On May 11, 2016, Congress enacted the Defend Trade Secrets Act of 2016 (the “DTSA”),[1] initiating a monumental change in trade secret litigation. Heralded as the single biggest development in Intellectual Property law since the America Invents Act,[2] the DTSA created a federal private cause of action for misappropriation of trade secrets.[3] In February 2017, jurors in the Eastern District of Pennsylvania rendered the first ever DTSA jury verdict based on the misappropriation of a particularly lucrative fruit jam recipe.[4] The jurors in that case awarded a total of $2.5 million in damages, including $500,000 allocated to the plaintiff’s misappropriation claim under the DTSA.[5] Due to the potential for substantial jury verdicts for misappropriation, your business must understand not only the type of information that qualifies as a trade secret, but also the steps you should take to protect that information.
The DTSA defines a “trade secret” as “all forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing.”[6] Courts, however, do not afford trade secret protection to all confidential and proprietary information. Under the DTSA, only information that: “(a) the owner has taken reasonable [measures] to keep secret; (b) derives independent economic value, actual or potential, from being kept secret; (c) is not readily ascertainable by proper means; and (d) others who cannot readily access it would obtain economic value from its disclosure or use” qualifies as a protectable trade secret. PharMerica Corp. v. Sturgeon, 2018 WL 1367339, at *4 (W.D. Pa. Mar. 16, 2018) (citing 18 U.S.C. § 1839(3)).
Although the DTSA does not explicitly outline the “reasonable measures” a plaintiff must take to maintain the secrecy of trade secret information, two recent cases provide clarity on this issue. In Freedom Med. Inc. v. Whitman, the United States District Court for the Eastern District of Pennsylvania found that the plaintiff took reasonable measures to keep its price schedules secret by: (i) defining pricing information as confidential; (ii) generally restricting its disclosure; and (iii) utilizing restrictive...
