Definition, According to Uniform Trade Secret Act:

Examples: Customer lists, manufacturing methods, chemical processes, formulas, computer program codes, marketing data, blueprints from machines, genetic information

Protects against 2 things:

1) people who have the secret in confidence and reveal it,

2) people who try to sneak in and find out your trade secret by trespassing on your public property

Trade Secret Requirements:

1)  Must Be Information

a. Formula

b.  Pattern

c. Compilation

d.  Program

e.  Device

f.  Method, Technique, or Process

2)  Must  Have Value

a. Value to plaintiff’s business

b.  Cost of developing the information

c. Cost of security

3)  Must Have Independent Economic Value

a. Consider: Is the economic value of the information transferable in the sense that it woul have economic value to another company to which the infornation is tranferred in the same way is was valuable to the original company?

b. Info. not in continuous Use = has economic value

c.  Info. not in positive Use = has economic value

d. Info. not in use in a business = has economic value

e.  Info. not yet in use = has economic value

f.  Info. not give a competitive advantage = has economic value

g. Information need ONLY be valuable, it need not be better than whatever competitors use

h. To be valueable, information need NOT be vlueable to competitors

4)  Economic Value Must Not Be Generally Known

a. Reasonable measures to protect the information

b. Value must come from the fact that information is secret

c. Information need not be known among the public to be unprotected as a trade secret; rather, the relevant group is that group which can obtain economic value from its disclosure or use

5)  Information Is Not “Readily Ascertainable”

a. If Info. is gain through “ improper means” = Not Readily Ascertainable

b. "Readily ascertainable" means easy and relatively cheap; if competitor has to conduct length, expensive work to duplicate information, then it is NOT readilyascertainabe.

c. Information is readily ascertainable if it can be found easily in published source, such as trade jounrals or reference books.

• Courts grant parties considerable latitude in deciding what level of security is reasonable
• Cases which find there was insufficient securit usually present facts in which the security was demonstrably lax.
• Determining whether securit measure were reasonable under the circumstances is made on a fact-bound, case specfic basis.

Measures Used in Connection with Trade Secrets: [Under many circumstances, somone receiving trade ecret information is subject to implicit obligation not to disclose.]

(1) Confidentiality/Nondisclosure Agreements: If an employer institutes a program and requires present employees to sign on, court have held that there is no consideration for the nondisclosure agreement. Clause that purports to restrict information employee knew before employment or that is geneally known in the industry may not be enforceable.

(2) Covenants Not to Compete: Non-compete agreements by individual employees are unenforceable in some jurisdictions, but more jurisdictions will enforce non-compete agreements, provided they are reasonable.

Terminaton of Trade Secret by Public Disclosure:

(1) Once a trade secret is public inforation, it is no longer a trade secret

(2) Govenment freqently requres disclosur of information, when compelled disclosure is sufficiently known then disclosure may terminat trade secret.

(3) Not every disclosue terminates the trade secret; however, disclosure can terminate trade secret if infomation no longer meets definition of seret because it is geneally known or readily ascertainable.

Length of Protection: As long as trade secret is in used and kept secret

Formalities: None needed, as long as it is kept secret, no need to go to any office to register trade secret

Cause of Action under Trade Secret:

 1) Infringement: Basic cause of action in trade secret law is misappropriation, not infringement.

 2) Misappropriation

1) Is there a secret?

2) Did you enter a "confidential relationship"?

3) Did you "use this information in violation of the relationship"?

• Reverse Engineering: reverse engineering is a fundamental public policy good, but the product must be obtained from the open market. It is ok to do this to some products to figure out how they work
• • Example: recipes, the temperature that you heat things at, the method of manufacturing something
• Employees: Most courts find a confidential relationship in the employee/employer context. You can't take documents outside the building with you, but you can take "general knowledge" (most states).
• Employee argument:
• • 1) the information at issue was not a trade secret of employer (because it was information Employee knew independently, was already generally known in the industry, was readily available from public sources, or was not sufficiently protected because employer did not take reasonable measures to keep the information secret.
  • 2) the employee had no duty of confidentiality (signed no confidentiality agreement and was not in a position in which confidentiality would be implied), so her disclosure and use of the information is not wrongful
  • 3) Non-competitive agreements: they are enforceable if they are "reasonable"

Remedies:

1) Injunctions

2) Damages:

a. Actual loss and restitution of defendant’s wrongful profits 

b. Reasonable royalty