The Uniform Trade Secrets Act (“UTSA”) defines a “trade secret” as: “information, including a formula, pattern, compilation, program, device, method, technique, or process that: Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.” The United States Patent and Trademark Office states that a trade secret must be used in business and must be used to gain an economic advantage over your competitors who do not know or use it.
Trade Secret laws can vary from state to state, however, there are similarities among the laws because almost all states have adopted some form of the Uniform Trade Secret Act (“UTSA”). In addition the U.S. has passed the Defend Trade Secrets Act which created, “federal civil cause of action, strengthening U.S. trade secret protection, with a choice for the parties between localized disputes under state laws or disputes under federal law, heard in federal courts.” USPTO. Courts can protect your trade secrets as long as they remain secret. If the trade secret hold fails to main its secrecy or if it is independently discovered by a third party, or generally released to the public then the trade secret is lost, and your company cannot receive any protection for what you think is proprietary information. One of the best examples of a trade secret is Coca Cola’s recipe for Coke, which is kept in a vault in Atlanta, Georgia. Coke’s trade secret has lasted for over 100 years and continues to be a trade secret today.
Courts can protect your trade secret by enjoining misappropriation. Misappropriation is defined as acquiring the trade secret “through improper means, or where it is disclosed or used without the express or implied consent of the trade secret owner after having been acquired under circumstances giving rise to a duty to maintain its secrecy. ‘Improper means’ include theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means.” IPO.org. If your trade secret has been misappropriated the courts can award you damages, court costs, and reasonable attorneys’ fees.
For your trade secrets to be upheld in court you must take reasonable security precautions. This helps provide evidence that your information has and will remain a trade secret. Investment in these precautions shows the courts that the information has value to your company and is a viable trade secret. These security precautions notify the employees and others that your information is confidential, and any unauthorized use or disclosure is improper.