Introduction to Trade Secret Law

Dont miss a good chance to keep quiet. Professor Jerome Shuman

Origin of Trade Secret Protection

The Roman Empire and misappropriation or theft of trade secrets The Roman courts recognized a cause of action for actio servi corrupti, which means an action for corrupting a slave Slave owners relied on the cause to protect them from theft of confidential business information by third parties who would intimidate, bribe, or corrupt their slaves into disclosing the information

From the Roman Empire to Western Capitalism

Presently, what entities require trade secret protection? Who is most likely to disclose a trade secret? Who is most likely to benefit from disclosure?

Source of Law for Trade Secret Protection

Common law tort of improper use or disclosure of trade secrets

Restatement of Torts, 757-758, which were adopted by most courts in most states is now supplanted by the Restatement (Third) of Unfair Competition, 39 In 1979, a model act was promulgated and is called the Uniform Trade Secrets Act, which was amended in 1985 (civil remedies) Through implementation of GATT-TRIPs, Congress provided national protection for owners of trade secrets with the 1996 Economic Espionage Act, 15 U.S.C.A. 1831-1839 (federal criminal remedies)

Two Theories of Trade Secret Protection

Utilitarian Theory

Deterrence Theory

Property Rights Protecting against theft, improper use or disclosure of proprietary information encourages investment in such information

Commercial Morality or duty-based obligation Discourage wrongful or illicit commercial behavior that undermines trust

How do each of these theories view the nature of intellectual property?

Drafting and Evaluating a Trade Secret Claim

What is a trade secret? Is there a threshold requirement of creativity or innovation before protection becomes available? What elements are required to state a claim for misappropriation, theft, or improper use? What are the tests for each of these elements?

Answers

A trade secret means information, including a formula, patent, 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, and is the subject of efforts that are reasonable under circumstances to maintain its secrecy

No, a threshold is not required; the only requirement is secrecy of information that derives independent economic value from remaining secret

Answers

Generally, there are three elements (and their tests) to a trade secret claim: the subject matter involved must qualify for trade secret protection

it must be the type of knowledge or information that trade secret law was meant to protect; and it must not be generally known to all through deception or theft through breach of an explicit obligation through breach of an implied duty diligence constructive knowledge standard

a showing of misappropriation

a showing of reasonable precautions to prevent disclosure