Intellectual Property

Trade Secret

A trade secret is any form of information the owner has taken reasonable measures to keep secret and from which he derives independent economic value by virtue of its secrecy. 18 U.S.C. § 1839(3).

They last for as long as they are kept secret, so potentially infinitely.

The most common types of trade secrets are client lists and recipes.

They are protected by federal law in 18 U.S.C. § 1836, but the federal law does not preempt state trade secret protections, which also exist.

  • Unlike contractual protections, trade secrets are protected against misappropriation by anyone, even if the other party has no contract with you.

Trade secrets are privileged information and do not have to be disclosed in court. Cases about them can be sealed.

Reasonable measures include:

  • Keeping such knowledge to only those who need to know such things for the business.
  • Access control—both physical and electronic
  • Encryption
  • Splitting the project into smaller parts
  • NDAs
  • Confidential markings

What is reasonable is ultimately a jury question.

Trade Secret Misappropriation

You can sue for trade secret misappropriation under 18 U.S.C. § 1836 if you have a valid trade secret which someone else misappropriated.

Misappropriation means acquiring something by improper means.

Improper Means

Improper means of acquiring trade secrets include theft, bribery, lying, breaching or inducing someone to breach a duty, and espionage, but it does not include reverse engineering, independent derivation, or other lawful means of acquisition. 18 U.S.C. § 1839(6).

Someone else breaching a contract does not make your use of the information misappropriation if you did not induce him to break the contract.

Improper means do not have to be illegal, but anything illegal is improper means.

You can get attorney's fees for trade secret misappropriation at the judge's discretion.

  1. General knowledge in the industry
  2. Reverse engineering

Trade secrets are property—intellectual property.