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How to respond to corporate espionage in civil court

On Behalf of | Mar 31, 2024 | Business Litigation

Business litigation often involves parties who sign contracts with companies. Businesses may need to take legal action against employees who violate restrictive covenants or vendors who never deliver materials. Sometimes, the party that puts a business at risk is not someone with a pre-existing relationship but instead a competitor.

Unethical competition can cause major operational headaches for modern companies. Litigation could be an appropriate response to unethical conduct on the part of a competitor. Business litigation could help resolve issues involving price-fixing and other forms of unethical competition. It could potentially also help companies address issues that constitute corporate espionage.

What is corporate espionage?

Businesses often protect their trade secrets because recipes and manufacturing procedures are what help them maintain a competitive advantage. Other businesses may want to learn those secrets and may engage in inappropriate conduct to achieve that goal.

Corporate espionage could involve a burglary, although such cases are rare. It could also involve cases of social engineering, where those working for one business lie to gain access to another company. They might pose as regulatory officials or possibly workers from the corporate offices to enter the building and access company records or infrastructure.

Other times, corporate espionage involves arranging to have someone infiltrate a company by accepting a job at that business. Their goal is to gather as much information as possible or specific trade secrets. They then provide that information to a competitor and may exit their role at the company they previously infiltrated.

When a business has reason to believe that a competitor engaged in corporate espionage, there may be grounds to take legal action. Fraudulent and unethical business practices violate state law and, in some cases, federal statutes. A business could obtain a court order preventing a competitor from misusing trade secrets or possibly an award of damages to compensate for the economic impact that the espionage and the loss of trade secrets could have on the organization. Proof of misconduct and the misuse of certain trade secrets could play a major role in such lawsuits.

Business owners and executives may need to take legal action to protect an organization from the misconduct of a competitor. Recognizing actionable forms of business misconduct can potentially help organizations negatively impacted by the actions of another business to seek justice effectively.