Trade Secrets

A trade secret is, basically, information of commercial value. The form of that information can be exceedingly variable:

– Key to the need for protection is the fact that the information is not generally known to others and is not readily ascertainable by proper means.

– A trade secret, generally, would be exclusive knowledge, of economic value, which has been generated by the labors of a specific person or persons who have an interest in protecting its value.

– Such information may be patentable or subject to copyright.

Key to the need for protection is the fact that the information is not generally known to others and isnot readily ascertainable by proper means. A trade secret, generally, would be exclusive knowledge, of economic value, which has beengenerated by the labors of a specific person or persons who have an interest in protecting its value. Such information may be patentable or subject to copyright.

At the common law, misappropriation of a trade secret could give rise to a remedy. "Misappropriation" means acquiring a trade secret by "improper means" or from someone who has acquired it through "improper means".

Things like theft, bribery, and misrepresentation are "improper means".  Misappropriation, also, includes disclosure and use of a trade secret acquired through "improper means".  

If there is a misappropriation, the injured person may have injunctive relief and damages.  Injunctive relief may extend into the future, and may condition future use on a proper royalty

Damages include actual loss and unjust enrichment.  If there is willful and malicious misappropriation, there may be exemplary damages.  Exemplaries are limited to twice the actual damages.

The Uniform Trade Secrets Act is an effort to codify the common law with proper clarification of rights and remedies.

The UTSA, published by the Uniform Law Commission (ULC) in 1979 and amended in 1985, was an act promulgated in an effort to provide a unified legal framework to protect trade secrets.

– Texas recently became the 48th state to enact some version of the UTSA.

– New York and Massachusetts are the remaining states not to have enacted the UTSA.

Unlike patent, trademark, or copyright protection, there is no set time period for trade secret protection.

– A trade secret is protected as long as it is kept secret.

– Once a trade secret is lost, it is lost forever.

– As we have seen in a post-Wikileaks and post-social media world, once confidential information is disclosed, it can be instantly distributed online for hundreds of millions to see, access, and download, thereby losing its trade secret status.

“Defend Trade Secrets Act of 2015” (DTSA) was file signed into law by Pres. Obama.  The DTSA has some similarities with the Uniform Trade Secrets Act.

The DTSA defines “misappropriation” consistently with the DTSA, and provides for similar remedies, including injunctive relief, compensatory damages, and exemplary damages and the recovery of attorneys’ fees in the event of willful or malicious misappropriation.

The DTSA, however, differs from the UTSA in several important aspects:

– It opens the federal courts to plaintiffs for trade secrets cases;

– The DTSA also allows for an ex parte seizure order;

– A plaintiff fearful of the propagation or dissemination of its trade secrets would be able to take proactive steps to have the government seize its trade secrets prior to giving any notice of the lawsuit to the defendant;

– The proposed seizure protection goes well beyond what a court is typically willing to order under existing state law;

– The DTSA’s statute of limitations period is five years compared to just three under the UTSA;

– Additionally, the DTSA allows for the recovery of treble exemplary damages versus double under the UTSA; and

– The DTSA contains no language preempting other causes of action that arise under the same common nucleus of facts, unlike the UTSA.