Legal Question in Business Law in California

Use of pre-existing business information/advertising by another business

A concession business that had been started 16 years ago was conceived in its entirity, by myself. All advertising information along with names and descriptions of what I offered was the first concession of this kind in this area. In 2000, I was offered a 5 year contract with an option of 5 years. Upon the renewal date in 12/04, that extension had mysteriously disappeared. I should say that I opted not to renew the contract but I already new the outcome.

Be that as it may, the same type of concession is up and running by another entity. The owners of this new concession were past clients of my existing business and had been inquiring for the last couple of years as to when my contract would be up so they could take over. They are advertising exactly what I designed; the format and description using almost the exact same wording.

The question is: I do not want any association with this business. They have already opened another business such as the one I currently own. Can I claim the rights to my pre-existing business information? Is any legal recourse that can be taken immediately? Would any of this rely on the people who contracts with the concession?


Asked on 4/18/05, 1:19 am

1 Answer from Attorneys
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Re: Use of pre-existing business information/advertising by another business

First, I will have to say that I really don't understand what happened from your description, and if I were interviewing you in person I would probbaly have to ask a dozen or more questions for clarification before beginning to answer.

Having said that, I would guess your legal issues fall into two categories: the first dealing with the loss of your option to renew, the other with what may be misappropriation of your trade secrets.

The option issues would probably be easier to handle, assuming the option agreement was part of a written contract. The law of options is pretty straightforward. Most of the time, you either had a right to renew or you didn't, and the rules for making a valid exercise of a renewal option are also relatively simple.

If your prinicipal issue is that a competitor is using your trade secrets and business concepts, you encounter a somewhat more nebulous body of law, because your property rights in trade secrets are in conflict with the preference for free and open competition. Also, the law demands that "trade secrets" be truly secret and an effort made to prevent their dissemination before you're entitled to legal protection (unless, of course, your ideas are patentable and you obtain a valid patent).

Generally, trade secrets are protected from misappropriation -- meaning mis-use by someone who obtained them by fraud or theft, or uses them in violation of a contract or fiduciary obligation to maintain theur secrecy and/or not to use them for their own benefit.

An idea for a business concept is probably by-and-large not a protected trade secret, although aspects of it may be entitled to protection.

Please contact an intellectual-property lawyer for trade secret assistance, or a business or real estale lawyer for option-contract advice. You may contact me directly if you want to provide some details of your situation.

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Answered on 4/18/05, 1:58 am


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