You’ve Been Sued for Trade Secret Misappropriation. Now What?

Few things are more unsettling than receiving a complaint alleging trade secret misappropriation. Whether you’re a company or an individual, the stakes can be high: potential injunctions, monetary damages, reputational harm, and even criminal liability in some cases. So, what do you do next?

Here’s a step-by-step guide to help you navigate the early stages of a trade secret lawsuit.

1. Don’t Panic—But Don’t Delay

Take the complaint seriously, but don’t jump to conclusions. Trade secret litigation often involves complex factual and legal issues, and early missteps can make things worse. Immediately contact an attorney experienced in trade secret law—especially one who understands your industry.

Pro tip: The deadline to respond to the complaint can be as short as 21 days after you've been served. Missing it has consequences.

2. Preserve Evidence

As soon as you’re aware of a claim, your legal obligation to preserve potentially relevant evidence kicks in. That means you (and your team) must not delete emails, texts, files, or physical documents that might relate to the allegations.

Your attorney will likely issue a “litigation hold” or "freeze letter" to prevent destruction of evidence. Ensure compliance. Destruction of evidence is a bad idea. Make sure no one on your team does it.

3. Understand the Allegations

Trade secret misappropriation usually involves one of two things:

• Acquisition of a trade secret by improper means (like theft, bribery, or hacking), or

• Use or disclosure of a trade secret without consent, often by former employees or business partners.

Your legal team will analyze whether the alleged “trade secrets” meet the legal definition under state or federal law (such as the Defend Trade Secrets Act (DTSA)), and whether the facts support a misappropriation claim.

4. Identify Defenses and Counterclaims

Your lawyer will explore defenses, such as:

• The alleged secret isn’t actually a trade secret.

• The information was already publicly known.

• You independently developed the information.

• You had permission to use it.

  
  

In some cases, you may even have counterclaims—for example, if the plaintiff has engaged in unfair competition or is weaponizing a lawsuit to stifle a legitimate business.

5. Be Strategic About Injunctions

Plaintiffs often seek emergency injunctive relief to stop the use or disclosure of trade secrets. These motions move fast—sometimes within days. Be ready to mobilize quickly with declarations, expert input, and evidence to refute the claim.

6. Cooperate with Your Legal Team

Be transparent with your attorneys about what happened—good, bad, or ugly. Surprises during litigation are rarely good. The more candid you are, the better they can defend you or negotiate a favorable resolution.

7. Consider Resolution Options Early

Litigation is expensive. Mediation or settlement may be in your best interest depending on the facts, especially if you can avoid an injunction or admission of wrongdoing. An early resolution might protect your business and reputation while limiting cost.

8. Review and Reinforce Your Trade Secret Policies

If you're being accused of misappropriation, it’s also a good time to review your own trade secret practices. Do your employees understand confidentiality obligations? Are NDAs up to date? Do you have clear onboarding/offboarding protocols? These steps can reduce future risk—on either side of a dispute.

Final Thought

Being sued for trade secret misappropriation is serious—but it’s not the end of the road. With the right legal strategy and swift action, you can protect your rights, limit damage, and position yourself for the best possible outcome.