Articles Posted in Build Product Phase

761822_61461701.jpgFor businesses with a unique product or service, keeping their ideas, designs, and plans secure is critical to their success. During business formation, a business owner must consult with numerous people, from designers and marketers to accountants and business attorneys. Once a business has begun developing its product, it needs employees and contractors. Non-disclosure agreements are often effective in the protection of trade secrets, but a business needs some form of recourse in the event of misappropriation of proprietary information. Most states, including New Jersey, have enacted the Uniform Trade Secret Act (UTSA), which enables holders of trade secrets to recover damages for breaches, and to restrain others from disclosing confidential information.

The term “trade secret” refers to information in any form that has actual or potential economic value, in part because it is not widely known or easily discoverable by others, and which would have economic value to someone who did discover it. The information must also be subject to reasonable efforts by its holder to keep it secret. N.J. Rev. Stat. § 56-15-2. This may include data, formulas, drawings, designs, business plans, techniques, processes, or prototypes. “Misappropriation” includes any means of obtaining secret information by a person who knows or should know that it is secret, or the unauthorized disclosure of such information to others. Id. It does not infringe on someone’s trade secret rights to discover the same information entirely independently, or to reverse-engineer information from a legitimately-obtained product. Unlike patents and other forms of intellectual property, no official procedure exists to register or declare something a trade secret.

The Restatement of Torts § 757 defined the tort of improper use of disclosure of a trade secret belonging to another. It provides that a person is liable for using or disclosing a trade secret if the person knows that it is a secret, regardless of how the person learned about it. Keeping trade secrets secure is critical to the viability and success of many businesses, and theft or disclosure of trade secrets results in substantial business losses.
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Colearn Social MediaSocial media is no longer an optional feature for most businesses. Consumers expect to find businesses online, not only on a company website, but also on popular social media platforms like Facebook and Twitter. Many businesses use these platforms to market products or services, but some use them simply to engage with their customers. These forms of media offer varying degrees of benefits and opportunities for different types of businesses, but all companies using social media face certain potential legal risks and liabilities. As small business lawyers for New York and New Jersey, we have seen how social media can get companies into trouble, but we have some suggestions for what to do.

1. False or misleading advertising: Advertisements put forth through social media must adhere to the same rules as any other kind of advertising. New York and New Jersey’s consumer protection laws prohibit businesses from making false or misleading statements to consumers about their products or services, and the penalties can be quite harsh.

2. False or defamatory statements: Social media, particularly Twitter, lends itself to short, quick bursts of information, often without the thought and consideration that might go into a longer marketing piece. Statements about a competitor or any other person or business, even limited to 140 characters, could expose a business to liability for defamation. Several recent lawsuits, including one against musician Courtney Love, indicate that Twitter is a viable medium for defamatory speech.

3. Bad publicity: Social media, perhaps for the first time in history, offers a two-way street between companies and consumers. A disgruntled customer can cause havoc for a company’s reputation through social media. A company’s response can make the difference between allowing the dust to settle and causing the dispute to “go viral,” giving it far greater exposure than it might have otherwise had (often known as the “Streisand Effect.”)
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