Colorado Business Trade Secrets Agreements: What to Know

Colorado has legislation known as the Uniform Trade Secrets Act (the “UTSA”) which provides a legal framework for companies to seek redress if their confidential information ends up in the hands of competitors. The UTSA outlines various types of data that could potentially qualify as trade secrets, such as designs, formulas, and customer lists. If trade secrets are misappropriated, the act allows for the award of monetary damages, legal fees, and in some cases, punitive damages.

Determining whether certain information constitutes a trade secret is not always straightforward. Colorado courts consider multiple factors when making this assessment, including:

• The extent to which the information is known outside the company
• How many individuals within the company have access to the information
• The measures taken by the company to maintain confidentiality
• The value derived from keeping the information secret
• The resources invested in developing the information
• The effort required for others to legitimately acquire the information

While confidential knowledge gained during employment may be protected as a trade secret, general operational knowledge of a business may not qualify as such. Additionally, information and inventions already known to competitors through legitimate means, including patented material, cannot be considered trade secrets.

Steps to Take to Protect Your Business Trade Secrets

Unlike patents or trademarks, trade secrets are not officially registered. However, they still carry significant value precisely because they are not widely known.

For a trade secret to be legally protected, the owner must be able to demonstrate that reasonable measures were taken to safeguard that information. Merely having valuable insider knowledge is not enough – there must be systems and protocols in place to preserve confidentiality.

To keep trade secrets safe, some recommended steps to keep trade secrets safe include:

• Conducting comprehensive audits to identify all trade secret assets
• Implementing robust data classification and access control policies
• Regularly training employees on confidentiality protocols
• Securing legally-binding non-disclosure agreements with staff
• Monitoring for potential leaks or breaches diligently
• Seeking advice from intellectual property legal experts

By zealously guarding your proprietary information, you can help safeguard your business and better position your business to litigate a UTSA claim if needed.

What To Do If You Suspect a Trade Secret Agreement Violation

Safeguarding the confidentiality of a company’s proprietary information is essential, but equally important is the effective enforcement of measures designed to protect trade secrets. The misappropriation and unauthorized disclosure of trade secrets can have severe consequences, potentially undermining a business’s competitive edge and inflicting substantial financial losses.

Fortunately, legal frameworks such as the federal law Defend Trade Secrets Act and state-level legislation like the UTSA provide businesses with tools to seek injunctive relief and monetary damages in the event of trade secret theft. But you must to act swiftly when a trade secret breach is suspected. Failure to promptly enforce protections may result in the unintentional waiver of those legal safeguards.

In Summary

Trade secret agreements between employers and employees represent an exception to Colorado’s general disfavor toward non-compete agreements. However, employers sometimes attempt to disguise non-compete agreements as trade secret agreements, a practice that Colorado courts have rejected.

Courts have ruled that trade secret agreements must be no more restrictive than necessary to protect the employer’s legitimate interests. This means employers cannot draft overly broad trade secret agreements to restrict the companies for which their former employees can work in the future.

To navigate this complex landscape effectively, it is imperative to consult with an experienced Colorado business law attorney who is well-versed in trade secret protection. Their expertise can prove invaluable not only in responding to incidents of misappropriation but also in proactively identifying a company’s trade secrets and implementing strong processes to safeguard their confidentiality.

By taking a comprehensive approach to trade secret management, businesses can significantly enhance the enforceability of their legal protections and mitigate the risks associated with the unauthorized disclosure of sensitive information. Contact our Colorado business law attorneys for a consultation today.