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 Features
Intellectual
Property: The Game of Swords and Shields
Trade
Secret Law
Trade secret
law is governed by the individual states. A growing number of states have
enacted versions of the Uniform Trade Secrets Act.
Types
of Works Protected
The
Uniform Trade Secrets Act (UTSA) defines "trade secret" as information,
including but not limited to, 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.
- Is the
subject of efforts that are reasonable under the circumstances to maintain
its secrecy.
Standards
Under
the UTSA definition, any type of information of any subject matter can
be a trade secret. Unlike copyright, there is no requirement that information
exist in some tangible form in order to be a protectable trade secret.
Nor does the trade secret have to be novel, original or creative. Instead
of novel, the information must be secret. Secrecy is the crucial factor
in most cases. Most clearly, information generally known to the public
is not entitled to trade secret protection. The general business experience,
memory, and skill that inure to an individual over the course of employment
also cannot be claimed as a trade secret. Matters which are completely
disclosed by the goods are not be deemed to be secret if determinable
upon inspection. The owner of a trade secret may disclose it to others,
so long as disclosure is accompanied by an enforceable pledge of secrecy.
There is a secrecy test has two prongs: (1) whether the information is
generally known or available; and (2) whether the trade secret owner takes
affirmative steps to safeguard the confidentiality of the information.
Customer lists present a special case. They are likely to constitute trade
secrets in situations in which the trade secret owner can demonstrate
that customers are not generally known and that the customer list is not
one that may be compiled easily from a telephone directory, trade association
member list, or other readily available public documents.
Procedure
There
is no registry or other direct government regulation of trade secret information.
Ownership
An
employer or hiring party generally owns trade secrets developed by employees
and by independent contractors who are hired to invent or create such
information. Explicit language protecting the employer's trade secrets
in employment contracts is highly recommended.
Exclusive
Rights
The
UTSA protects trade secrets from "misappropriation." Misappropriation
is defined in the Act to cover situations in which the information is
knowingly acquired, disclosed or used by improper means. "Improper
means" is not defined in the UTSA, but would include acting without
the consent of the trade secret owner and using the information in a manner
adverse to the interests of the owner.
Duration
A
trade secret lasts as long as it meets the definitional test. The UTSA
provides a 3-year statute of limitations in which to sue for misappropriation.
Notice
There
is no notice practice given the secret nature of the trade secret. Internal
procedures within an organization to assure maintenance of trade secret
treatment is advisable by stamping documents and restricting access.
International
Scope
There
are no multinational treaties or agreements specifically pertaining to
trade secret law.
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