Protected Status Of Trade Secrets May Be Lost By Not Insisting On Confidentiality

A recent decision of the U.S. Court of Federal Claims highlights the difficulty the owner of trade secrets faces in trying to market products while simultaneously preserving confidentiality. The Court dismissed a trade secret owner’s misappropriation lawsuit against the U.S. Government because of a failure to insist on trade secret protections.

Summary of the case. Gal-Or, an Israeli scientist, invented various products which embodied his inventions and were used in the military aerospace industry. In the course of his efforts to sell his inventions, he disclosed confidential information to the Government and others, but he did not always insist on a non-disclosure agreement or place a legend on documents or prototypes. The Government allegedly misappropriated his trade secrets and infringed his patents. He sued in the Court of Federal Claims, alleging a violation of the Takings Clause of the Fifth Amendment and seeking $71 million in damages. The Government then moved to dismiss the trade secret misappropriation counts on the ground that he revealed the confidential information without always imposing an obligation to maintain secrecy. The motion was granted. Gal-Or v. U.S., Case No. 09-869C (U.S. Court of Fed. Claims, Nov. 21, 2013) (Braden, J.).

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