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A Multidisciplinary Approach To Trade Secret Protection in
the Digital Age
By David C. Brezina
Law and Business
Between James Bond’s brand of espionage and the emotional reaction when someone trained and trusted leaves
and goes to work in competition lie most fact situations that give rise to trade secret disputes. These wrongs and their
subjects overlap legal disciplines of intellectual property, employment and unfair competition.
Assume a Trade Secrets Case – How Should The Business Prepare?
There are three categories of trade secrets case. One is the tort action for the protection of the owner of a trade
secret for unlawful appropriation.1 Second is an action brought by employers against employees to prevent disclosure
to others.2 These actions are based upon either a confidential relationship or a restrictive covenant. Third is an action
based on a contract involving the use of the trade secret.3
The Uniform Trade Secret Act (USTA) typically pre-empts other tort actions arising under trade secret facts. Winning
a UTSA case is enhanced if facts surrounding events prior to the tort establish the basis for the action. The trade
secret plaintiff must prove (1) the existence of a trade secret and (2) the misappropriation.4
These two elements are deceptively simple. The UTSA requires a “trade secret” to be: (1) sufficiently secret to derive
economic value, actual or potential, from not being generally known to other persons who can obtain economic value
from its disclosure or use; and (2) the subject of efforts that are reasonable to maintain its secrecy or confidentiality.5
The Subject Must Relate To and Provide A Commercial Advantage in
Business
Customer lists, manufacturing and marketing plans, financial information, manufacturing techniques and product
designs, can all be protectable if the other prerequisites are met6. These are examples of typical business information
that may give a business an advantage over competitors who do not have the information. General knowledge and
skill of a worker can be transportable to a new job.7
“Secrets” Are Not Generally Known and Are Subject to Protective Steps
If all the industry insiders know it, it is hard to show secrecy. Industry knowledge, something mobile employees
regularly bring with them, the subject of talks or papers at conferences, disclosures in patents,8 copyrights or public
bids are hard to be protected as secrets. It must be "sufficiently secret to derive economic value, actual or potential,
from not being generally known to other persons who can obtain economic value from its disclosure or use".9
The owner must also “keep” the secret. If security measures are foolproof, you can stop reading now. If someone
"gets away" with the secrets, then by definition, security is imperfect. Failure to take reasonable precautions can
cause the lawsuit to be lost. Locks, passwords, limited access, visual protection, shredders, computer security,
explanations and consistent procedures can all help. Cases are lost when blueprints are left lying about and
employees freely take information home.
The Taking or Use Violates Some Duty or Involves Some Other Wrongful
Act
The definition of the wrong pigeonholes trade secret and unfair competition cases. Ex-employees may have acted in
violation of a duty of loyalty to their employer, violated an express contract such as a “Non-compete” agreement, a
specific employment agreement, or acted contrary to guidelines such as a policy manual. Interpreting these
agreements in the US varies from state to state. Enforceability varies based on the form and timing of agreement and
the interrelationship of agreements and policies.
