How to recognize misappropriation

Glenn W. Peterson

Most business owners in California have worked hard to start a company, acquire new customers and build a brand, but what happens when the foundation of the company is stolen? While the Merriam-Webster dictionary defines misappropriation as a verb meaning to appropriate wrongly by embezzlement or theft, it doesn’t take a masked robber to snatch away the basis of a company’s success; it can happen with trade secrets through a process known as misappropriation. Understanding what qualifies as misappropriation can be confusing.

According to the Cornell University Law School’s Legal Information Institute, a formula, process, method, technique or program can be considered a trade secret. Once developed, the inventor must decide whether the secret should be patented or given trade secret protection, but is not allowed to use both. There are benefits and drawbacks to each, including the fact that patents are only good for a certain number of years and trade secret protection means that no public disclosure of the secret is required.


When another business or person attempts to steal a trade secret, the offense is called misappropriation. In order to qualify for a claim, the owner of the trade secret must be able to prove that another person wrongfully acquired the details of the secret. He or she must also be able to show that there were precautions taken to prevent misappropriation, such as patents or protection.


Additionally, the information involved needs to qualify as a trade secret by proving that it is not something that is easily discernible. If the subject is shown to be general knowledge, it cannot qualify as a trade secret and thus cannot be eligible for misappropriation.