Trade Secrets Law in United States
Trade Secrets Law in the United States:
๐ Definition of Trade Secret (Under the Defend Trade Secrets Act and UTSA)
A trade secret is information that:
Derives independent economic value (actual or potential) from not being generally known or readily ascertainable by others who can benefit economically from its disclosure or use.
Is subject to reasonable efforts to maintain its secrecy by its owner.
This includes formulas, practices, processes, designs, instruments, patterns, or compilations of information.
๐ Governing Laws
Defend Trade Secrets Act (DTSA) โ Federal (2016)
Provides a federal cause of action for trade secret misappropriation.
Allows trade secret owners to bring lawsuits in federal court.
Enables injunctions, damages, and seizure of property.
Includes whistleblower immunity provisions.
Uniform Trade Secrets Act (UTSA) โ Adopted by 48 States + DC
Defines trade secrets and misappropriation.
Provides civil remedies including injunctions, damages, and attorneyโs fees.
States interpret and enforce according to their own courts.
State-Specific Laws
While UTSA is widely adopted, some states have additional or modified provisions.
๐ก๏ธ Misappropriation
Trade secret misappropriation involves:
Acquiring trade secrets through improper means (theft, bribery, espionage, breach of confidentiality).
Disclosing or using trade secrets without consent by someone who knew or should have known the information was a trade secret.
โ๏ธ Remedies Available
Injunctive Relief: Court orders to prevent further disclosure or use.
Monetary Damages: Actual damages and unjust enrichment; in cases of willful misappropriation, damages can be tripled.
Attorneyโs Fees: Awarded in exceptional cases.
Seizure: Courts can order seizure of property used to misappropriate trade secrets.
๐ Protection Practices
Businesses should:
Use Non-Disclosure Agreements (NDAs) with employees, contractors, and partners.
Implement physical and digital security measures (access controls, encryption).
Conduct employee training on confidentiality.
Label confidential information and restrict access appropriately.
๐ Federal vs. State
DTSA provides a federal option but many companies also pursue claims under state UTSA laws simultaneously.
Federal courts may handle trade secret cases involving interstate matters or federal jurisdiction.
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