Trade Secrets

What is a trade secret?

The Uniform Trade Secret Act defines a trade secret as information that derives actual or potential economic value from not being generally known by others and that is the subject of reasonable efforts to maintain its secrecy.

What information qualifies as a trade secret?

Courts look to the following factors to determine if the information is a protectable trade secret:

1. the extent to which the information is known outside the business;

2. the extent to which the information is known by employees and others associated with the business;

3. the precautions taken to maintain the secrecy of the information;

4. the value to the information to the business (the advantage it gives to the business in respect of its competition);

5. the amount of effort or money expended in developing the information; and

6. the ease with which the information could be acquired by others using proper means.

Do trade secrets need to be registered with a government agency?

No. Unlike patents, trademarks, and copyrights, a trade secret is not registered with any government agency.

How long does trade secret protection last?

Trade secret protection lasts as long as the information remains a secret. A trade secret has no fixed term and has the potential to last forever.

What is necessary to protect a trade secret?

A trade secret is protected by keeping it a secret. Once the trade secret is publicly disclosed it is no longer a secret and others who learn or know of the trade secret are free to use it.

How is a trade secret infringed?

Trade secret infringement is typically referred to as a misappropriation of the trade secret. The Uniform Trade Secret Act provides the following description of misappropriation:

acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or

disclosure or use of a trade secret of another without express or implied consent by a person who

1. used improper means to acquire knowledge of the trade secret; or

2. at the time of disclosure or use knew or had reason to know that his knowledge of the trade secret was

    a.     derived from or through a person who has utilized improper means to acquire it;

    b.     acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; or

    c.     derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use; or

    d.     before a material change of his position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake.

How do enforce a trade secret?

Trade secrets are governed by state law and common law.  A trade secret owner must initiate a law suit against the alleged infringer under the appropriate state law or common law. The remedies available to an owner of a trade secret include injunctive relief, damages for actual losses and unjust enrichment, and, in some cases, exemplary damages and attorney fees.

Is trade secret status lost if the trade secret is made public? Can trade secret status subsequently be recovered?

Generally, trade secret status is lost forever after public disclosure, unless the trade secret information became public through an unlawful act. Even then, however, the owner may have effectively lost the trade secret because of uncontrollable or widespread distribution.