This article serves as a practical roadmap for small and midsized companies on how to protect what makes your business valuable if copyright, patent, and trademarks are not helpful.

The case, Valeo v. Nvidia, should serve as a warning not to neglect trade secrets. Imagine your company has finally perfected a novel, confidential source code for driving assistance systems. Then, a former engineer leaves for a competitor, jumps on a joint video call, and accidentally shares his screen—revealing your stolen source code.

That is how quickly a trade secret dispute can erupt. In an instant, one careless mistake transforms your confidential information into a multi-national legal battle spanning Germany and the U.S., costing millions to investigate and litigate. This case joins a growing list of blockbuster disputes. It ranks right alongside Waymo's $245 million settlement with Uber over stolen driverlesscar designs and federal indictments against former Apple engineers who fled to China with autonomous vehicle source code.

This article serves as a practical roadmap for small and midsized companies on how to protect what makes your business valuable if copyright, patent, and trademarks are not helpful.

Why Trade-Secrets are More Relevant Now than Ever

First, non-competes are increasingly less enforceable. Although the FTC's categorical ban on noncompetes was ultimately vacated, a growing majority of states outright ban or severely restrict them, employers can no longer rely on broad contracts to keep employees from joining rivals.

Trade secret law is now the primary weapon left to protect your proprietary edge. Second, remote and hybrid work has inconspicuously changed “access.” More employees can reach sensitive files from more places, often through shared drives, personal devices, and third-party apps.

That convenience is great until someone leaves with a full download of your customer data. Third, job-hopping is normal. Employees move more often, and competitors hire aggressively. Even diligent workers in good faith can negligently divulge trade secrets, especially if boundaries were never clearly set. Fourth, organizations are leaner. Downsizing and streamlining often mean more employees are exposed to proprietary information earlier than they used to be. The more broadly sensitive data is shared internally, the more likely it is to walk out the door.

Small and Mid-Sized Companies Misunderstand the Term Trade Secret

Under the federal Defend Trade Secrets Act (DTSA), the legal definition of a trade secret is any information that:

1. Derives independent economic value from not being generally known or easily discoverable by others; and
2. Is subject to "reasonable measures" to keep it secret.

Common examples include but are not limited to: (1) customer lists with purchasing history; (2) pricing formulas, margin targets, and bid strategies; (3) vendor and supplier terms; (4) scripts, operating procedures, and training materials; or (5) product formulas, recipes, prototypes, and manufacturing methods.

A simple test is this: would a competitor pay to get this information, and would it save them time or money? If yes, it may be a trade secret.

“What Did You Do to Protect It?”

Often business owners neglect a key element of enforcing their trade secrets: preparation. This essentially means you need a credible pattern of protection that matches your business. For example, in Turret Labs USA, Inc. v. CargoSprint, LLC, a federal court dismissed a massive trade secret claim because the company failed to require users to sign Non-Disclosure Agreements (NDAs) before accessing its software. Similarly, in Art & Cook v. Haber, a company lost its trade secret protection over a valuable customer list simply because it didn’t password-protect the file or restrict employee access.

When an employee resigns or is terminated, preventative measures to avoid litigation due to the aforementioned rationales include the following:

• disabling accounts, shared-drive access, and administrative permissions;
• collecting and inventorying all company property, including electronics, badges, and physical files; confirming where work product has been stored and requiring the return or deletion of copies in personal devices and drives;
• following up with a brief written reminder that reattaches the relevant agreement, and restates the confidentiality and non-solicitation obligations; and
• where appropriate, a formal notice to the new employer about existing obligations can further deter misuse.

Effective Use of Restrictive Covenants

A successful trade secret strategy uses contracts thoughtfully, not broadly. To build an enforceable legal fence around your proprietary information, focus on these key principles:

• Target High-Risk Roles: Restrictive covenants are essential for the following candidates: (1) executives and senior managers, (2) sales teams, (3) technical employees, and (4) third parties like contractors, consultants, and service providers.
• Be Specific, Not Expansive: Drafting definitions that are overly broad makes the agreement legally unenforceable, while definitions that are too narrow leave your assets exposed. Define protected information by referencing specific, relevant business data.
• Tailor Your Non-Solicitation Clauses: Courts dislike blanket bans. A restriction is much more defensible if it only applies to customers the employee actually serviced, had material contact with, or learned about through confidential systems. Apply this same precision to time periods, geographic scope, and the definition of prohibited conduct.
• Prioritize Confidentiality Over Non-Competes: Because the enforceability of non-competes is increasingly constrained and varies wildly by state law, businesses are better served by relying on confidentiality and non-solicitation provisions. When paired with clear internal access controls, these provide highly reliable protection.
• Include Compliance Carve-Outs: When drafting, be mindful of language banning legally protected activity. You must include explicit carve-outs, pursuant to federal and state-specific regulations, for lawful whistleblowing, good-faith reporting to government agencies, and protected workplace discussions.

Conclusion & Practical Guidance

The risk to your IP has never been higher. Your competitive edge is only as safe as the practical and legal fences you build around it.

Means of Protection

1. Audit Access: Identify your most valuable data and restrict access strictly to a "need-to-know" basis. Password-protect everything.
2. Update Your Contracts: Replace unenforceable, blanket noncompetes with tailored confidentiality and non-solicitation agreements.
3. Formalize Offboarding: Do not let employees walk out the door without a digital audit of their devices and a written reminder of their legal obligations.Protect your trade secrets today, so you have legal rights to enforce tomorrow.

Dutch consumers are suing Sony over the argument that Sony controls about 80% of the console market in the Netherlands and abuses its dominant market position.

Ultimately, the Dutch consumer group Stichting Massaschade & Consument, representing 1.7 million Dutch Playstation users, makes the same claim that the regulators are making against dominant tech platforms like Apple and Google, who wield market abusive, and likely illegal, powers over digital ecosystems.

Uniquely here, the case represents the consumer’s fight for fairness following the February launch of the “Fair PlayStation” campaign that criticizes the “Sony tax” where digital games are allegedly priced up to 47% higher despite lower distribution costs. The lawsuits, if successful, could not only force Sony to compensate affected users, it would also open Sony to third party game stores and prove a vital cornerstone in the developer’s fight for market access against big corporations.

What Happened?
Sony’s digital ecosystem is closed by design: PlayStation users can only purchase games and add-ons through the official PlayStation Store, while third-party resellers like Amazon or Green Man Gaming are completely excluded. This gives Sony complete control over pricing and distribution, along with a standard 30% commission on all digital sales.

This setup results in limited consumer choice and higher prices - commonly referred to as the “Sony Tax.” While physical PlayStation games remain available through retailers with competitive pricing, the same is not true for digital content. Sony sells two PS5 models: a Standard Edition with a disc drive and a Digital Edition without one. Owners of the Digital Edition are fully locked into Sony’s digital-only ecosystem. Additionally, since 2019, Sony has banned third-party sales of digital game codes, preventing developers from offering their games directly or through alternative platforms.

What This Means for Game Developers?
Sony’s digital policies tightly restrict how developers can price, promote, and distribute their games. Independent discounts, regional pricing, and time-limited promotions all require Sony’s approval, while selling digital codes through developers’ own websites or third-party platforms is prohibited - practices common on PC and Xbox.

This creates a single point of access - the PlayStation store - where visibility and revenue opportunities are tightly controlled. Placement depends entirely on Sony’s algorithm and editorial discretion - a barrier for many indie and mid-sized studios. With no option to drive external traffic or leverage affiliate marketing, discoverability becomes yet another gate that only Sony can open.

This lack of alternative sales channels leaves developers fully exposed to Sony’s standard 30% commission, with no way to offset it through direct sales or discounted offers, limiting both pricing flexibility and growth potential compared to other platforms.

Is the “Walled Garden” and “Sony Tax” illegal?
Under EU competition law, companies with a dominant market position are strictly prohibited from abusing that power to the detriment of consumers or competition. The key legal provision is Article 102 of the Treaty on the Functioning of the European Union (TFEU), which bans abusive practices such as excessive pricing and unfair trading conditions. Dutch law reflects this through Article 24 of the Dutch Competition Act, which mirrors the principles of Article 102.

Legally, the Dutch Consumer Foundation argues that Sony controls about 80% of the console market in the Netherlands and has abused this dominant position by restricting developers and resellers from offering digital PlayStation games outside the PlayStation Store. They claim this has created an artificially closed market that inflates prices and harms consumer choice. According to their research, digital PlayStation games can cost up to 47% more than physical copies.

If upheld in court, this pricing model could be considered excessive pricing under Article 102 TFEU - a form of exploitative abuse - particularly if Sony’s digital prices are found to significantly exceed what would be expected in a competitive market.

Beyond Article 102, the EU’s Digital Markets Act (DMA), which came into effect in 2023, introduces new rules targeting large online platforms classified as “gatekeepers,” including Sony’s PlayStation Store. The DMA mandates fair and transparent pricing, prohibits self-preferential treatment, and aims to foster cross-border competition within the EU’s digital single market. This legislation enhances regulatory oversight and restricts the kind of closed ecosystem Sony has built around digital game sales.

What’s Next?
The first court hearing is expected later this year, beginning with the Dutch court assessing whether it has jurisdiction and whether the consumer foundation can represent the class. Cases like this can take several years to resolve, especially if appeals follow an initial ruling.

If the court ultimately grants the claims, the foundation expects that Sony could be required not only to open its platform to third-party digital game sellers, but also to compensate millions of Dutch consumers for alleged overcharges. A ruling in favor of the plaintiffs could also set a legal precedent for similar lawsuits in other EU countries, putting further pressure on Sony - and possibly other platform operators - to reform their digital distribution models.

While Sony is battling similar cases also in England and Portugal, this case arrives at a moment of mounting political will to rein in digital gatekeepers. With laws like the EU’s Digital Markets Act (DMA) already targeting tech giants like Apple and Google, Sony may now find itself drawn into a broader regulatory push for platform accountability and consumer and game developer choice. Whether driven by regulators or consumers, the message is becoming clear: the era of closed ecosystems is under challenge.

This article serves as a practical roadmap for small and midsized companies on how to protect what makes your business valuable if copyright, patent, and trademarks are not helpful.

The case, Valeo v. Nvidia, should serve as a warning not to neglect trade secrets. Imagine your company has finally perfected a novel, confidential source code for driving assistance systems. Then, a former engineer leaves for a competitor, jumps on a joint video call, and accidentally shares his screen—revealing your stolen source code.

That is how quickly a trade secret dispute can erupt. In an instant, one careless mistake transforms your confidential information into a multi-national legal battle spanning Germany and the U.S., costing millions to investigate and litigate. This case joins a growing list of blockbuster disputes. It ranks right alongside Waymo's $245 million settlement with Uber over stolen driverlesscar designs and federal indictments against former Apple engineers who fled to China with autonomous vehicle source code.

This article serves as a practical roadmap for small and midsized companies on how to protect what makes your business valuable if copyright, patent, and trademarks are not helpful.

Why Trade-Secrets are More Relevant Now than Ever

First, non-competes are increasingly less enforceable. Although the FTC's categorical ban on noncompetes was ultimately vacated, a growing majority of states outright ban or severely restrict them, employers can no longer rely on broad contracts to keep employees from joining rivals.

Trade secret law is now the primary weapon left to protect your proprietary edge. Second, remote and hybrid work has inconspicuously changed “access.” More employees can reach sensitive files from more places, often through shared drives, personal devices, and third-party apps.

That convenience is great until someone leaves with a full download of your customer data. Third, job-hopping is normal. Employees move more often, and competitors hire aggressively. Even diligent workers in good faith can negligently divulge trade secrets, especially if boundaries were never clearly set. Fourth, organizations are leaner. Downsizing and streamlining often mean more employees are exposed to proprietary information earlier than they used to be. The more broadly sensitive data is shared internally, the more likely it is to walk out the door.

Small and Mid-Sized Companies Misunderstand the Term Trade Secret

Under the federal Defend Trade Secrets Act (DTSA), the legal definition of a trade secret is any information that:

1. Derives independent economic value from not being generally known or easily discoverable by others; and
2. Is subject to "reasonable measures" to keep it secret.

Common examples include but are not limited to: (1) customer lists with purchasing history; (2) pricing formulas, margin targets, and bid strategies; (3) vendor and supplier terms; (4) scripts, operating procedures, and training materials; or (5) product formulas, recipes, prototypes, and manufacturing methods.

A simple test is this: would a competitor pay to get this information, and would it save them time or money? If yes, it may be a trade secret.

“What Did You Do to Protect It?”

Often business owners neglect a key element of enforcing their trade secrets: preparation. This essentially means you need a credible pattern of protection that matches your business. For example, in Turret Labs USA, Inc. v. CargoSprint, LLC, a federal court dismissed a massive trade secret claim because the company failed to require users to sign Non-Disclosure Agreements (NDAs) before accessing its software. Similarly, in Art & Cook v. Haber, a company lost its trade secret protection over a valuable customer list simply because it didn’t password-protect the file or restrict employee access.

When an employee resigns or is terminated, preventative measures to avoid litigation due to the aforementioned rationales include the following:

• disabling accounts, shared-drive access, and administrative permissions;
• collecting and inventorying all company property, including electronics, badges, and physical files; confirming where work product has been stored and requiring the return or deletion of copies in personal devices and drives;
• following up with a brief written reminder that reattaches the relevant agreement, and restates the confidentiality and non-solicitation obligations; and
• where appropriate, a formal notice to the new employer about existing obligations can further deter misuse.

Effective Use of Restrictive Covenants

A successful trade secret strategy uses contracts thoughtfully, not broadly. To build an enforceable legal fence around your proprietary information, focus on these key principles:

• Target High-Risk Roles: Restrictive covenants are essential for the following candidates: (1) executives and senior managers, (2) sales teams, (3) technical employees, and (4) third parties like contractors, consultants, and service providers.
• Be Specific, Not Expansive: Drafting definitions that are overly broad makes the agreement legally unenforceable, while definitions that are too narrow leave your assets exposed. Define protected information by referencing specific, relevant business data.
• Tailor Your Non-Solicitation Clauses: Courts dislike blanket bans. A restriction is much more defensible if it only applies to customers the employee actually serviced, had material contact with, or learned about through confidential systems. Apply this same precision to time periods, geographic scope, and the definition of prohibited conduct.
• Prioritize Confidentiality Over Non-Competes: Because the enforceability of non-competes is increasingly constrained and varies wildly by state law, businesses are better served by relying on confidentiality and non-solicitation provisions. When paired with clear internal access controls, these provide highly reliable protection.
• Include Compliance Carve-Outs: When drafting, be mindful of language banning legally protected activity. You must include explicit carve-outs, pursuant to federal and state-specific regulations, for lawful whistleblowing, good-faith reporting to government agencies, and protected workplace discussions.

Conclusion & Practical Guidance

The risk to your IP has never been higher. Your competitive edge is only as safe as the practical and legal fences you build around it.

Means of Protection

1. Audit Access: Identify your most valuable data and restrict access strictly to a "need-to-know" basis. Password-protect everything.
2. Update Your Contracts: Replace unenforceable, blanket noncompetes with tailored confidentiality and non-solicitation agreements.
3. Formalize Offboarding: Do not let employees walk out the door without a digital audit of their devices and a written reminder of their legal obligations.Protect your trade secrets today, so you have legal rights to enforce tomorrow.