What Constitutes a Trade Secret
Most people have heard the term “trade secret” used at some point or another. Typically, people use this phrase when discussing the recipe to popular foods or the formula for various consumer products. However, trade secret protection can be extremely broad, and covers information that people would not normally consider to be a trade secret in the traditional sense of the phrase. Typically, courts look to a variety of factors when considering what constitutes a trade secret.
Relationship to Other Doctrines
It is important to note before discussing what constitutes a trade secret that the doctrine of trade secrets must be understood in conjunction with other legal protections. For instance, trade secret protection is similar to patent protection, which prevents others from using an invention, method, or operation. In addition, depending on the trade secret involved, trade secrets may also be similar to copyright protection. Copyright generally involves preventing the reproduction or other use of artistic expression, and some informational trade secrets might also be subject to copyright. Furthermore, contractual obligations, such as non-disclosure agreements, may be similar to trade secret protection, since these provisions may also prevent individuals from disclosing information. However, the doctrine of trade secrets fills a gap of other useful information that courts recognize should be protected even if this information is not subject to other kinds of protection. However, since the doctrine of trade secrets runs in conjunction with other areas of the law, this protection may not be as broad as copyright, patent, or contractual protections.
Business Uses
It might seem obvious to some, but one of the most important factors that goes into what constitutes a trade secret is that the information protected is used for business purposes. As a result, any information that is used primarily for educational purposes or private consumption is generally not subject to trade secret protection. However, the commercial element of a trade secret can be only tangentially related to business purposes. For instance, the information contained in certain self-help or meditation programs can constitute trade secrets. Since the scope of trade secrets is broad, it oftentimes pays to speak with an attorney to see if certain information can be protected by this doctrine.
Economic Value
Related to the issue above, what constitutes a trade secret oftentimes centers around the economic value of information. If information does not have inherent value by virtue of the fact that it is kept secret, then it is likely that information will not be found to be a trade secret. For instance, the names of people who work for organizations, or other mundane details about a company, would typically not be considered trade secrets. This is because the organization does not usually derive economic value from such information, even if they wish to keep some information about their company private. Unless the information involved is something that can be used by a competitor for profit, it is unlikely that information will be deemed a trade secret and subject to protection.
Secrecy
Another consideration that is evaluated when assessing what constitutes a trade secret is the level of secrecy surrounding proprietary information. Traditionally, trade secrets are subject to considerable precautions in order to keep the information private. For instance, it is not uncommon for companies to use safes, encrypted files, and other security measures to ensure that trade secrets are protected. If information is not subject to this type of secrecy it is more likely that the information will be considered ordinary corporate information not subject to the protection of the trade secrets doctrine. However, if companies or individuals take measures to protect proprietary information, it is more likely that this information will be considered trade secrets.
Non-Public
As an extension of the above doctrine, if a trade secret has been made public, it is difficult to thereafter assert that the information should be protected. For instance, if a recipe is leaked on the internet, a company could lose the ability to sue others for violating their trade secret protection by making a product or distributing the recipe to others. Since publication of information is a major factor in what constitutes a trade secret, it is even more important that companies take measures to prevent information from becoming public.
Federal Law
Most of the time parties wish to take action with respect to trade secrets, they stick to civil remedies like seeking damages or an injunction regarding the trade secret. However, it should also be mentioned that what constitutes a trade secret is also determined by federal law. The Economic Espionage Act of 1996 provides that if parties misappropriate trade secrets with knowledge or intent that the misappropriation can cause harm, then that person can be criminally charged. It should be mentioned that not every theft of trade secrets will be actionable under federal law, and a number of factors are typically assessed when evaluating if a case under the Economic Espionage Act can be made. However, it is worth pointing out that trade secrets is one field where both civil and criminal remedies may be available to parties who are harmed.
The Rothman Law Firm has experience with trade secrets, and can help companies and individuals who wish to protect their proprietary information. In addition, we have experience litigating against parties who may have misappropriated the trade secrets of others. If you are looking for an experienced business lawyer to handle your trade secrets matter or any other legal issue, please feel free to contact The Rothman Law Firm to request a free consultation.