological advancements,

Apple experienced a trade secret breach in 2017. Engineer Xiaolang Zhang stole
30
Idem
31
https://www.wipo.int/export/sites/www/sme/en/documents/pdf/ip_panorama_4_learning_points.pdf
(Consulted on the 24th of November).

11
By Aya Farhat & Rania Chemli

confidential files linked to the company’s autonomous vehicle project before planning
to join a Chinese self-driving car start-up. Apple acted swiftly, managing to retrieve
the stolen data and, subsequently, securing Zhang’s arrest. The case highlighted the
significance of proactive measures, such as multi-factor authentication and encryption,
to protect sensitive trade secrets effectively.

 KFC: The world-famous fast-food chain KFC faced a notable trade secret challenge
during the mid-20th century. Colonel Sanders, the founder of KFC, franchised his
popular recipe to various restaurants under a non-disclosure agreement. However, one
franchisee, attempted to establish her own fried chicken business using the secret
recipe. KFC took legal action to prevent them from misusing the trade secret,
illustrating that trade secrets can also extend to recipes and culinary techniques. 32

32
https://tradesecrets.vondranlegal.com/blog/5-famous-trade-seret-cases/#:~:text (Consulted on the 24th of
November).

12