Trade Secrets

Definition

Trade secrets are valuable, confidential business information that provides a company with a competitive advantage. They are protected under the law as long as reasonable efforts are made to maintain their secrecy. This term is particularly relevant in the context of litigation alternatives and the secrecy requirement for trade secret protection.

5 Must Know Facts For Your Next Test

1. Trade secrets can include formulas, patterns, compilations, programs, devices, methods, techniques, or processes that provide a competitive advantage.
2. Unlike patents, trade secrets do not have a limited term and can be protected indefinitely as long as the information remains secret.
3. Misappropriation of trade secrets can occur through theft, bribery, misrepresentation, breach of contract, or espionage.
4. The Defend Trade Secrets Act (DTSA) provides a federal civil cause of action for the misappropriation of trade secrets used in interstate or international commerce.
5. Companies must take reasonable efforts to maintain the secrecy of their trade secrets in order to qualify for legal protection.

Review Questions

• Explain how the concept of trade secrets relates to litigation alternatives, such as mediation or arbitration.
  • Trade secrets are often at the heart of commercial disputes, as companies seek to protect their valuable confidential information from being disclosed or misappropriated. Litigation alternatives like mediation and arbitration can be attractive options for resolving trade secret disputes, as they allow the parties to keep the details of the case private and avoid the public nature of court proceedings. These alternative dispute resolution methods can help preserve the secrecy of the trade secrets at issue, which is a critical requirement for maintaining legal protection.
• Describe the key elements of the secrecy requirement for trade secret protection.
  • For information to qualify as a trade secret, the owner must take reasonable efforts to maintain its secrecy. This includes measures such as limiting access, using non-disclosure agreements, marking information as confidential, and implementing physical and digital security controls. The information must also derive independent economic value from not being generally known or readily ascertainable by others. If a trade secret becomes publicly available or the owner fails to take reasonable steps to protect it, the legal protections may be lost.
• Analyze the importance of the Defend Trade Secrets Act (DTSA) in the context of trade secret litigation and protection.
  • The Defend Trade Secrets Act (DTSA) is a federal law that provides a civil cause of action for the misappropriation of trade secrets used in interstate or international commerce. Prior to the DTSA, trade secret owners had to rely on a patchwork of state laws, which created inconsistencies and challenges in protecting their valuable information. The DTSA allows for federal jurisdiction, the ability to seize misappropriated trade secrets, and the potential for enhanced damages, making it a critical tool in the arsenal of companies seeking to protect their trade secrets through litigation. The DTSA has significantly strengthened the legal framework for trade secret protection and enforcement in the United States.

Related terms

Confidential Information:

Information that is not publicly known and has economic value due to its confidential nature.

Misappropriation:

The unauthorized acquisition, use, or disclosure of a trade secret by improper means.

Reasonable Efforts: The steps a company takes to protect the secrecy of its trade secrets, such as using non-disclosure agreements and limiting access.